Fake AI Hotel Videos Are Coming for Travel

0:27Seth Borko: This podcast is brought to you by the show of Seth Borko and Sarah Kopit. videos, Skift found for a single 40-room luxury resort in Sedona, Arizona. Some of the suites that they show don't exist. There's a peaceful pond that doesn't exist. And at least one of the creators may not even exist either. And some of the videos are tagged as earning a commission for any bookings at the property that is not even available on TikTok. So what's going on here? Welcome to the strange and wild world of TikTok Go. This is the travel equivalent of TikTok Shop. And Skift found that there was a lot of kind of, I don't know what the term would be, maybe AI fraud going on.

1:14Seth Borko: Basically, there's a lot of videos of properties or amenities on properties that aren't actually there. And there's kind of an affiliate link situation going on, but often that lead to nowhere. It's kind of confusing. Brave New World.

1:31Sarah Kopit: It feels like a scam that's just very poorly thought out and poorly done. It's clearly a scam, but it's just like if you're going to go through the effort of scamming, do it right. You know, I don't want to complain too much about, you know, the kids these days or AI generated slop. But like an AI, it's scammer slop. They can't even scam correctly. They can't even scam correctly.

1:56Seth Borko: Exactly. Exactly. We're used to these kind of like, well, I don't want to say used to, but I mean, we've all been, you know, victims or we've received these like kind of highly sophisticated, maybe phishing emails or you get contacted and you really kind of have to know what you're looking for. It's really easy to fall for it. This is kind of like, huh, head scratcher. Kind of weird.

2:20Sarah Kopit: Back in my day, a real human used to imitate an African prince. Now the AI bot just imitates the African prince. It's just something's lost. You know, there's no, where's the soul?

2:29Seth Borko: Where's the drive?

2:31Sarah Kopit: Yeah. Yeah.

2:33Seth Borko: And the interesting thing, I think, I mean, I thought it was a fascinating story that Bailey Schultz, our tourism reporter, wrote. But I think one of the most interesting things was for some of the owners of the properties that were up on TikTok is that they didn't even know any of this was going on.

2:53Sarah Kopit: So wait, let's break down this story because it was a great story from video. Let's break it down piece by piece. I'm going to ask you some questions. So there's this hotel in Arizona called the Ambiente Sedona. Is that correct? Yeah, it's a resort. And we looked and we found fake AI-generated videos promoting this resort, right?

3:19Seth Borko: Yes.

3:21Sarah Kopit: So there was just, so tell me about this. It was videos that just, they were wrong, they were fake, they were AI generated? Yeah.

3:29Seth Borko: Well, I would say either AI generated or like certainly AI enhanced. Like there was one that had like a pond. There is no pond, for example. um like like maybe the the the view around it was accurate but pond not so much so it's like the things that you can do i mean when you're playing around with you know grok or you know claude it's like here's a picture put a pond in it right like stuff you know stuff like that And the other weird thing about it is there were creators or influencers who were not real either. So synthetic. I feel like we've definitely bridged over into the sci-fi realm when I now in my real life work and life have started talking about the synths.

4:29Seth Borko: You know, that's that's like a very old sci fi term for, you know, it's usually for like a synthetic person, but a droid or a Cylon. But the synths are there. And it's but it's kind of strange, too, because like. Detecting the scam is a little bit weird, like there is like a link to book this property on TikTok, but you couldn't do it.

4:55Sarah Kopit: So I want to I want to ask some follow up questions here. I just want to not let the Cylon reference just be totally dropped because I'm a huge Battlestar Galactica fan. You are? I didn't know that. I love Battlestar Galactica.

5:07Seth Borko: How did I not know that?

5:08Sarah Kopit: Oh, it's the best.

5:09Seth Borko: New one or old one?

5:11Sarah Kopit: The new one. I've only seen the new one.

5:12Seth Borko: Yes, of course. Same. Same, same, same.

5:14Sarah Kopit: I love the new Battlestar Galactica. I mean, it's not even new anymore, but it's so good.

