The erosion of Booking.com

The OTA built a $170 billion business by controlling what travelers see. That control is fragmenting across a dozen AI platforms — and management is pretending otherwise

Booking.com doesn't just charge hotels for bookings. It charges them for placement.

Base commissions run 10-25%, with most properties paying around 15%. But that's just the entry fee. Preferred Partner status costs additional points. Genius program participation requires funding discounts. Sponsored placements cost extra. Mobile-first positioning costs extra. Every pixel of the interface has a price.

The margins reflect this. Booking engines, customer service, and payment processing are valuable but commoditised functions. Controlling what travelers see — and charging suppliers for better placement — is where the exceptional margin lives. Booking.com has built both, but investors have valued it based on the latter.

There's also a payments layer most travelers never see. Booking.com has shifted aggressively to a "merchant model" — collecting payment upfront, paying hotels later. They earn interest on the float and capture foreign exchange spreads. They pay hotels through Virtual Credit Cards, which cost properties around 3% to process — and Booking.com almost certainly receives rebates on this volume. Merchant revenue now accounts for roughly 60% of total revenue.

In 2024, Booking Holdings spent $7.3 billion on marketing — roughly 31% of revenue. That spend wins when travelers search Google or open booking apps. If they ask AI assistants instead, that journey never reaches Booking.com's interface. The marketing isn't misdirected — it's optimised for a world where travelers actively seek out booking sites.

The fragmentation

A year ago, the threat seemed like it might come from one dominant AI platform — whoever won the race between ChatGPT and Gemini would control travel discovery.

The reality is messier — and worse.

In January 2025, OpenAI launched Operator, an AI agent that can browse the web and complete bookings autonomously. Booking.com, Tripadvisor, and Priceline partnered at launch. By July, agent mode had rolled out to paying subscribers. In October, OpenAI unveiled its Apps SDK — with Booking.com and Expedia as launch partners, accessing 800 million weekly active users.

Perplexity partnered with Selfbook and Tripadvisor to offer hotel booking directly within its AI search engine. Microsoft integrated Expedia with Copilot Actions. Amazon launched Alexa+ with travel capabilities. Google continued building agentic booking for Gemini, working with Booking.com, Expedia, Marriott, IHG, and others. And Apple announced a multi-year deal to embed Google's Gemini into Siri — putting Gemini-powered travel discovery on 2 billion active devices handling 1.5 billion requests per day.

The threat isn't a single dominant platform. It's a dozen platforms, each demanding inventory access, each controlling its own interface, each deciding independently what "recommended" means.

When a traveler asks any of these assistants to find a hotel, the selection happens inside the model. There may still be visibility hierarchies worth monetising — top picks, default suggestions, sponsored options. But Google, OpenAI, and others will set the criteria and collect the premium. Booking.com shifts from selling placement to buying it.

Why partnerships don't help

Booking.com's response has been to partner with everyone — feeding inventory to whatever AI platform will take it. Management presents this as strategic positioning.

Look at what these partnerships actually involve. Booking.com provides inventory data, pricing, and booking infrastructure. The AI platforms provide the user relationship, the discovery interface, and the recommendation logic. Booking.com becomes a backend supplier; the platforms become the frontend.

But Booking.com isn't the only backend option. Hotel brands connect directly to AI platforms through their CRSs. Independent hotels connect through channel managers and GDS providers. Neither needs Booking.com as the aggregation layer.

There's also a technical development worth watching: the Model Context Protocol. MCP is an open standard that lets companies build one connector that works with ChatGPT, Gemini, Claude, and Copilot simultaneously. If hotel technology vendors build these connectors, properties can reach AI assistants without going through Booking.com at all.

Booking.com's invitation to participate in these platforms isn't a sign of strength. AI companies want optionality — multiple inventory sources that can be played against each other. Every partnership announcement is a press release celebrating Booking.com's diminished role.

What the market is missing

Booking Holdings trades at roughly 34 times earnings. The valuation implies continued growth, sustained margins, and durable competitive position.

The bull case requires believing that Booking.com will either control its own AI interface or maintain pricing power as a backend supplier across a dozen competing platforms. Neither assumption is safe.

Building a competitive AI assistant requires distribution Booking.com doesn't have. Google has Android, Chrome, and now Siri. OpenAI has 800 million users. Microsoft has Copilot in Windows and Office. Amazon has Alexa. Booking.com has an app travelers open when they've already decided to book.

Maintaining pricing power as a multi-platform supplier requires leverage Booking.com may not have. If Expedia, Marriott, and a dozen hotel chains all feed inventory to every major AI platform, what makes Booking.com's supply special? Scale matters less when the aggregation happens at the platform layer.

Booking.com built one of the most successful businesses in internet history by controlling what travelers see. Agentic AI doesn't eliminate visibility hierarchies — it transfers them. When discovery happens inside AI models, those platforms decide what prominence means and who pays for it.

The company's management is treating a transfer of power as a channel opportunity. The market hasn't priced the possibility that visibility economics fragment across AI platforms within five years — none of which Booking.com controls.

It should.

by Markus Busch, Editor/Publisher Hospitality.today

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