OpenAI Just Bought a Booking Agent. Airbnb Opened Its API.

0:00ZS is a global consulting and technology firm that partners with companies to improve life and how we live it. Working with the world's top hospitality brands, ZS brings together data, science, technology, and human ingenuity to transform ideas into customer loyalty. They're ready to help you elevate guest experiences, improve operations, and uncover preferences and motivations through their AI-powered solutions. With more than 1 ,700 clients in over 170 countries, ZS has built the expertise, fortitude, and vision to help you deliver impact right where it matters.

0:58Good morning. Happy Wednesday. Best day of the week. I'm Brandy Canale here with Jamie Lane and Michael Golden. And Jamie and I, if you are watching, are again in different locations. Jamie, where are you this morning or this afternoon? It is this afternoon, 4 p.m. here in Barcelona. Siesta. Yeah.

1:18Michael Goldin: You're the only one in the office. Hanging out at their DNA office. Today is a general strike in the city of Barcelona. I think the first time I read this morning in 14 years. So no one's getting in, no one's getting out of the city. And there are protesters walking down the street. So it's a great time to be in Barcelona. Fun. That's pretty sweet. You get to be right in the middle of it. Are restaurants and bars still open? Coffee shops? Is it open? Everything in our office is open. I haven't ventured down further in town to see if everything is open. And apparently we're in a non-impacted part of the city right now.

2:01Michael Goldin: Live breaking news from Barcelona. Brandy, you're in a dungeon somewhere? I'm sad that it looks dungeon-y because it's actually more like Tuscan villa vibe. But I am on the lower floor of this enormous, beautiful home in Deer Valley in Utah. uh so i had to find find a fun place i wanted to have my background be the view out my window but then you wouldn't be able to see me so um any any snow out there yet there's snow on like the top of the peaks and they said they're supposed to get like 40 inches next week i that sounds like an unreal i mean that was just what someone told me yesterday i haven't checked the weather so don't fact check me but i saw on the news this morning new hampshire's about to get like many inches of snow.

2:54I'm pumped. Ski season. Ski season. And it's November.

2:58Michael Goldin: Lay that base already. That's great. I know. I'm so excited. I'm about to order a whole new ski suit, so I'm pumped. Beautiful. Well, and Michael, no travel for you this week. You're at home. I'm home through Thanksgiving and got a couple trips in early December. Fun. Well, we have a bunch of stories today. Busy, busy news week. But before we jump into those, we want to give a shout out to our sponsors. This episode is brought to you by ZS. They're a global management consulting firm helping companies turn strategy into results. So if you'd like to find out more, you can find that link in the show notes.

3:37So AI, we're three minutes in. Our first story, OpenAI acquires Odessia, which is Francis Davidson's company, his AI travel startup. So I feel like we were just talking about him launching this and here he is getting acquired.

3:57Michael Goldin: Yeah, 12 months. I believe it was November last year when Sonder and Marriott literally closed the doors and blocked people from going back into their units. 12 months to the day. It might not have been that dramatic, but 12 months ago and then now startups spun up and enrolled into OpenAI. Makes a ton of sense for OpenAI, right? We know people are starting their searches on the LLMs and the interfaces and the journeys haven't been particularly great at scale through OpenAI. So bringing in someone like Francis who knows hotels, no short-term rentals, and has been building their own interface for the past 12 months, makes total sense.

4:51Michael Goldin: And I think it's a good direction for all of us that we will get better results and we'll get seen and get noticed more and more through LLMs with better conversions. And I think ultimately that's what it will come down to, is this seems like to me a move for OpenAI to really turn on the faucet of conversions within the app and try and keep people inside of the app as long as possible, if not all the way through the booking process. I'm going to go ahead and coin 2027 is going to be a year of generative UI. Prediction, market for the call. Mark it. And for all that we made fun of, Adesia is like, it wasn't perfect.

5:42It wasn't, and we didn't think it was going to be super successful. And he built a great UI around booking travel that did evolve based on what it knew you wanted to do, where you wanted to go, and sort of showed you what AI could do to sort of take you on the travel planning, discovery, and booking sort of funnel. and I know it was clear, I know it was built on top of the LLMs, but he did build out those components that made it a much more delightful experience. And when you go through it, you're like, yeah, I can see the vision of how LLMs are going to drive travel bookings. I think they've done it way better than Muse, than Instinct, than any other ones that are out there.