5:18Seth Borko: No, but like I tell you, and now we're just going to geek out here for, dear listener, forgive us. the in the latter seasons when they did jimi hendrix all along the watchtower as like that i was like it's so good blown i was like so good this is like giving me like all the tingles right

5:39Sarah Kopit: yeah i totally associate the song with battle star galactic i think it's so good it could have been cheesy and it wasn't cheesy it was so good so good i should start watching that again i'm looking for

5:49Seth Borko: a new show i should just re-watch i don't know if i took it all star galactica well okay so

5:54Sarah Kopit: it's back anyway story about back to this so quick plug no paid promotion here check out the 2004

6:00Seth Borko: whatever battle star glide the early 2000s battle star galactica you want to understand what a nylon is um so these people are creating yeah fake ai generated reviews of um this hotel in arizona

6:17Sarah Kopit: We actually have talked about social media reviews on past episodes. It is a real genre. It is a real category. But why waste your time with an AI generated one? What's the financial incentive? And it seems that the financial incentive is the new affiliate program that TikTok launched called TikTok Go. and so the idea is that you the influencer the creator will be able to drive travel bookings hotels experiences maybe even flights depends on who plugs into this system and earn and it's affiliate link marketing and you will earn an affiliate i mean we can call it a commission split you will earn a portion of the commission a portion of the affiliate link so we have all of a sudden we've been excited about social commerce and this is like i guess this is a good lesson in unintended consequences we wrote a whole story about the launch of tick.go i put into my slide decks i've been talking a lot about the rise of social commerce about yeah what this could mean and the opportunity but of course i guess it's obvious in hindsight it has incentivized it's created a financial incentive for scammers to now mass produce ai generated um hotel reviews whether they're real or not in this case and in this case if you click the tiktok shop tiktok go link to book the ambiente what happens nothing nothing you know in several of them yeah it's

7:43Seth Borko: like a broken leg like nothing happened so dumb it it's so dumb and so but again you know it is true like and we've seen this throughout throughout history you know a new technology or a new type of business practice comes comes into being you know it is it is sprung from the ether and you know there's going to be really good applications of it and really like good actors who make a lot of money and with really useful products then like kind of just the normal like whatever and then just like the really bad stuff too like people who are low effort just trying to you know maybe game the system and they don't even do it right well that's what's i mean that's what i

8:24Sarah Kopit: was joking earlier about good old-fashioned human-generated scammers is that they didn't even do it right like the late the scam link which is how they're gonna so these people probably didn't get paid they created all these scam videos and they didn't get a dime for it but i think i

8:37Seth Borko: think the really interesting story here for like hotel operators or any i guess small business owners so i'm just going to make an assumption here for for a moment i don't know folks that work at like Hilton or Marriott, reach out, let me know if I'm wrong here. You all probably have some mass or fairly sophisticated detection machine when, you know, you are mentioned in the media and online and you have to, you know, keep up with your brand. I mean, that's even a trademark thing, you know, just to make sure that it doesn't get diluted and all that good stuff. But for the small business owner.

9:15Sarah Kopit: By sophisticated system, you mean a Google news alert, of course, is I assume what you mean. I do mean that. Yes.

9:22Seth Borko: I do actually mean that. You know, I'm sure there are better tools, but the good old fashioned Google news alert is chef's kiss. But for a smaller business owner or somebody who just isn't set up to have like that workflow within their system. And, you know, it's kind of now it is so easy to create content and it's so easy to create content that isn't even it isn't even real. And we were only even, I don't know, a year into this. Like I remember a year ago trying to make some AI generated like just to like for my own life, like trying to like mock up what like a room would look like if I redecorated it and it couldn't really do it very well and i just tried it again and it was flawless so like the the technology is so quickly changing and i have heard that said by a lot of ai proponents

