Marriott Plans To Reward AI Travel Agents As It Fights To Control Your Hotel Bookings

Marriott CEO Anthony Capuano was the company will have a rewards program for AI agents: “Stay tuned.”

That came in a Wall Street Journal interview, and he didn’t say who exactly would be rewarded. But it’s clear that the next big hotel distribution fight is over how AIs decides which hotels to show you and to book for you.

For years, hotel brands fought Expedia and Booking.com for control of the customer. They used loyalty programs as the tool to get customers to ‘book direct’. Roughly 70% of Marriott bookings are currently through their own channels. Capuano says while that’s “disproportionate” it is “not enough.”

Marriott’s own channels are a less expensive way for them to acquire customers, and online travel agencies are among the most expensive, which is why they restrict loyalty program benefits when you book at places like Expedia. They don’t want you indifferent to where you book the room, because they aren’t. And Capuano says he wants to “capture 100 cents on the dollar” of each customer’s travel wallet.

AI Will Bypass Both Expedia And Marriott.com

Capuano thinks AI agents may be a bigger threat to online travel agencies than to Marriott. An agent that knows your preferences, status and budget can check Marriott’s own rates. It doesn’t need Expedia to do the comparison. But it also doesn’t need Marriott’s layer, either.

The hotel brand has launched a limited U.S. beta of Ask Bonvoy, a natural language search tool that looks only at Marriott hotels. It is not impressive, but it’s meant to be more of an early experiment. The company has also said it’s working with Google’s AI travel products and OpenAI’s advertising pilot.

• The AI company wants to own the trusted recommendation.
• Marriott wants to own the booking, loyalty relationship and guest data.
• Expedia and Booking want to supply broad inventory, comparison, checkout and service.

But it’s ultimate AI that’s going to recommend hotels to guests. That’s also a threat to TripAdvisor, even as LLMs draw on guest reviews in building their recommendations.

OpenAI’s Economic Model

Tyler Cowen interviewed OpenAI CEO Sam Altman. Altman said accepting money to rank a worse hotel would be “catastrophic” for trust. (Expedia recommends higher margin hotels, and features them more prominently.)

ChatGPT, maybe it gives you the best answer, maybe it doesn’t, but you’re paying it, or hopefully, all are paying it, and it’s at least trying to give you the best answer. That has led to people having a deep and pretty trusting relationship with ChatGPT. You ask ChatGPT for the best hotel, not Google or something else. If ChatGPT were accepting payment to put a worse hotel above a better hotel, that’s probably catastrophic for your relationship with ChatGPT.

On the other hand, if ChatGPT shows you it’s guessed the best hotel, whatever that is, and then if you book it with one click, takes the same cut that it would take from any other hotel, and there’s nothing that influenced it, but there’s some sort of transaction fee, I think that’s probably okay. With our recent commerce thing, that’s the spirit of what we’re trying to do. We’ll do that for travel at some point.

For all the capital investment, and building either the singularity or a doomsday machine, and we’re actually talking about the potential of AI to earn affiliate commissions booking hotel stays.

Marriott Wants To Reward The AI

One study found that eighteen of 23 AI models picked a more expensive option more than half the time when told it was sponsored, suggesting that financial incentives matter even to machines. So what would “rewards for agents” mean?

• Best case scenario, it’s just where a Bonvoy member connects their account with the AI, and the AI books direct, the member gets loyalty points, elite status, and benefits for the stay as though they’d booked through a Marriott channel. The member gets their usual reward, and Marriott pays out a commission. The AI knows the guest’s status and factors benefits, and how much they value those, when comparing hotel choices.

• Marriott pays the AI as ‘reward’ for sterring business, basically a new online travel agency that puts Expedia out of business because it’s so much better. That creates an incentive problem, and – as Altman observed – a trust problem when trust is going to matter a lot more than hotel commissions. (They want you entrusting your health and financial life, not just stay decisions.)

It’s unclear in this model who services the booking. Expedia had to build its own (excruciatingly awful) customer service to handle bookings they’ve made. Will LLMs service their own bookings? While we don’t know how this will develop, Marriott is planning to put money on the table to influence how it does.