Duff on Hospitality Law

Good Saturday afternoon from Seattle . . .  Our Online Travel Update for the week ending February 21, 2025, is below. If any of our readers still question the profound (dare I say, disruptive) effect that AI will have on online travel (and in particular, distribution), I encourage you to take the time to listen to (or read) the many comments Booking Holdings CEO, Glenn Fogel, in the latest Booking Holdings’ earnings call. A transcript of the call is attached. What should we make of Glenn’s comments? Do they reflect the unbridled optimism of a CEO who is confident in his company’s position to once again leverage the latest and greatest technology (like the many technological developments that preceded AI) to maintain his company’s position in online travel? Or, perhaps the comments were offered in anticipation and defense of the participants’ inevitable questions (and maybe doubts) about the role of online intermediaries in a post AI world? The stories below in this week’s Update seem divided on the issue.    

A few key takeaways from Glenn’s comments . . .

“Adapting to and leveraging new technologies has been in our DNA from the start, and Generative AI is pushing the pace of technology innovation faster than ever.”

“We see the development and use of AI agents [e.g., Operator] and those agents working with other AI agents as a potential way, to more quickly bring together the different elements of travel into a truly connected offering on our platform.”

“We are also excited to be working with leading Generative AI organizations on their Agentic developments. These collaborations reflect our commitment to staying at the forefront of this rapidly developing field and are consistent with our long-standing approach to work with different sources of new customer traffic.”

“ . . . as I mentioned, and we've talked about this in the past, that we're working with all of the major players in the Valley and elsewhere, that we are working together to do things that would be better as togetherness instead of trying to do separately.”

“And I'm just pleased to be in the position we are with all the data we have, with the resource we have, with the people we have, the worldwide network of consumers who trust us, which is also a very big deal.”

I hope you enjoy this week’s Update. 

• • Booking Holdings Reports Strong Fourth Quarter Results.  Glenn and his team had a lot to be positive about beyond Booking Holdings’ AI efforts this past quarter and year.  Some highlights for me were . . .
    • Many key financial metrics were at or above the high-end of previous fourth quarter expectations – room nights, gross bookings growth, revenue growth and adjusted EBITDA.
    • Full year financials reflected similar strong growth – gross bookings (10% YOY growth), revenue (11% YOY growth), adjusted EBITDA (17% YOY growth) and adjusted earnings per share (23% YOY growth).
    • Fifty nine percent (59%) of gross bookings at Booking.com are now “merchant bookings” processed through Booking.com’s payment platform.
    • Additional future layoffs are possible as Booking Holdings continues its previously announced Transformation Program. 
    • Looking forward, Booking Holdings expects a year of “normalized growth” for the travel industry allowing Booking to deliver constant currency gross bookings, revenue and earnings per share growth at targeted (though lower than 2024) levels.
  • Details on TripAdvisor’s Partnership with Perplexity and OpenAI Revealed.  Will AI become intermediaries’ next customer acquisition channel (like Google, metasearch sites and social media are today)?  You bet, at least according to TripAdvisor’s CEO and CFO.  In last week’s TripAdvisor four quarter earnings call, both expressed optimism over the recently announced partnership between TripAdvisor and generative AI platform, Perplexity.  As part of the agreement, Perplexity licenses TripAdvisor data.  According to TripAdvisor CEO, Matt Goldberg, users who come to TripAdvisor via Perplexity are both “incremental” and “high intent.”  Also discussed during the earnings call was TripAdvisor’s recent partnership with OpenAI’s agentic product, Operator, which according to Goldberg allows TripAdvisor “to be best-positioned favorably as agentic AI emerges.”  According to Goldberg, TripAdvisor expects to make more AI announcements in the near future.

Have a great week everyone. 

Good (holiday) Monday morning to everyone . . .  It is President’s Day, which means those of us in the U.S. get to enjoy an additional day off (sort of, but not really) work.  Our Online Travel Update for the week ending Friday, February 14, 2025, is below.  As I promised in our last Update, this week’s Update contains a number of stories providing concrete examples of how AI is being used (and predicted to be used in the near future) in the travel industry.  I’ve also included a story updating the status of the UK’s Digital Markets, Competition and Consumers Act 2024, which the UK’s Competition and Markets Authority (CMA) has confirmed it will begin to enforce in April of this year.  For those of you who have asked recently what new regulations are on the horizon – after the FTC’s Junk Fees rule and most recently, the DSA’s KYP requirements – you might want to take a closer look at the new consumer-focused legislation.  I plan to have more information about the Act and its requirements in our next Update.  Enjoy.

