Hotel Brands Face AI Threat to Direct Booking Power

Hotel executives warned this week that generative artificial intelligence assistants could weaken the booking power of major hotel brands, CoStar reported in a news brief.

The executives, gathered at an industry conference, told CoStar that tools such as OpenAI's ChatGPT, Google's Gemini, and Anthropic's Claude are quickly becoming the first stop in travel planning. Those tools can collapse the multi-site comparison process into a single recommendation, the executives said.

The shift would matter most for hotel chains that have spent more than two decades moving bookings off third-party travel agencies and onto direct channels. Direct bookings through brand.com sites, loyalty apps, and call centers carry far higher operating margins than OTA reservations.

How big is the AI threat?

Executives told CoStar that the risk does not depend on AI tools completing a booking inside a chat window. The risk lies in the discovery step. If an AI assistant selects one hotel for a given prompt, the losing brands never see the traveler at all.

That dynamic echoes a fear hoteliers voiced when Google search became dominant in the 2000s. Then, hotels responded by investing heavily in search-engine optimization. The brands that won that race captured billions of dollars in lifetime booking revenue, and the same stakes apply to AI assistants, the executives said.

What brands are doing about it

According to CoStar, major operators have begun three defensive moves:

• Monitoring AI responses to common traveler queries to track which brands surface first.
• Publishing structured property data in machine-readable formats so AI tools return accurate room, amenity, and pricing details.
• Experimenting with paid placements inside AI responses, similar to paid search ads on Google.

The moves are budgeted inside 2025 marketing plans at several major chains, CoStar reported.

Could the threat be overstated?

Skeptics at the conference noted that AI travel planning today remains uneven. Several executives said the technology still needs a year or two of refinement before it changes booking mix.

CoStar's briefing framed that timeline as too late for inaction, given how quickly AI assistants are being adopted for trip planning.

Why this matters for the broader industry

For years, hotel brands have used direct-channel economics to justify loyalty investments, app development, and rate-parity programs that exclude cheaper third-party rates. AI agents threaten each piece of that strategy by inserting a new layer between traveler and brand.

Even if AI tools ultimately direct the traveler to a brand.com page, the brand that wins the AI answer still controls the relationship. Everyone else becomes interchangeable, CoStar reported.

The story to watch

The hotel industry's response to AI distribution will unfold across 2025 and 2026 as major brands test conversational interfaces, sign data-sharing deals, and rework loyalty economics. The operators that move first into AI-native distribution are positioned to set the conventions that other chains follow.

The executives who spoke with CoStar framed 2025 as the year hotel distribution gets redefined. The speed at which brands adapt will determine whether AI becomes a margin headwind or the next direct-booking channel.