10:21Sarah Kopit: who say that you know a lot a very common rebuttal to people who say that ai is just slop is like those were these were a lot of people who formed their opinions about ai in 2023 and haven't aggressively kept up with it and and sometimes you dismiss and you're like well i still use ai i still use a quite a lot of my workflow and still makes quite a lot of mistakes yeah um but also there are moments that it is so true where i'm like well i can't do this and then i just ask it and it does it and i'm like oh oh this is a much better model oh it is really improved so this is really definitely going to to happen i think it's an interesting challenge and did we did bailey get a comment from the owner of the hotel yeah yeah she interviewed what did they say what did the

11:04Seth Borko: hotel owner think yeah i mean well she was kind of she was kind of confused she was mostly confused kind of like like didn't didn't understand like how this came to be or or why or like what the you know what the purpose was for it you know we've talked before about how like i have a you you know, a short-term rental upstate. Like, I kind of think, like, what it would be like if I all of a sudden came across my own property with an affiliate link and, like, I don't know, that went nowhere and all of a sudden there was a pond where there shouldn't be a pond. I guess, you know, my takeaway is that, I mean, like, she didn't feel, I think she felt kind of unsettled by it, but there was no like immediate downstream impact.

11:59Seth Borko: But the question, so the question is like, if you're a property owner, a property manager, how are you kind of protecting yourself in that? Like you want people to have an accurate representation of your property. You know, you don't want other people out there adding ponds and pools and fountains where, where they're not, you know,

12:21Sarah Kopit: unless you're willing to invest in a pond, unless you have a great pawn guy to work on.

12:27Seth Borko: Yeah, exactly. But then also it's kind of like also for TikTok, TikTok's gotten very into the travel space. We've written a lot of stories about them, which is unsurprising. It's a great fit for their model. And basically what's going on over there at TikTok Go to help police this and make sure that, you know, that there's an accurate representation of travel properties on their site.

13:00Sarah Kopit: TikTok famously bad at policing the content on its platform. Well, listen, it strikes me from pure business implications that this is a sign of things to come. And that there's only going to be more of this. This is only going to become more and more of a thing. And I think it's interesting. I think there's three things I think about. The first is, what if these were real? What if the AI hadn't gotten it wrong? And it just feels like this hotel is selected kind of randomly, but we talk all the time. I mean, you've reported on the squeeze. The big issue for an independent resort luxury property in Arizona is, how do you drive eyeballs?

13:37Sarah Kopit: How do you drive brand? How do you drive attention? And to have a whole bunch of, if it were authentic, to have had a whole bunch of influencers swarming your property and having a real financial incentive to do so. I happen to know a little bit about the economics. We report in the story, or we report, what do we say in the story, that I think the economics of it is interesting. It is quite an expensive channel, but it is quite a financial incentive. We previously reported, Skiff previously reported on a TikTok Go creator who generated roughly 30 ,000 hotel bookings from a single video with a 5 % commission rate, which I assume is coming out of the full pile of that Expedia is probably charging 15.

14:25Sarah Kopit: This is powered by Expedia on the back end. Is that correct? Like when you click on the link, you go to an Expedia portal, right? So Expedia is plugging into the TikTok Go on the back and it's TikTok and Expedia are giving commissions a 5 % commission. Expedia itself generally charges between 15 % and 25 % commission. We could probably call it 20 % for an independent. So you have to assume that Expedia is giving up something like a quarter of the economics in order to have a bigger reach and also to drive more traffic to their platform. Because Expedia wants traffic. They don't want Bookin. Right now, Bookin has much more traffic than them.

15:05Sarah Kopit: And we're going to talk about them in just a minute.

15:06Seth Borko: Yeah.

15:07Sarah Kopit: It's a bit of foreshadowing. and so it's a really interesting win-win-win potentially$1 ,500 for a single TikTok or a single reel or a single YouTube short I mean I know that TikTok pays out creators from its creator fund but you can go online you can look up people will disclose I mean people make sense they have videos with millions of views and they make literal pennies like dollars and cents like you know, 20 bucks from a$10 million view video. That's why so many creators do sponsor content. That's why they do advertising jobs. That's why they create and sell their own products because the advertising revenue is so small and for shorts, for short form content, it's so, so, so small.