6:37So I absolutely agree. It was a great pickup. I think it's going to advance OpenAI's sort of development into travel significantly. And I'll make another prediction that, like, if you go to the site now, it says it's, and they turned it off because of acquisition. I'm guessing we don't see it again until they relaunch it into the sort of native open AI experience. Kate? So I want to give a little touch on the comment that Luke Butler made in our comments about that it is impressive, it is remarkable, but the 10 ,000 users and 60 million of travel process to me seems a little, it's information like travel plan does not travel booked and And 10 ,000 users is not, I don't believe that that is the number of users that are actively using Odessia on a regular basis.

7:35So I think, I mean, I do believe that this is a great, I'm co-signing what you're saying, Jamie, but I think that this, everything's a little gassed up for, you know, for this sale. Michael, do you believe those numbers? Or how would you explain those numbers?

7:50Michael Goldin: um i mean i've personally planned 60 million in travel myself i don't know if anyone else is like me but just planning some cool trips and then start adding it up and goodness gracious that's a lot of money um what what i think this is good and interesting and we've seen this at kismet for a while that chat gpt continues to play with how they present travel back to the guests, the formats. You can build your own UI through plugins and apps, but then they can also toss that UI away and present their own and start to present it in ways that look like you could just drop in an ad as the fourth slot.

8:36Michael Goldin: So I think this is a way to progress the UI in a material and meaningful way. But at the end of the day, it's going to become a place just like Google where ads exist and live. But I do expect that transactions will ultimately be pretty material within these platforms. So we're going to talk about Airbnb earnings later. But I do want to talk about what Airbnb talked about in terms of building their agentic tool. because I do think it's going to be directly competitive with OpenAI and what they're trying to do. They're all trying to sort of build the new travel experience. So, and I totally agree with what Airbnb put in their shareholder letter of why OTAs might be better positioned to win that booking or win that sort of new process versus those sort of general purpose agents.

9:42And one of them is the design. and so Adrenative UI and Airbnb has said that they're going to build it they're going to build all and essentially and get rid of the existing UI of Airbnb's page and depending on what you're searching for they're going to build a dynamic page for you and I'm I'm bought in that that and that could that could really work if they can do it well and it can be quick and it can do all the things to keep people on that page but then also what they talked about was I'm They're actually part of the reservation themselves. And the booking doesn't stop when you make that reservation.

10:17You've got alterations. You've got cancellations. You've got the communication between the guest and the host. And to think that OpenAI is going to just like, oh, we booked it. And now you've got, we're done. And now you've got to deal with everything else through some other agent. Like, doesn't make sense to me. I want whatever agent I work with to own the full experience through to not only once I check in, but after I check in and the process afterwards.

10:50Michael Goldin: Through the right rails, though, it's Brandy's team answering those questions, right? Those become direct bookings and they're interacting not through a platform. Through open AI chat that doesn't exist yet. It's direct with the customer. Yeah, you've got the customer's details, which I know is different for Airbnb. You do not get the customer details with Airbnb. Yeah. And then the other one is like that they just have the experience building travel apps. Like OpenAI doesn't have it. And maybe they've acquired a bit of that experience now. But there is a lot of learnings that they have on how people search, book, host, and the sort of understanding of their marketplaces.

11:32like Airbnb has that with short-term rentals or building with hotels. Expedia and Booking have that relationship with the hotel operators. They sort of understand how people come in, how they discover. And that is a big leg up over the likes of OpenAI and Anthropic in terms of building that experience. So when you look at Anthropic today and they've now rebuilt sheets, they've rebuilt docs, they've rebuilt slides, like they're going in and I'm essentially taking what everyone else has done and is doing a little better. So I'm not sure how much of a moat that actually is. But until I see something better that OpenAI or Thoropic have done for travel, like so far, I haven't seen it.

12:19I mean, feisty words. And it's funny because I don't know. I feel like a Luddite kind of in some of these conversations. because I don't know if I've been purposefully not using LLMs to plan trips as an active rebellion. Airbnb loves you for that. I'm not using Airbnb either. You'll be happy. I know a couple of weeks ago, I was getting some shade on the show because I said that if I can't find the direct site, I'm going to Airbnb, which is still true. But I just booked a whole trip all using direct. So I want to, I have to back myself, give my, I don't know, support myself from the masses there.

