The Hotel Industry’s iPhone Moment: Why AI in Distribution Demands Urgent Action

By HSMAI Europe journalist, Gemma Greenwood

When OpenAI announced the launch of apps within ChatGPT in late October, the hotel industry panicked. Within hours, Booking.com and Expedia had unveiled integrations inside the platform, and the inbox of Dr Peter O’Connor – a tech and distribution expert and Professor of Strategic Management at the University of South Australia – was quickly filling up with alarmed messages from hotel professionals: “What does this mean? How do we compete?”

Speaking at HSMAI Europe’s ‘AI in Distribution’ Curate, staged at Sofitel St James, London, on Wednesday November 6, O’Connor ‘reassured’ hotel leaders: “Don’t panic… well, maybe panic.”

This wasn’t just another tech update, he warned. It was the hotel industry’s own iPhone moment – a once-in-a-generation shift that will redefine how guests search, choose, and book hotels.

From search bars to conversations

Tech has become so embedded in everyday life that few remember a world without Google. But, O’Connor reminded the audience, disruption happens fast: “On 9 January 2007, when Steve Jobs introduced the iPhone, everything changed. Apple’s motto was ‘It just works.’ We’re at that same moment again.”

The next shift, he said, is driven by AI-powered search and autonomous agents. Traditional search results are disappearing, replaced by zero-click, AI-generated answers.

“In markets where Google is using AI, organic traffic has plummeted 30–50%,” he cautioned. “Half of search traffic is disappearing, and most of it is being captured by the OTAs that have already struck deals with these platforms.”

Hotels, meanwhile, are watching from the sidelines.

Visibility + data = power

O’Connor dismantled the myth that OTAs win only because of convenience. Their power, he said, lies in visibility and data.

“Expedia spends 58% of its revenue on customer acquisition,” he noted. “Google’s biggest customer in the world is Booking.com.” The result is a self-perpetuating ecosystem in which the most visible players gather the most data, which in turn fuels their dominance.

AI amplifies that imbalance. Booking.com and Expedia’s new ChatGPT integrations mean they are already embedded inside the world’s most influential conversational interface, while most hotels aren’t even in the room.

“How do you get mentioned by an AI?” O’Connor asked. “You move from SEO to AEO (Answer Engine Optimisation). It’s not that different, but brand mentions are the new currency. You need people talking about your hotel online – on social media, review sites, even Reddit. It’s not about you talking about you. It’s about others talking about you.”

Introducing the autonomous agent

The future, O’Connor said, lies with agentic AI – autonomous digital assistants that can act independently to complete complex tasks such as booking travel.

“Imagine Fred, your autonomous agent,” he explained. “Fred knows your diary, your preferences, your favourite hotel brand. He books your flight, your transfer, your room, and checks back for approval 20 minutes later. That’s what the consumer wants, and that’s what Booking.com and Expedia are building right now.”

Hotels, however, face a barrier: fragmented systems and underused data. “We collect incredible amounts of information about our guests but don’t use it,” O’Connor said. “Look at Amazon Prime [in comparison]. It gives you free video and music just to collect data. We have the data, but we don’t leverage it.”

1. Solve your data integration problem – retire legacy systems and create a unified customer view.
2. Train and empower staff – equip teams to use AI daily.
3. Change the mindset – “If it isn’t broken, break it before someone else does.”

“Unless we want to be even more OTA-dependent,” he concluded, “we need to stop just talking about change and start doing it.”

Picking up where O’Connor left off, Juanjo Rodríguez, founder of The Hotels Network, offered the solutions.

“Peter has set out the problem,” he said. “I’ll explain the opportunity.”

Rodríguez described how AI assistants are fast becoming the first touchpoint in travel discovery: “Between 25% and 50% of travellers are already using AI chat tools for research. Booking.com and Expedia are already live inside ChatGPT. This isn’t a test phase; it’s mainstream.”

Also eluding to the “hotel industry’s iPhone moment”, he drew a direct parallel to 2008: “When the App Store launched, there were six million users. The ChatGPT app ecosystem already has 800 million. Connection to AI will define hotel visibility just as apps once defined mobile engagement.”

Rodríguez urged hotels to think beyond rates and focus on content, connection, and control. “ChatGPT is a content game, not a rates game. Travellers care about your story, not just your price.” He outlined three imperatives:

• Be discovered – ensure your property appears in AI hotel searches.
• Be understood – tell your brand story clearly and consistently.
• Be bookable – integrate live rates and direct links so guests can complete the transaction within the AI chat.

At the heart of this is data: “To power AI agents, you need comprehensive, accurate, well-structured data; a single source of truth your systems can share with AI platforms.” He predicted a future of hyper-personalised booking experiences, where AI proactively  recommends upgrades, packages, and add-ons: “Upselling won’t be reactive; it will be anticipatory. You can train AI to nudge guests with real-time offers.”

During the audience discussion, hotel leaders voiced concerns about investment costs and yet another distribution channel to manage.
O’Connor reassured them: “Costs are coming down exponentially. But yes, it’s another thing to worry about: another channel to master.”

When asked whether AI could help hotels regain control from OTAs, Rodríguez was optimistic: “This is an opportunity to fight for customers in a new environment. The OTAs can’t do anything you can’t, except pay more. They’re not equipped for a world where content matters more than rates.”

O’Connor agreed that brand and loyalty, which he once thought obsolete, would become vital again: “To use these apps, guests have to name the brand. Without recognition, independent hotels may only be bookable via OTAs. That will drive consolidation unless smaller players strengthen their branding.”

Asked about B2B and MICE, O’Connor didn’t mince words: “The only sector with worse tech than hotels is the tour operator industry.”

He predicted major disruption in corporate travel management as AI automates booking and RFP processes, while warning that many hotels still under-invest in this area. “Heads of events will soon be going to GMs asking for AI systems, and they’ll need to be ready.”

Both speakers agreed that AI marks a fundamental re-wiring of hotel distribution. Search is no longer about lists but about answers; discovery is moving from browsers to conversations; and visibility will depend on data connectivity and brand storytelling.

Despite all the AI hype, O’Connor reminded hoteliers of the enduring power of good old email marketing.

“You should be leveraging the contact bases that you already have to deliver hyper-personalised campaigns,” he said. “The best thing to make you win is actually email marketing.”

His point underscored that while AI is transforming discovery and engagement, hotels already possess a powerful direct channel capable of immediate, measurable impact if used strategically.

O’Connor left delegates with a challenge: “We are at the cusp of a fundamental shift. It’s uncomfortable but change always is. Those who adapt fastest will lead.”

For Rodríguez, the opportunity is clear: “We’re not just talking about a new tool; we’re talking about a new interface for travel. It’s already happening. The question is whether hotels will be part of it.”

Dr Peter O’Connor

Professor of Strategic Management at the University of South Australia

Juanjo Rodriguez

Founder of The Hotels Network