15:50Sarah Kopit: And so to basically have a viral video with tens of millions of views and get paid 50 bucks or to have a video with tens of thousands of views and get paid fifteen hundred dollars the incentives for creators are huge yeah expedia only has to give up a quarter of its economics it still keeps 15 the hotelier still pays the whole thing but you know thirty thousand dollars in bookings from a single video from basically a free external marketing team i see how this This quickly becomes a win, win, win, win, win, where the creators have a real source of revenue, where Expedia gets traffic from its rivals, and the commissions that the independents are paying anyways are used to partially incentivize a new form of really powerful marketing.

16:40Sarah Kopit: I could see this being a huge win throughout the system, except fraud undermines trust in this entire thing. And if someone comes up expecting a pool or a pond or whatever and they don't get it, it's going to be the hotelier who's going to get the two-star, one-star review of, I booked this expecting this, and instead I got, and what can the hotelier do? There's no way that an independent hotelier can police TikTok. There's just no way. They do not have the resources. So what do you do in the face of fraud that will in turn ruin your property's reputation?

17:17Seth Borko: I mean, I would say it's not, you know can't just wash your hands of it and be like i'm out like it's too big i i think i think you can try to police it i do you know we have tools now where you know you can actually kind of reverse search a lot of these things so i i would i would give the owners a little bit of that i mean i would put it back on tiktok quite a bit it's their platform and i know i know that the social media platforms famously are not responsible for the content that is they get

17:55Sarah Kopit: hauled in front of congress if the if the u.s president of tiktok if donald trump is threatening to nationalize them and congress is investigating them and there's actual senate commissions into these social media and their facebook is settling billion dollar lawsuits and they still can't clamp down on the problem writ large of fraud and misinformation on social media there's nothing that can be done. I just don't believe it. There's no way that congressional legislation, hearings, executive action, and lawsuits, if those four things can't, it slowed it, but if those four things can't stop it, what is an independent hotelier in Arizona supposed to do?

18:37Seth Borko: It's the tiny, it's the micro, not the macro issue for them. It's, you know, flagging instances of their own property being portrayed in a light that is not true. But I think the other issue is central to the creator economy and what is happening now. It used to be, not too long ago, if you're a business, even with TripAdvisor reviews and such, you were pretty much in charge of your brand. You got to decide how your brand was showing up out there. And it started to erode a little bit with, you know, Yelp and Google reviews and TripAdvisor. But now enter the creator. And now you've got like video, you know, now you can see.

19:39Seth Borko: And that's one of the reasons why creators were so popular and continue to be so popular is that you trust them more than like the company itself to say what's true now you layer ai on top of it where you can't even believe your eyes it's just a whole different it's a whole different kind of quagmire for the for for the business owner to

20:01Sarah Kopit: me it's like an anti-democratization right because yelp and ultimately creators democratized this information you didn't have to get it from the brand itself you can get it from the yelp reviews i do think some yelp reviews have lost some of their credibility because you you started to learn it's full of cranks the only people who leave yelp reviews are five stars or one stars although have you heard this thing about how in japan they like self-enforced like the japanese public at large self-enforces really strict reviews have you heard about this no i i i feel like i'm gonna love this please do share there's a japanese website called i think it's called table log like tabloge like table log and it's the yelp of japan and the community like self-enforces three stars is like an actual normal distribution and so like the best rated restaurants in the country have like 4.1s and people are like i only give i only reserve three stars unless it really true and i'm like i kind of love it as opposed to yelp where like it's great inflation it's great

21:00Seth Borko: inflation anyways meanwhile meanwhile like my friend group in my like group chat like we had a discussion not too long ago that most of us only give like serial killer reviews like just like you said it's either a five or a one they're like why bother why bother with this you're it's always going to be a five or a one but but and then ultimately creators help democratize this brand you no longer had control of your brand the public influenced your brand as well and i kind of

21:28Sarah Kopit: love that right i mean that's the way it should be you are responsible for how your brand shows up in the world but now what we're talking about is not the democratization of brand not it's not actually like the story we talked about a week or two ago where a social media reviewer showed up at the amman and was kicked out and that is the democratization if that's what your brand stands for if that's how you communicate you have to take your your licks right when that happens publicly Like that is legitimate, in my opinion. But what we're talking about now is not a legitimate bad review. It is fraud.

