Bernstein sees AI disrupting travel booking, reshaping OTA landscape

Investing.com - Bernstein sees artificial intelligence as a "major disruptor" of the travel booking process that will reshape how travelers research, plan, and book trips, according to a new research note from the firm. For TripAdvisor (TRIP), currently trading at $15.65, this transformation comes at a time when InvestingPro data shows the company is undervalued, with strong liquidity metrics and a healthy 62.3% gross profit margin.

The firm outlines three potential scenarios for how AI might transform the online travel agency (OTA) landscape: AI-enhanced vertical-specific OTAs, AI platforms as dominant traffic gatekeepers, or AI platforms functioning as aggregators that query multiple sources directly. With a current market cap of $1.82 billion and a promising revenue growth forecast of 5% for FY2025, TripAdvisor appears well-positioned to adapt to these changes. InvestingPro analysis reveals 8 additional key insights about the company’s strategic positioning.

In the first scenario, existing OTAs would embed advanced AI capabilities like natural language filters and personalized recommendations to improve conversion rates and customer experience, potentially increasing online hotel booking penetration while possibly reducing opportunities for paid placement.

The second scenario envisions AI platforms like ChatGPT and Google Gemini becoming primary booking interfaces but routing users exclusively to partner OTAs under traffic deals, which could increase OTA market share while potentially pressuring take rates as AI handles more decision-making.

In the third scenario, which Bernstein suggests could be most disruptive to incumbents, AI would query multiple sources directly, providing consumers with transparent pricing and availability across OTAs, brands, and other platforms, potentially eroding both market share and commission rates for established online travel agencies.

In other recent news, TripAdvisor’s financial performance has been a focal point for analysts. UBS raised its price target for TripAdvisor to $19, maintaining a Neutral rating, after the company’s earnings report revealed a $2 million revenue shortfall but a significant margin beat from its Viator business. Bernstein SocGen Group reiterated an Outperform rating with a $20 price target, highlighting the company’s 7% revenue growth, 10% EBITDA growth, and 17% EPS growth in the second quarter. Meanwhile, CFRA increased its price target to $13 from $12, despite maintaining a Strong Sell rating, adjusting its earnings outlook to $1.22 per share for 2025 and $1.31 for 2026. Mizuho initiated coverage with an Underperform rating and a $14 price target, citing long-term challenges in organic search traffic. These developments indicate varied analyst perspectives on TripAdvisor’s financial trajectory and market position.

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