Hotels losing pricing control: You sell the room. The channel is taking the upsell.

An AI agent that knows what your guest spent last year will offer her the suite, the spa and the late check-out before she ever reaches you, at its price and its margin

by Markus Busch

Three days before arrival, the hotel's system sends the email. Sea-view room, $45 more a night. Breakfast. Late check-out until two. The channel has taken its commission on the room. The extras are the part the hotel still prices for itself, and keeps whole.

More and more, the guest who opens it has already been sold, before she ever reached the hotel. Someone who knows far more about her chose which room to show her first, which extras to put in front of her and what to charge for them.

The room's price was the first thing hotels lost control of this year. The rest of the stay is next. The better room, the breakfast, the spa and the late check-out are being put together for each guest at the point of sale, by whoever knows her best. The margin stays there.

Booking.com already decides who gets the extras

Part one of this series showed what Genius costs the hotel: the discount, and the free breakfast or upgrade at hotels that sign up. Here the point is who decides. Booking.com sets the levels, decides which guest reaches which one, and attaches the extras at the moment of booking.

On its August earnings call, Booking Holdings said Level 2 and 3 members now book a high-50% share of Booking.com's room nights. We covered that call this month. So for more than half of Booking.com's room nights, the upgrade question is answered before the guest reaches you, by Booking.com, based on her history with Booking.com.

Today it gives the extras away, at your cost. The machine that decides who gets them is already running.

Airlines went first

Airlines have said out loud where this goes. At its investor day in November 2024, Delta's then-president described the goal of its new AI pricing engine as a fare available "to you, the individual." One passenger, one offer, one price.

It drew attention. In August, Frank Pallone, a senior Democrat in the House of Representatives, sent questions to Delta and seven other US carriers about what Washington now calls surveillance pricing. On September 9, Delta's current president replied that no Delta fare uses personal data to set an individual price, and none will.

The goal was public before the denial was. And the same airlines sell hotel rooms, through rewards sites built with tools that, as part one of this series showed, let them set their own price on your rate for each tier of member.

Who knows your guest

An offer built around one guest needs someone who knows her. The companies that sell your rooms know her far better than you do.

Revolut, the banking app, passed 70 million customers in January. It holds a record of every hotel bill each of them paid with a Revolut card: where, how much, how many nights, and what else she spent while there. Last October it bought Swifty, an AI booking startup. The executive running that work describes the goal as "almost mind reading."

Google's AI Mode now books hotels in the United States. It passes the hotel or OTA what the booking needs: the name, the payment, the room. The rest of the conversation stays with Google, including what she asked for and what else she considered.

On August 4, a US Senate subcommittee held a hearing on surveillance pricing. One witness's example came from travel: someone buying a ticket to get to a funeral, whose urgency is what gets priced. AI shopping assistants, witnesses warned, can read that urgency in the middle of a conversation.

The upsell moves into the answer

An AI agent doesn't hand the guest twenty hotels and a filter. It answers with a few names and a reason for each. That answer is the new sales conversation, and it happens before the booking.

A guest whose card shows spa bills on every trip can be offered the room with the spa package. A guest who always pays for late check-out can find it already in the price. A guest traveling for a funeral can be shown the one room left near the church, at the rate she will pay. The front desk used to have that conversation at check-in. Now the agent has it first, and whoever builds the answer keeps the margin on it.

What the independent supplies

The independent supplies the parts: the room, the breakfast, the spa slot, the late check-out. It supplies them at a net rate or under a commission contract. Either way, its price becomes the cost line in someone else's offer. The spa slot leaves at the spa's price. The package it ends up in is priced by someone else.

A chain can fight for the guest's profile with its own loyalty program and app. An independent's guest record starts at check-in and ends at check-out. It gets to make its offer after the booking, to a guest someone else has already sold.

The hotel still sets the price of the sea view. The channel will decide who is offered it, and for how much.

Read also: Hotels losing pricing control: You publish the rate. AI quotes Booking.com.

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