22:05Sarah Kopit: It is a scam and it will lead to bad reviews. But no one will have been the bad guy. Like someone will show up having paid two thousand dollars for a luxury resort expecting a spa. They will not get the spa. It will not be the person's fault who showed up, nor will it be the hotel's fault. The hoteliers.

22:23Seth Borko: Yeah.

22:23Sarah Kopit: And yet this will be a chargeback. It will be a bad review. It will be both potentially, depending on how your minimum wage paid worker at the front desk handles the fact that a customer comes complaining that they don't have the spa that they booked. And it's like, what do you mean you booked it? You know, this would happen with OTAs. What do you mean you don't have my reservation? This would happen with, in the early days of OTAs, people would expect stuff that they saw online they didn't get. And, you know, it became this thing that front desk had to learn to deal with. Like, no, I'm sorry, ma 'am.

22:53Sarah Kopit: I'm sorry, sir, you booked through Expedia. You have to cancel through Expedia, that sort of thing. Like when your flight gets canceled, right? But now it's going to happen, you know, with social media. And is your person working the front desk at the night shift when they check in, going to know that there was this viral fraud on? It's going to cause, it's going to cause chargebacks. It's going to cause chargebacks and it's going to cause bad reviews and bad customer experiences. It's scary.

23:19Seth Borko: Well, one of the things that Bailey writes in her article, which I just thought is, I mean, I can just see it like I can see it happening, is this is this particular property that she highlighted is an adult's only place. And some of the videos showed it or made it seem like it was like a family family resort. So you like show up with your, you know, six year old and your four year old into like an adult's only spa in the middle of.

23:47Sarah Kopit: And you're going to have to deny them service. And you're going to have to walk them. And it's going to be a huge thing. Like, do you either accept it and ruin the experience for the rest of your guests who are promised adults only? Do you walk a family of four that just showed up and got off a six-hour plane ride from the East Coast? Like, what do you—it's a disaster. It's a disaster waiting to happen. It really is. And the financial incentives are going to go in favor of more and more of this. If you can earn$1 ,500 and you can churn these out with AI, it's going to happen. And segue into our next topic, the platforms are going to be incentivized to do this because TikTok can drive so much traffic.

24:30Sarah Kopit: Expedia, when this was the platform that this one was on, it was Expedia. The social media companies are going to want to work with aggregators where they can get a large amount of inventory in one single agreement. the aggregators are going to want to work with tiktok because they want the traffic because the dynamics around traffic on the otas themselves are shifting and in many ways this is ironic it's a response to independents and brands doing such a better job being able to book direct they're putting pressure on the otas to get creative to get innovative they have this huge inventory they can go to social media they can sign these one stroke of a pen unlock 100 000 properties And then they earn back some of the traffic that they let out to the direct and branded channels.

25:16So I don't know.

25:19Seth Borko: Yeah. Well, I'm curious to see what TikTok has to say. I mean, they didn't give us a comment on this. But as this gets bigger, as it maybe, you know, creates more problems, I hate to say, in the industry, perhaps they will need to have more of a comment. But let's shift now. Let's go from pure play small business consumer stuff with social media to B2B, pure play B2B. Dennis, our glorious reporter, Dennis Schall, wrote this week about this bombshell B2B story that booking is doing more than Expedia. What do you think about his reporting, his analysis?

26:13Sarah Kopit: Yeah, potentially doing more than Expedia. We don't know for a fact. I thought it was, well, so can I share, hopefully Dennis doesn't mind me sharing this. Can I share a little bit of inside scoop here? So this was a report that Dennis wrote. It was an analyst report that estimated, so we're talking here about B2B, which is the B2B white label platform. It actually is incredibly relevant to this TikTok conversation. It is the affiliate white label product where Expedia or Booking or Hopper, many people do this, or Amadeus or Saver do this, where you allow third-party companies to book inventory on your platform, but in a white label format without your brand.