13:03Brandy, I think you're in the 99 % of people that aren't using it. I'm booking iterated again. It's less than 1%. I think Airbnb even quoted like, yeah, we've seen hundreds of bookings through Instinct and Muse. So it's, it's, it's, it's not, it's not the majority of people that are using this stuff. Yeah. And also, I think part of it is when you go to search and you only get a couple of options, right? I have my screens, all my monitors, I have like a thousand tabs. And I still kind of enjoy that process of whittling down the ones that I'm looking at. And so maybe the next trip, I'll lean into it.

13:41But it didn't even like, we talk about this on a daily basis. And when I went to go book this ski trip, it literally didn't cross my mind. So I don't know. I'm compartmentalizing my personal life and my work life. But moving on. I'm sorry. I got one more thing before we move on. And it's just that Brian did tease that this agentic booking experience, until they figure it out, they're not going to launch sponsored listings. Because they feel like the agentic booking experience and the generative UI is what they want to build sponsored listings into. So they're going to launch it. And they said they're going to launch it in the first half of 2027.

14:21So maybe and they usually do their their spring product release in like May. So I'd expect that we're going to see it then. And then once they say that, once they figure that out, then they've got the surface that they're going to launch sponsored listings into.

14:37Michael Goldin: and then demand rate parity did we get a hint at rate parity from brian chesky over the over the past couple days jamie i think he didn't say rate parity he just said that they price match price match and they have price match now for the hotels on airbnb if you find a lower price elsewhere they will give it back to you in a credit i mean on airbnb so so who eats that Airbnb or the property? Airbnb. And they put it as a credit for the user for now.

15:12I saw that screenshot of that tweet that was going around LinkedIn. And I was like, oh my God.

15:21Michael Goldin: And I'll push back on one of the stats that keeps coming up, which is less than 1 % is booked agentically. That's correct. Less than 1 % is booked all the way through by an agent like Instinct or Muse. But OpenAI drives a large amount of transactions. They just link out to the booking engine. They don't transact within OpenAI today. So I can assure you they're seeing a lot of bookings sourced or credited to OpenAI. And they also they don't want to tell people that because the tides could shift the other way. Yeah. Well, continuing on the theme of Airbnb expanding its business, they're now getting further into business travel with their connections with the company, the travel company Perk, which is a company that, you know, lots of businesses use for employees to plan their their travel.

16:24And I was looking at this, I was trying to find some data of, you know, PERC usage versus like a program like RAMP, like internal travel, because PERC is just the travel component for corporate employees. But it does show that Airbnb is really pushing its distribution options. We talked about that with Amex and now pushing into a company like Perk, really trying to make sure that Airbnb is accessible to you wherever you are traveling for whatever reason you are traveling. So any initial thoughts from either of you on this partnership that they've released?

17:03Michael Goldin: Yeah, I think the thing that jumped out to me is it's labeled business travel, but the average length of stay was like nine plus nights, which is less business travel in the traditional sense and more like contract travel. Yeah. Consultant travel. Yeah. So if those are the numbers, I mean, sign me up. Everyone would love those types of bookings, right? Yeah. But I think the nomenclature is a little misleading because traditionally business travel is even shorter than leisure travel stays. Yeah. Sorry, go ahead, Jamie. I was just going to say, I think it's maybe one of the reasons why they would partner with that company is one of their first ones is because it was very Airbnb specific type of travel.

17:54Of this company, they're sending people for long stays. They like to stay in short-term rentals. They're booking them on behalf. they're already generating a ton of bookings through it. And to facilitate that being a much simpler experience, it totally makes sense. And it's now three weeks, and we've talked about two B2B launches with Amex first and now Apex. So now they're a B2B player, right? Yeah. I'm always curious, though, when I see the number, I want actual numbers instead of percentages because they say the Knights grew 94 % over two years. I'm like, from what to what? So I just, when we see these flashy stats, I'm just like, I just am very skeptical.

18:40Not that this isn't a great partnership, but is this like that big of a deal? Yeah, and agree.

18:47Michael Goldin: And back to Jamie's point, like if I'm on a contract in Barcelona for one month, I don't want to live in a hotel room. own a live with a kitchen and a separate living space, ideally. And so, I mean, again, beautiful alignment here, just like Amex. People have lots of points to burn with Amex. Homes and holidays, homes and rentals, homes and villas. These are all the best places to burn points. Don't forget hideaways. Homes and hideaways. I knew I was missing one. Yeah. So, yeah, I think, I mean, I wouldn't be surprised if we continue to see Airbnb, like all these corporate, whether it's ramp or something, you know, rippling or something that has some sort of, you know, travel booking component for employees.

