Morgan Stanley: Online travel platforms may become winners in AI

Investing.com – Morgan Stanley, in a research report, suggests that online travel platforms (OTAs) may benefit from artificial intelligence more than the market generally fears. This view challenges the consensus that AI agents will replace traditional booking platforms.

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The bank states that early “agent AI” travel tools did not bypass online travel platforms but instead directed users to their apps and websites to complete transactions. Major platforms seem unwilling to assume payment risk, customer service, refunds, and regulatory obligations, so they do not act as traders themselves. This keeps online travel platforms at the core of the transaction process.

Morgan Stanley believes this dynamic preserves a key advantage: online travel platforms can continue to act as traders while still collecting valuable consumer browsing and purchasing data. This data, along with their ability to access large inventories of accommodations, could make online travel platforms indispensable partners rather than victims of AI disruption.

The report highlights that the accelerated growth of direct traffic to Booking.com’s app demonstrates ongoing consumer engagement. The app’s monthly active users have been increasing at an accelerating rate over recent quarters, with year-over-year growth rates of 8%, 9%, 11%, and 12% over the past four quarters. Morgan Stanley considers this especially attractive given that direct channels tend to have higher profit margins.

Scale advantages remain a structural benefit. Booking Holdings Inc (NASDAQ: BKNG) has over 4 million listings worldwide, about 40 times the inventory of major hotel groups, with approximately 90% of revenue coming from independent hotels, small chains, and alternative accommodations. The firm believes AI platforms will find it difficult to replicate or ignore this long-tail supply.

Although some investors speculate that AI might benefit hotel brands by weakening online travel platforms, Morgan Stanley considers this view potentially mistaken. Instead, the firm sees the current industry structure as similar to paid search, more resilient than expected, with key data flows and purchase pathways largely intact.

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