27:05Sarah Kopit: And so, for instance.

27:08Seth Borko: Yeah, give give listeners who aren't like so kind of in the weeds on this an example of what that would look like in real life.

27:17Sarah Kopit: Yeah. So what it would look like, I mean, is a lot of these banking platforms, like when you book through, it's not entirely true. It's actually changing a little bit. But a lot of these booking platforms, when you book through, say, like American Express or Chase Travel or Capital One, and then you want to book a hotel, a lot of times the actual, it says you're in the Capital. So Capital One Hopper is a very famous example. It's sort of shifted recently. But for a very long time, Capital One's travel portal was powered by Hopper, which is a small startup incumbent disruptor online travel agency.

27:52Sarah Kopit: And so the website said Capital One. It was built into Capital One's book and flow. It was part of their banking. And you could click on links and everything said Capital One. And you got the confirmation emails through Capital One, all that stuff. But on the back end, the entire website and product have been built and powered by Hopper. it was hopper's inventory it was hopper's technology um this was true of chase and expedia for a long time actually there's recently been a trend of these large banks bringing them in-house so chase brought its platform in-house hot and hot capital one bought the tech platform from hopper and brought in-house but it's true of also i'm giving example of credit cards but it's also true bookend who's the subject of this article powers lufthansa's hotel platform so it's not even just like zero non-travel businesses it's other parts of the travel ecosystem lufthansa obviously doesn't need any help selling flights they are an airline but they want to be able to upsell you know you often see at checkout after you check out of a um of an airline you'll see the upsell oh because you just booked this flight you can get a discount on this hotel or on this car rental rental car oftentimes that is third party white label inventory so lufthansa works with booking when you um book a flight with lufthansa you get to the checkout page they say oh we see you're going to dusseldorf would you like to book a hotel in dusseldorf here's some options that we think might be interesting to you and you click on those you book it lufthansa it is just affiliate marketing it's literally the same thing that these tiktok creators are doing at the corporate scale lufthansa if you click that link it will actually click you off to bookings website and you can book through booking.com and lufthansa will get some sort of like a kickback an affiliate commission for having referred that traffic to booking so this is what this b2b business is okay this uh the idea is that you have all of this inventory you have hotels car rentals flights all cruises experiences all already on your platform all already bookable yes book in and expedia have consumer brands yes they want to drive direct traffic where you type in expedia.com and you come and you book with them but also we could probably white label this get some affiliate revenue and turn into a really big business expedia has been the king or i should say the queen of this arianne gorin is the queen of this she ran their b2b business for many years grew it into a behemoth and in fact has now the group CEO shout out Arianne and they've done a really excellent job of this at Expedia and Expedia has very much made B2B white labeling their thing let's see if I have the numbers exactly B2B over the last 12 months at Expedia is almost a third of their revenue these days.

30:48Sarah Kopit: I think it's almost 40 % of their room nights. So 40 % of, give or take, well, that's actually the estimate that it's the analyst gives, but we know it's about a third of their revenue. So for every, you know,$100 that Expedia makes from selling hotels, flights, cruise, experiences, $33 of those came from selling those same products through a third-party white label, not on the Expedia website directly. Expedia breaks this out as a separate line of business. They promoted the group head to group CEO. They've made a big deal out of it, and it is the fastest-growing part of their business today.

31:28Sarah Kopit: This is all the context for which everyone has assumed for a long time that Expedia is the queen of B2B, and that therefore it has the biggest B2B business in the online travel agency game. We knew Hopper, due to a very large amount of this, but a lot of Hopper's inventory came from Expedia and Hopper's biggest customer has always been assumed to be Capital One and Capital One bought out the technology and brought it in-house. So with Capital One bringing it in-house, Hopper's kind of out of the game and Expedia, this is their market to win. and then so enter booking yeah booking is not really known for this i mean they do it they've always done it and dennis has been reporting dennis shawl has been reporting that they want to make this more of a priority they do this b2b business but they do it as a part of their individual subsidiaries so book and holdings has three brands three primary brands they have more than this but three big brands booking.com which is europe and now north america kreitz line which is to be honest shrinking a small part of their business north america primarily and agoda which is their asian brand and each of those were individual b2b so you had a book in business and then you had a b2b book in business you had a priceline business you had a b2b priceline business you had a go to business and you had a b2b a go to business dennis has been all over this and he reported that book and said we need to take this seriously we're going to take these b2b businesses out of these individual brands we're going to consolidate them we're going to make them a standalone division and we're going to put um omri who's i forget his last name omri

