AI transforms travel distribution and reduces the relevance of OTAs

A new study led by Propellic, an AI-focused digital marketing agency specializing in travel and tourism, in collaboration with Eric Van Buskirk, founder of Clickstream Solutions, and Kevin Indig, editor of Growth Memo, reveals that less than 10% of bookings observed in Google’s AI Mode were made through OTAs, compared to 56% completed directly with hotels or activity providers.

This is one of the key findings of the study, which analyzed more than 300 bookings, 71,000 words of transcripts, and thousands of clicks and actions in real-life travel planning scenarios using Google's AI Mode, showing that OTAs' future competitiveness depends on investing in a strong GEO strategy with AI-ready content and booking incentives.

“Generative AI is now the new OTA competitor,” says Paul Teddy, Senior Director of Operations at Propellic. “While direct booking sites have an inherent advantage, it can easily be lost without GEO best practices. This represents an opportunity to achieve a disproportionate ROI with a relatively small budget,” adds Teddy.

The study also found that optimizing Google Business Profiles to appear at the top and provide essential information to travelers is becoming key as search shifts to AI mode. When users click on a local pack or an embedded link that opens the Google Business Profile card in the right panel, they interact with websites, reviews, prices, and photos.

Google is inserting these mini-local packs directly into AI-generated answers, and users are interacting with them even before reaching traditional search results. This means that a Google Business Profile now functions as the main showcase for a hotel or business, surpassing the traditional role of a website.

AI Mode is the future, not just a feature.
As Google CEO Sundar Pichai said, AI Mode is the future of Google search. In fact, AI Mode has already displaced the 10 blue links down the page and taken over the trip planning process. Information is gathered and decisions are made in AI Mode. The only task that still requires the user to leave the AI ​​environment is booking (for now).

“For decades, travel marketing has designed its campaigns around the concepts of 'dream, plan, book,'” says Brennen Bliss, CEO and Founder of Propellic. He adds: “LLMs blur the traditional funnel stages into a single environment. The new competition is to control the collapsed funnel within the AI ​​ecosystem. Whoever masters that interaction wins the traveler.”

The study also revealed several key trends in traveler behavior within AI Mode, including:

AI recommendations are solidifying their place as a trusted source for travelers: destinations, hotels, and activities suggested in AI Mode earned a consumer trust score of over 4.3 out of 5, giving brands a significant conversion advantage.

Be in line to be clicked: Users in Google's AI mode tend to click directly on embedded text links without exploring other features. The goal of AI inclusion should be to appear in those links. These attract the most attention, more so than the list of citations on the right side. How you appear in those passages with your embedded citation is increasingly important as travel planning shifts to an AI environment.

Conversations replace keyword searches: The average length of queries has more than doubled, demonstrating a shift from simple keyword searches to longer, conversational prompts that guide planning and decision-making within AI Mode.

Yesterday's best practices no longer align with today's journeys and complex user behaviors. As the Propellic study highlights, strategies must evolve to connect with travelers who expect to find all the information they need in AI Mode, enabling them to make decisions with clarity and confidence.

“Content on your own pages, Google Business Profiles, earned media, and paid media should be structured, designed, and written to address user questions, behaviors, and preferences. The right data and metrics should be tracked, and the most relevant insights applied to drive more bookings,” Bliss concludes.

Travel brands and marketers that evolve with user behavior and continuously analyze and optimize their strategies will be best positioned to win with AI.

Source: Propellic.