How AI Search is Forcing Hotels to Shift Commercial Budgets Upstream

Hotel commercial teams must shift budgets upstream into upper-funnel storytelling and third-party editorial content to capture traveler attention before booking decisions are finalized. They need to unify revenue, marketing, and analytics functions to manage AI visibility as a single objective, while preparing for new technology fees imposed by emerging AI gatekeepers.

Who owns visibility when AI dictates hotel discovery?

Responsibility for digital discovery is currently fragmented across departments, forcing lodging companies to rethink their organizational structures. At Outrigger Hospitality Group, search engine optimization and large language model visibility belong to product and analytics teams, while revenue teams handle online travel agency relationships, according to Skift. [3] Jenna Villalobos, senior vice president and chief revenue officer at Outrigger, noted that visibility is not yet owned as a single commercial objective. [3] The company plans to formalize this responsibility under its analytics team, as they pull data and identify opportunities. [3] For Remington Hotels, managing visibility across multiple brands requires cross-functional work involving website setup, content, and reviews. [3] Lance Burton, vice president of marketing at Remington, explained that marketing often acts as the quarterback for these efforts because online channels traditionally fall under digital marketing. [3]

How is AI altering the traditional search and booking funnel?

Artificial intelligence is intercepting travelers earlier in their planning process and drastically reducing the traffic that reaches direct booking channels. Research from Curacity and Cornell University indicates that 94% of hotels are invisible in AI search results, Skift reported. [3] The impact on traditional search behavior is already measurable. A SparkToro analysis of clickstream data revealed that 68% of United States Google searches now end without a click to any website, an increase from 60% two years prior. [3] AI Overviews are driving this shift, reducing click-through rates by approximately 60%. [3] Boutique Hotel News highlighted a Barcelona study involving 659 hotels and 27,000 AI questions that examined what actually drives AI visibility and where friction breaks the booking journey. [2] Instead of presenting a long list of options for comparison, an AI travel agent might narrow the entire market to just three recommendations, or even one. [1]

What hidden costs will AI distribution models introduce?

Hotels will face new technology fees for preferred algorithm placement alongside increased operational expenses for data management. Writing for HospitalityNet, Anthony Paul Ruffino of Hospitality Management Services, Inc warned that AI platforms will become new gatekeepers that decide which choices travelers see first. [1] Properties might be forced to pay for real-time inventory connections, verified content, or priority placement in AI marketplaces. [1] These costs might be labeled as connectivity charges, subscription fees, or data expenses rather than traditional commissions. [1] Furthermore, intelligent systems require clean, accurate data to personalize experiences. [1] Hotels will need to spend more on cybersecurity, privacy controls, and constant integration among property-management systems, central reservations, and external AI tools. [1]

Where should commercial leaders allocate their budgets now?

Brands are moving investments into upper-funnel storytelling and third-party editorial environments to build demand before travelers use traditional booking channels. While Outrigger still directs most of its budget toward the middle and lower funnel, the company is testing new methods to amplify its message earlier in the traveler journey. [3] For its 2027 commercial budget, Outrigger is exploring generative engine optimization through Curacity VI. [3] Villalobos stated that Outrigger values third-party storytelling that inspires people to select a destination. [3] By placing the brand in trusted third-party editorial environments, Outrigger reaches travelers who have not yet decided where to go, resulting in direct business growth. [3]

How can independent properties compete against global brands in AI search?

Independent hotels must rely on distinctive storytelling, earned media, and authentic content to appear in the open-ended queries travelers ask AI assistants. Large global hotel companies benefit from accumulated recognition and direct demand, leaving independent brands with less room for error. [3] Burton pointed out that hotels in highly competitive markets require stronger website content and a better presence across social media, travel publications, and blogs. [3] Independent hotels often have to work harder to achieve visibility, but they possess more room to highlight experiences that people naturally want to share. [3] As AI-generated content becomes easier to produce, authenticity becomes increasingly valuable for properties trying to stand out. [3]

What happens to traditional online travel agencies?

Online travel agencies will likely evolve their platforms into complete travel-management environments to defend their market position. Ruffino noted that OTAs possess enormous inventories, years of consumer behavior data, and established payment systems. [1] They will use artificial intelligence to make their platforms more persuasive and difficult to leave. [1] However, an independent digital assistant might search multiple sources, including hotel-direct rates and alternative accommodations, bypassing the need for a traveler to scroll through an OTA. [1] This shift could weaken the traditional OTA model, or conversely, make the largest OTAs more powerful if they become the transaction infrastructure behind the AI assistants. [1] Stiplo founder Carlo Del Mistro and Boutique Hotel News editor Eloise Hanson plan to address these digital journey leaks that send ready-to-book guests back to OTAs during an upcoming webinar. [2]