33:07Seth Borko: morgan stern i think omri who is not we all just know him as as omri so all good omri m um who is

33:17Sarah Kopit: the head of agoda which is an incredibly fast growing division of book and he's a very successful executive within book and and we're going to put him in charge of growing this business so they're doing something very similar to Expedia's move. Nonetheless, we always assume that they were starting at a disadvantage, that they were starting from a much lower base. And then I get an email from Dennis. Subject line is just this. It says, from Dennis Schall to me, Seth Borco. Subject line, jaw dropping. That's what he writes me. Subject line, jaw dropping. So I'm just going about my day and write it and answer any emails jaw dropping wow and i open it up and it's a analyst note from a well-respected um equity research cell side analyst at a company called btig the guy's name is jake fuller and what is it i haven't talked too much sarah what does this note

34:09Seth Borko: say oh you're gonna you're gonna make me pull up the analyst note here okay oh well what does it say i mean the gist of it is what's so jaw-dropping it's so jaw-dropping because we all have been going about our our lives thinking that expedia is you know they are the master they are the big kid on the block the goliath but it looks like you know booking is there they're surpassing them

34:37Sarah Kopit: yeah so expedia has been talking about they've restructured their entire they've restructured their reporting lines at the parent company level to focus on B2B. They give updates every quarter to investors. They sell, you know, hundreds of millions of dollars of this stuff. It has always been assumed that Expedia is the bigger B2B business. Jake Fuller estimates that Booking Holdings might sell more B2B room nights than Expedia, which is kind of a crazy thought that But Booking, which has barely even focused enough business, it's not even a consolidated division, is selling more room nights B2B than Expedia, which has made it a third of their revenue and made it a huge push, a huge focus, and a huge part of their investor story and their growth story.

35:25Seth Borko: So obviously this isn't by accident. How do you think this worked behind the scenes at Booking? Like, how did they pull this off?

35:33Sarah Kopit: I kind of think it is by accident. I hate to say it. Really? Yeah. Yeah, I do.

35:40Seth Borko: Tell me more now. Now I'm now I'm interested because generally people don't like take out entire incumbent incumbents in a in a business category by accident.

35:51Sarah Kopit: Well, I think we're we're just underestimating. The size and scale of these two businesses, we often put Expedia and booking on a level playing field. But Expedia, over the last 12 months, and if you're listening to this, we're talking September 2026. The most recent earnings report was Q2. So we're talking Q2 26 through Q3 25. Over the last 12 months, four quarters, Booking Holdings sold 1 ,271 ,000 ,000 room nights. Okay. In that same time period, Expedia sold 428 million room nights. 428 room nights is not too shabby, but it is a third of what Booking does. right and so i think you know so the numbers that that jake fuller estimates is that he estimates that expedia sold about 170 million b2b room nights okay that would be about 40 percent of expedia's total room nights i said earlier that expedia does about a third of its revenue from from B2B.