19:37I think that we could probably see that continue. It makes a lot of sense. It's a demographic that they that wants to use the product. So why not facilitate that? And on to Jamie's favorite topic, quarterly earnings.

19:57So we're going to quickly touch on Expedia and then get more into Airbnb. So Jamie, do you want to touch on some of the highlights from the Expedia earnings call? Yeah, and they didn't get too in detail on anything like Vrbo or anything like that. But overall, like gross bookings, they're up 11%. I'm$31 billion a record for them. Like this is a large scaled company growing and gross bookings at greater than 10%. Like that's incredible. And revenue grow at 12 % and at$5 billion in revenue. I'm even a margin 34%, like they're crushing it. And most of the growth for them still comes from B2B. 19 % consumer brands grew at about 7%.

20:41um uh room nights up seven percent so overall like they were i mean i mean things were good they did guide q4 um as pretty i'm weak compared to q3 and so they guided it like three to five percent growth um always guide low right you always guide low and that's how i explain it like i mean everyone i'm exceeded expectations this quarter and maybe they're setting themselves up to exceed expectations next quarter as well. And then Airbnb, and we'd seen booking and Expedia come out right around 10%. And then I nights booked for Airbnb was up 16 % revenue and sort of blew it out of the water and gross booking value revenue, both right around 20, 21%.

21:37And so they really exceeded everyone's expectations there. A note, though, on that 16 % night books, they attributed 3 % of that from Reserve Now, Pay Later. And essentially, because you can book a larger trip and you're willing to do it further in advance since you don't have to pay, and they're seeing just lead times expand out and people are going ahead and booking trips further in advance. We talked about this same time last year, because they had just rolled it out in the US, and it was about a 1 % lift pull forward, and now they've rolled it out globally in a 3%. And Ellie said it, she's like, this exceeded all of their expectations on the impact.

22:23So even more of an impact globally of reserve now pay later than in the US. And then Michael's favorite thing to hear, demand grew faster than supply. So, and supply is only growing in upper single digits where nights grew in 13, 16%. So that's good for hosts. And then there is great pricing power. I'm sort of crossed the board of not only people booking larger homes, and which sort of causes this mix of ADRs to go up, but just on the same units, I'm seeing significant ADR growth. So they called out in U.S., Europe, seeing essentially 6%, 7 % growth on ADR. So that's a very healthy ADR growth and something that I suspect operators are happy to see and not having to discount to drive more bookings into their properties.

23:23Michael Goldin: Are we in a travel boom? Because we reported on some of the brand numbers last week. The flags are up double digits. The OTAs are up double digits. I guess I'm not hearing from a lot of my operator friends, and Brandon, you don't have to tell us, but it doesn't feel like all my operator friends are up double digits. and it feels like some of these flags or OTAs are doing really, really well. But when it gets down to the actual operator on the day-to-day or the owner of the asset, are they up double digits as well? Is it bleeding all the way through? I think we touched on it a couple of months ago when we talked about the bifurcation or the K-shape that's happening with the flags and the hotel operators and that there's that great Skift piece about it.

24:19And I think that that is what's happening here on the short-term rental side as well. You know, all the OTAs are posting this growth, but it doesn't seem like boom times. I think people are doing well, but you have like the cost side of the business continues to drag. So you're not, I don't think you're feeling like elation at numbers, But things don't feel like rickety, but it doesn't feel comfy cozy at this point, I would say. Yeah. And I'll give some U.S. numbers just on what we're seeing at RDNA. Like back half the year, occupancy has been growing by half a percent to a percent. And so that's decent.

25:04And ADR growing three to four percent, which generally aligns with what Airbnb, Vrbo, booking have been saying. So, yes, clearly Airbnb is gaining some share. We see that coming a bit from direct and Vrbo and BookingShare being roughly flat. And so their growth is real, but it's not the entire industry seeing huge growth. But as Brandy said, we do see dichotomy of some areas doing really well. Larger listings, Airbnb called out, plus four bedrooms. And we're seeing overall demand growth like 6%, 7%, 8%. It is well outpacing that of, and we saw demand for studio and one bedrooms fall in the back of the year for short-term rentals.

