Hotels Shift Focus to Loyalty Programmes to Challenge AI Agents, Booking Platforms: Report

Major hotel groups have always been competing with online travel agencies (OTAs) for customer bookings, but a new competitor has now entered the arena. With more and more companies offering agentic artificial intelligence (AI) tools that can book a hotel online, hoteliers are reportedly intensifying efforts to win over customers — and their modus operandi is loyalty programmes. As per the report, multiple hotel groups are offering more incentives and easier loyalty status bumps to increase their share of direct bookings.

Hotels Reportedly Do Not Want Customers to Use AI Agents for Bookings

Hotels and OTAs are ecosystem players with both serving the same goal of helping individuals make bookings, which means they are not traditional rivals. However, the two compete for the same pie, which is customer bookings, and there are two main reasons for it. According to a Financial Times report, booking platforms such as Expedia and Booking.com charge fees of between 15 and 25 percent, which is a big margin for hotels to lose out on.

But the fees are only one part of the problem. The second, and more important aspect, is customer data. Both parties need direct access to customer data to provide personalised experiences, which ensures that they get repeat business. So, to compete with OTAs' discounts and incentives, hotels have always relied on their loyalty programmes.

However, with Google, OpenAI, and other AI platforms offering agentic tools that can book hotel rooms online, the competition has grown fierce. AI platforms offer ease of access with text or voice as the primary interface and a helpful agent that takes care of the manual labour. But hotels are reportedly intensifying their efforts to ensure that customers make their bookings directly with them.

As per the report, Marriott has revealed that its Bonvoy loyalty programme has gained nearly 260 million members by the end of September, witnessing a YoY growth of 18 percent. Hilton has reportedly made it easier for customers to reach the elite loyalty status. The hotel group has also focused on expanding partnerships to open more avenues for members to spend their points. Similar strategies have reportedly been implemented by Hyatt and Wyndham Hotels & Resorts.

“Generative AI is shifting travel planning from traditional search into more conversational and agent-led environments. So that makes building relationships [with customers] a bit more strategic and important,” Chema Basterrechea, Chief Operations Officer at Radisson Hotel Group, told FT.

However, not all hotel groups look at AI agents as a threat. Wyndham's CEO, Geoff Ballotti, told the publication that tools offered by platforms such as ChatGPT and Gemini offered hotels an opportunity to reduce dependency on travel agencies. Interestingly, the report highlighted that the company is leveraging in-house AI tools to drive more direct bookings.