The AI Distribution Shift Hotels Need to Understand

A few weeks ago, we thought agentic AI would add rocket fuel to the book direct movement.

The thesis was that ChatGPT and Claude would become your travel agents.

Hotels would get served up directly to travelers and OTAs would lose their grip on distribution.

But now we fear the big LLMs might just make OTAs more powerful…

Or at least, we were too optimistic about how this was going to play out.

What we thought would happen

Here’s the vision we had:

You’re planning a trip. Instead of going to Booking or Expedia, you go to ChatGPT.

“Find me a boutique hotel in Marfa, Texas. Under $400/night. Aesthetic, design-forward, local vibe. Not corporate.”

ChatGPT parses every review on TripAdvisor, Google, the OTAs. It gives you 10 recommendations with reasoning. It surfaces independent hotels that would be hard to find otherwise. Then it serves up the direct booking link or just books it for you.

You now have a personalized 120 IQ travel agent doing it all for you after a few thumb taps.

If this new AI agentic experience becomes the norm, what’s the OTA’s value? You trusted them as an aggregator and a trust source. So why go to an OTA when you can continue your chat with ChatGPT and get a better experience?

And as a hotel, why pay the OTA 15-20% commission when ChatGPT provides a better experience all round?

So naturally, we thought OTAs were in real jeopardy.

If they couldn’t build a competing agentic AI experience fast enough, then what happens to them?

What’s actually happening

Then ChatGPT walked back native checkout.

They announced they’re focusing on discovery and research, not transactions. They’re leaving the booking layer to third parties.

Now our guess is there’s probably a big partnership coming. Maybe multiple partnerships. OpenAI with Expedia. Claude with Booking. Who knows.

We fear that AI might actually end up making OTAs stronger, despite our hope that things would get driven direct.

The LLMs want to be the discovery layer. The OTAs want to own the transaction layer and aggregation. If they partner up, the OTAs might not just survive – they might win.

Personally, we don’t think this is the ideal outcome. But it’s probably what’s going to happen.

Why this still matters for hotels

Even if the OTAs survive through partnerships, the strategic question for hotels doesn’t change.

What if all the OTAs went away tomorrow…how would you fare?

The answer depends entirely on one thing: do you have a brand?

Commoditized and undifferentiated hotels will get crushed.

Hotels with strong storytelling, authenticity, one-of-a-kind experiences – basically everything that rolls up into brand – they’ll do great. And they’ll continue to capture more market share.

If you have content all over the internet – social media, your website, earned media, user-generated content – you’re going to be disproportionately served up in AI recommendations.

The AI models are trained on what’s out there. If your property has a strong digital footprint with compelling content, you show up. If you’re a generic property with minimal online presence, you don’t.

That doesn’t change whether ChatGPT partners with Expedia or goes direct.

The real distribution shift

Independent hotels have always had a distribution problem. You’re harder to find than the big brands. You don’t have the marketing budgets. OTAs solved that problem for you. But they took 15-20% commission for it.

Agentic AI changes the game. Not by killing OTAs, but by changing who gets surfaced.

If AI is doing the discovery, the properties with the strongest digital presence will win. The ones with compelling stories that exist across the internet. The ones that have been creating content and building brand.

The generic, commodity properties relying on OTA filters and price comparison?

They’re in trouble. Because AI doesn’t filter by price first. It filters by fit, by story, and by what matches the traveler’s specific ask.

If you don’t have a story, you won’t get recommended.

The play hasn’t changed

We were hoping AI would drive bookings direct and cut OTAs out entirely. But that’s probably not happening anytime soon.

The strategic play for hotels is the same either way…

Build your brand now.

Create content. Tell your story. Build a digital footprint that AI models can find and surface.

Because whether ChatGPT partners with Expedia or drives booking direct, the hotels that get recommended are the ones with strong brands and compelling content.

The distribution war is heating up. AI companies want to own discovery. OTAs want to own transactions. Big brands are testing conversational search on their own sites.

Whoever wins, the hotels with the best stories are the ones that get surfaced.

All the others? They’re going to get buried.