Online travel aggregators (OTAs) are pinned down Tuesday as sluggish travel trends and the adoption of AI to formulate travel plans continue to weigh on the sector, leading UBS to issue a cautious commentary on the outlook for Q4 results.
The proliferation of AI-driven search engines and their ability to mimic services provided by OTAs threatens traffic to OTAs, increases customer acquisition costs, and disrupts OTAs dominance in the travel segment.
“Online travel is a vivid test of how AI could disrupt the aggregator model,” a study from Harvard Business Review says, adding that “Google is keeping travelers inside its AI-enhanced search environment longer and helping them curate trips before they leave the results page.”
This leaves OTAs with few opportunities to cross-sell products, “weakening the network effects that supports their scale.”
Reflecting investors’ concern surrounding this disintermediation risk from AI capabilities into Q4 results next week, UBS analyst Stephen Ju doesn’t see a “material shift” in this debate. Besides Expedia (EXPE), which saw a rerating in 2025, the others have ceded ~10% off the multiples they enjoyed from 2025 to the first half of 2025.
“Although we find it difficult to believe that management teams will elect to transfer top-of-marketing-funnel travel research even further to both Google and [large-language models], we do not expect any resolution on the AI risk this year,” Ju says, adding that positive rerating to multiples seems unlikely.
For this reason, Ju favors Booking Holdings (BKNG) shares over peers like Expedia (EXPE), Tripadvisor (TRIP), and Trivago (TRVG), as Booking (BKNG) has seen the greatest amount of risk already priced in.
Of the group, Expedia (EXPE) is taking on the heaviest loss, down 8%, followed by -6.4% for Booking (BKNG) and -5% for Airbnb (ABNB).