Booking Holdings: OTA Model & Agentic AI

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Yes, there are multiple ways to approach this, but the main concern is how it changes the overall consumer experience and journey. If consumers are no longer using the app or are going through Google or directly, how does that change affect Booking? The key idea is to understand what the world will look like five years from now and what role Booking.com will have in this new world. This involves understanding what the customer journey will look like, what role Booking will play, and the economics of that role. These are the three main blocks, I would say.

In the future, the lead generation technology or interface might diversify. Some leads will still come from Google, but others might originate from social media platforms like TikTok, Instagram, or Facebook. Additionally, platforms like ChatGPT, Perplexity, and Claude could become significant sources. For customers who go directly to Booking, Priceline, Agoda, or Expedia, I believe this behavior will either remain constant or fluctuate slightly. These customers have high trust in the brand and bypass Google searches. Once they open a trusted app, there's no competition. For instance, when someone opens Amazon, competition ceases. Competition only exists when searching for a product on Google and choosing between Amazon, Walmart, or another site.

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Let me offer some thoughts and alternative scenarios to see how you perceive them. Let's discuss direct customers. I understand that people go directly due to high trust. What scenario do you envision where these customers might use an agent like ChatGPT instead? Imagine it's 2029, and GPT is integrated with everything. Instead of visiting Booking.com for a hotel, you could open ChatGPT and request a hotel in Italy for two weeks in the summer, specifying your dates. If you're accustomed to using this interface as your primary web interface, perhaps everything could be accessed through a ChatGPT-based interface instead of traditional websites. What are your thoughts on that?

Let me trace this back a bit and provide an example. A similar feature, though not exactly the same, was offered by Alexa, Siri, or Google Assistant. For instance, someone could ask Alexa, "Hey Alexa, find me a hotel in New York in this specific district." What we observed in customer behavior was that they were comfortable asking that question and receiving responses from Alexa. However, when it came time to actually pay for it, they didn't trust it as much. Why? Because booking a hotel is not a simple commodity transaction. You want to see pictures of the hotel, learn about the managers, ask questions, and compare prices with other hotels. Unless you're someone who doesn't care about money, which is not the market we're dealing with.

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I had the perception that Booking had its own platform and that most small hotels would upload to them. Is that not the case?

No, that's not the case. For small hotels, we don't usually go directly to them. In rare cases, like a small town boutique hotel, it's different. In most cases, the inventory comes to us from the GDS.

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