Overview
Analysts at Bernstein argue that the online travel agency (OTA) sector is entering a fundamental shift driven by generative AI that could reshape how consumers find and book travel. While Booking Holdings Inc (NASDAQ:BKNG) and Expedia Inc (NASDAQ:EXPE) have adapted to past disruptions - including Google’s entry into travel search - Bernstein warns that AI agents could impose more severe pressure on margins and reduce longstanding competitive advantages.
From metasearch evolution to agent-driven results
Bernstein’s report contrasts Google’s 2010 move into travel with the emerging class of AI platforms. The firm describes Google’s approach as an evolution of metasearch - a top-of-funnel auction model that tended to reward the largest, broad-based platforms able to sustain high marketing budgets. By contrast, AI platforms rely on high-context natural language search that surfaces a narrower set of highly relevant outcomes rather than a long list of sponsored links.
According to Bernstein, this difference in search behavior could strip away some of the cost advantages of scale that have long benefited large OTAs and make direct bookings with hotels or specialist providers comparatively more competitive. "The entry of AI platforms into travel is an entirely different prospect to Google," the analysts write. "Google adopted an existing model and refined it. AI platforms are likely to completely change the model."
Margin implications and strategic responses
The report highlights how past competitive pressure already altered OTA business models. Booking shifted toward a merchant model to compete on price, a move that had a material impact on profitability - Bernstein notes EBITDA margins remain more than 3% below their 2015 levels. Expedia reoriented much of its effort toward its business-to-business segment; that unit now comprises more than one-third of the company’s revenue after consumer-facing operations struggled to regain room-night volume.
Bernstein warns that as AI agents become better at interpreting qualitative information like reviews and room descriptions, the informational edge historically held by OTAs may continue to diminish. The analysts argue OTAs could face higher marketing and investment needs while contending with "meaningful disruption" to take rates and marketing efficiency. They also caution that continued increases in online penetration alone are unlikely to offset these emerging headwinds in the way growth did during the 2010s.
Analyst positioning and valuation risk
Bernstein maintains "Market-Perform" ratings on both Booking and Expedia, signaling neutral near-term expectations. However, the firm emphasizes that terminal value risk - the risk to long-term franchise value - remains the primary factor driving these shares.
Promotional note included in source material
Additional material in the original release describes a tool called ProPicks AI that evaluates EXPE alongside thousands of companies using many financial metrics and cites past winners including Super Micro Computer (+185%) and AppLovin (+157%). The source text asks whether EXPE appears in current strategies or whether there are better opportunities in the space.
Conclusion
Bernstein’s analysis frames AI agents as a potential structural disruptor for OTAs, with implications for take rates, marketing effectiveness, and the value of scale. The firm’s stance reflects caution that previously successful defensive moves may not be sufficient if AI fundamentally changes how travel inventory is discovered and transacted.