26:00And then I brought our hotel industry. Look at the data that CoStar SDR is putting out. This was a epic summer for the hotel industry of RevPARs up anywhere from six, seven in September numbers. And they were boosted by the Labor Day ship. But RevPAR was up 11 % for hotels in the US. So very strong growth across the board. So I don't think it's zero sum. I'm between hotels and short term rentals. I do think we're in a lodging and expansion cycle. Like things are good. More people are traveling than ever. But I think some of the OTAs growth rates are a bit of share gains of the existing pie of travel.

26:41Well, and to your comment about the product type that's doing better, everything, you know, if you have an STR, that's a one bedroom or a studio and or if you have a whole building full of them. I mean, it's commoditized. Right. And now on Airbnb, for example, you have hotels right next to those same listings. And in the earnings call, they mentioned their new neighborhoods feature, which I thought actually was really interesting. So I went to Paris and I looked at one of the neighborhoods and there were almost equal number of hotels listed as short term rentals on the page. And so I think that if you're the big homes, you're fine.

27:19You're getting those big groups. But the hosts that have the smaller product on Airbnb in particular, I think it's going to continue to be very difficult to remain competitive against some of the boutique hotels. And I also, a comment from the earnings call was Brian saying the other lever they have to pull is cost and price and continuing to push that down. And so I think, you know, when we have, when people are getting feisty online about the changes that Airbnb is making and their dynamic pricing tools, like that is one of the levers they have.

27:52Michael Goldin: Just what you want to hear from the CEO, that we can pull some levers to lower the price. Here's our dynamic pricing tool. Exactly. So that just shows it's like, that's it. Like the dynamic pricing tool is there to make sure that the guest is getting the best possible rate. And it's like, and higher conversions, more loyal travelers. It hits all the boxes. Jamie on higher conversions, you said room nights grew on Airbnb. Was any of that in the hotel segment? Yeah. So we've been tracking hotels on this platform and they're growing enormously. Airbnb hasn't disclosed like, and what the growth rate is or what portion of their growth is.

28:37But I heard from some analysts that they did talk about on the callback. So they said less than 1 % of their growth was coming from hotels. So my estimate is like maybe like 3 % of overall bookings are coming from hotels on their platform. It's still a very small percent and less than 1 % of the 16 % growth was attributable to their hotel growth. So it's still largely immaterial, but it's growing at a pretty significant growth rate. I have to say, just on the hotels, like this is very anecdotal. This is not data driven at all. But the aesthetic of the hotels that they're like, everything looks, they are really signing up some nice boutique hotels.

29:25I mean, at least in Paris. And so, yeah, it'll be really interesting to see how that continues to pan out.

29:33Michael Goldin: And what their metrics are Is this just to get people used to it And they just bring on the sexiest coolest ones And then they start adding in the The beige boxes And if you were launching it Wouldn't you pull on the sexy cool ones first Sure I mean if I could land Marriott right out of the gate Yes I would land Marriott right out of the gate But that's a different discussion Yeah Well lots going on this week Jamie you are traveling anything else going on in your world? Jamie's protesting this afternoon. Doesn't know what he's protesting, but he's out there. With enthusiasm. I fly back Friday and then immediately drive up to my cabin for guys weekend.

30:19So my wife loves it. Yeah, gone for an entire week. I'm sure she's thrilled.

30:26Michael Goldin: You're going to have loads of energy too. That's going to be great. Oh, yeah. What about you, Brandy? Oh, my God. I am continuing to travel. But this weekend, I'm actually doing one of my big brandy wine dinners, my only one for 2026. My parents graciously allowed me to host at their home in Saratoga because you can't fit 15 people in a one-bedroom apartment in Boston. And so a bunch of us are going there. So I'm excited. I haven't done one since last year. So excited to go all out for that. Beautiful. We'll enjoy. Same old, same old over here. No need to ask. All right. Getting ahead of it. Well, thanks to everyone who tuned in in the comments today.

31:10It's great to have that interaction live. And thanks to everyone who's listening later on in the download. We will see you all again next week.

31:41ZS is a global consulting and technology firm that partners with companies to improve life and how we live it. Working with the world's top hospitality brands, ZS brings together data, science, technology, and human ingenuity to transform ideas into customer loyalty. They're ready to help you elevate guest experiences, improve operations, and uncover preferences and motivations through their AI-powered solutions. With more than 1 ,700 clients in over 170 countries, ZS has built the expertise, fortitude, and vision to help you deliver impact right where it matters.