• • Here Come the AI Agents.  For the past few weeks, we’ve been featuring stories about OpenAI’s new AI-powered agent, Operator.  Hospitality.net published an article last week that provides a helpful overview of these new tools, including a description as to how these tools could actually aid hoteliers and their direct booking efforts.  As the author notes, timing is everything with these newest technologies and hoteliers now need to move with a sense of urgency (particularly, with OTA’s current and growing head start).
    
    
  • Southeast Asia Leads the Charge in AI Transformation.  With its online travel penetration levels estimated to increase to 74% by 2027 (with the majority of that soon to be coming through mobile), Southeast Asia is expected by many to be at the forefront of AI disruption to the travel industry.  Young travelers in the region are already transitioning to AI-based itinerary planners and concierge apps. 

Have a great week everyone. 

Good Sunday afternoon from Seattle . . .   Our Online Travel Update for the week ending Friday, February 7, 2025, is below.  This week’s Update features a variety of stories, including details on Expedia’s recent quarterly earnings release, news of recent layoffs at TripAdvisor and a heavy does of AI related stories. 

Given recent conversations that I have had with many of you about AI and its likely effects on online travel, particularly around marketing, search, distribution and now, actual transacting or booking, I plan to use our Updates (at least for the foreseeable future) to provide our readers examples of how AI is actually being used in these areas.  For those of you who have read our Updates over the past month (or saw my or the many presentations at the recent annual HEDNA Conference), you now know that AI is no longer an ethereal concept that may one day find its way to the travel industry.  Recent advances in the technology have brought us real world applications that one day soon may be the primary method or platform through which travelers are inspired, travelers search and plan and ultimately, travelers book.  If nothing else, I don’t want to see a repeat of the early 2000’s when hoteliers were so poorly prepared to respond to the phenomenon of the internet, and specifically, the growing control and influence of online travel intermediaries.  Enjoy.

• Expedia Speaks to AI Efforts in Strong Fourth Quarter Earnings Release.    In today’s Update we feature two reports on Expedia’s recent fourth quarter and full year earnings’ release.  We’ve also included a copy of the transcript from the recent earnings call.  Key takeaways for me from the recent release include the following:
  • Expedia posted strong YOY growth, including notably 21% growth in its B2B business (EPS) and 25% growth in its ad revenue.  It would be interesting to know how much of the ad revenue increase is attributable to corresponding reductions in supplier compensation levels. 
  • Expedia is making conscious efforts to introduce AI into each of its key strategic goals for 2025, including by (1) working to ensure that Expedia’s brands appear in travelers’ generative AI searches, (2) exploring opportunities to partner with native AI travel startups to become their supply partner and (3) developing AI partnerships to better power Expedia’s B2B business.
  • Expedia (particularly, its new CFO) is again open to looking at M&A opportunities. 
    
    
• Is OpenAI’s Operator a Game Changer?  One of the most read stories on PhocusWire this past week was its piece on the newly introduced OpenAI agent, Operator.  Website optimization may never be the same again.  I’d encourage all of our readers to read the article.  Demos of the new Operator agent booking travel (and other services) are also widely available on YouTube. 
  
  
• A National Junk Fee Standard Takes a Step Forward.  This past week, the Senate Committee on Commerce, Science and Transportation approved the Hotel Fees Transparency Act, legislation that is favored by both the online intermediaries (Travel Technology Association) and hoteliers (American Hotel & Lodging Association).  Many of you may be asking why we still need federal legislation when we now have the national FTC rule.  As I’ve discussed with many of you (and as noted in my recent HEDNA presentation), the FTC rule does not preempt other state and local laws that are more protective.  This lack of preemption opens the door to states like California and Minnesota (both of which have enacted junk fee rules) and countless others (20 at last count) to adopt potentially contradictory (and confusing) requirements (e.g., what is more protective – California’s requirement to display only total price or the FTC’s requirement that total price be displayed most prominently).

Have a great week everyone.