Wall Street asked what the OTAs own. Morgan Stanley's answer was your hotel.
Independent hotels, small chains and rentals bring in about 90% of Booking.com's revenue. Its annual report names the risk: you, selling cheaper where an AI agent can book.
by Markus Busch
A bad week for Booking.com's owner. Shares of Booking Holdings fell 3.9% on Tuesday, September 22, after a Goldman Sachs trading desk put Booking Holdings and Expedia on a list of companies that make money because customers don't bother to shop around, and warned that AI agents are getting better at comparing prices and booking trips, Investing.com reported. The agent on everyone's mind was Muse, which Meta launched on September 8 to shop travel sites for the guest and book for her, and which had climbed to the top of Apple's App Store. On Wednesday, the day after Expedia said it's joining Muse, the shares fell about 5% more, to around $156. The Motley Fool's explanation of that drop is the thread this piece follows: the OTAs are middlemen that don't own the rooms they sell, and unlike Airbnb they have little that can only be found on their sites. By Thursday, Booking Holdings was trading about 29% below its August high.
Booking.com wrote the worry down itself. None of this is news to the company. Booking.com doesn't own a hotel room, and every room it sells, the hotel sells too, usually alongside Expedia. The annual report of Booking Holdings, the company that owns Booking.com, filed in February, months before Muse arrived, had already named the risk. It warns that AI agents could grow into booking sites of their own and cut the OTAs out, that hotels may offer lower prices through their own or AI-driven channels, and that holding on could mean more discounting and more prices only members can see.
Wall Street answered with you. Morgan Stanley took the other side in February, telling investors that the agents will need Booking.com's hotels and that this gives Booking.com the upper hand, CNBC reported. The reasoning, as reported at the time, came down to who Booking.com sells: around 90% of its revenue comes from independent hotels, small chains and vacation rentals, millions of small properties the bank judged hard for any AI company to sign up one at a time. On September 16, a second Morgan Stanley analyst made the case again, counting 4.7 million properties. The supply Wall Street is counting on is the independent hotel.
Same room, two copies. Inside an agent, your room shows up twice. Expedia's hotels will be booked right inside Muse's chat while your own website stays something the agent has to click through, stopping whenever the guest needs to log in or approve a step. Both copies are the same room on the same night, and the agent chooses between them on price, terms and how easily it can finish the booking.
The lower price is the one you fund. On price, the OTA's copy often wins with money that comes out of your rate. When you joined Genius, you agreed to give Genius travelers 10% off your least expensive and most popular room types. Expedia's member prices take 10% or more off, and they show only to members who are logged in. Its VIP Access terms ask the hotel for members-only deals as well. What sets the OTA's copy of your room apart from yours is a discount you gave it.
The catch. Morgan Stanley's notes are private, so what they say here comes from press reports. Nobody has tested in public whether an agent booking with a guest's own login sees the member price. And Expedia's hotels aren't bookable in Muse yet.
What it means for your hotel. Booking.com's filing is specific about what it fears from a hotel: a lower price, offered through a channel an AI agent can book. Pull up tonight's rate for your best-selling room on your own website, then the Genius price for the same room on Booking.com. The Genius price will be lower, because you agreed to make it lower, and an agent hunting for the cheapest night, logged in as a Genius member, will book that copy. Then ask whoever runs your booking engine whether an agent can book the room on your site at all.
The cheaper copy of your room is the Genius price, and you set it.
Read also: Expedia is getting a direct line into Meta's agent. Your hotel can't apply for one.
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