37:11Sarah Kopit: So 40 % of room nights, 33 % of revenue. Fair enough. Makes sense. He estimates that Bookin does more. It does almost 190 million B2B room nights, more than Expedia's 170 million room nights. And yet that 190 would be, you know, just about just about 10%, a little under 10 % of Expedia's global room nights. So when I say I kind of think it happened accidentally i think it's just that we were forgetting about the scales yeah scale and the base of yeah scale um and i think it's interesting the fact that omri is going to take over the b2b business and omri runs agoda i wonder how much of this has happened in asia because expedia does not have a large presence it does not have as large a presence in asia as book and holdings does and agoda is very big in asia i wonder if partially what happened was agoda's b2b business like again act just did really well and they said oh this is a real like omri already run like it may i this is this is speculation this is not reported but i wonder if omri got tasked with um running this because agoda's b2b is the strongest of the b2b brands and that would sort of make sense to me of how bookend quietly surpassed xpedia because if it happened in asia which wasn't a focus market you could sort of see how it could play out without people sort of realizing it if that makes any sense one of those it's it's one of

38:53Seth Borko: those rare times in in the boardroom where you know usually it's maybe the the mistakes or the the kind of the negative news that sometimes comes as a surprise. So it's like, huh, look at that. Okay. We got something here. Yeah.

39:11Sarah Kopit: I mean, look, I think it's a challenge for Expedia. I mean, Bookin, this was last year. Bookin.com famously only did hotels. Right. Hotels and nothing else because hotels have that sweet, sweet, sweet, juicy 15 to 25 % commission. airline commissions you are lucky if you get four percent they tend to be more like two percent so expedia forever sold a similar amount of gross bookings to book and holdings but had significantly fewer room nights and significantly smaller revenue because so much of its gross bookings were airlines they sold you know whatever tens of billions of airlines but at a two percent commission, you know, Expedia only need to sell a couple hundred million more hotels to fully offset billions of ticket volume.

40:05Sarah Kopit: Does that make sense what I'm saying in terms of revenue versus commission?

40:08Seth Borko: It does. Absolutely.

40:09Sarah Kopit: And so Bookin always said, look, we are a hotel company. We want to do hotels. We don't want to do flights. It's low margin. It's volume. It's commodity. Let Expedia have as much gross bookends as us. We're going to always have higher effective take rate, therefore higher revenue, therefore generally higher margin. It worked. And eventually they said, Glenn Fogle has this idea. You may have heard of it, this idea of this connected trip. I have. I have, Seth.

40:36Seth Borko: Yeah, I have.

40:37Sarah Kopit: In order to make connected trip work, we're going to need to sell flights. Okay, well, fine. We'll do it. So they started selling flights. You don't really think of booking for flights, but they do it. And last year, they reported that they sold more flight tickets than Expedia did. Expedia with a 20-year head start. They sold more flight tickets. And now Bookin is saying that he might... Bookin is not saying, Analyst is saying that Bookin might have sold more B2B. It speaks to the power of scale in this game.

41:09Seth Borko: Yeah. I can't, you know... We're in September now. Like, September is kind of like, for us at Skift, like, it's kind of our month. It's like our month to, like, do our thing with the Skift Global Forum. and Glenn Fogel is going to be on stage as he often is at Skip Global Forum and Dennis will be interviewing him. So I'm sure that all of this will come up and more. And I cannot wait to watch that conversation.

41:37Sarah Kopit: There is not a doubt in my mind that Dennis will ask Glenn about this study. Now, I want to point out that Jake Fuller, the analyst who did this, and Dennis quoted me in the story, which is always fun when I'm quoting. And I think I called it wholly plausible but it's based on a lot of assumptions and there's a lot of sensitivity to those assumptions some of which is based on and this is like how this stuff works how this sort of competitive intelligence works is the ceo said mid 50s share of this mid 60s share of this and so you say okay mid 50s that's 55 mid 60s that's 65 if you just shifted it by a little bit and you said mid 50s means 56 % and you said mid 60s means 64%, you would lose something like 20 to 50 million room nights.

42:25Sarah Kopit: So it's worth bearing in mind that in this one scenario, it's modeled out that Bookin might have sold more than Expedia. I think I gave this analysis as a quote in the article that if you just shifted these assumptions by one percentage on each stage on each side, you would lose something like 50 million room nights and expedia would sell more so that exact headline of bookend beats expedia in b2b is based on a really important assumption and yet the core directionality that expedia can almost that bookend can almost sleepwalk its way into selling nearly as many B2B room nights as Expedia, that fundamental scale holds true.

43:15Sarah Kopit: And I think that's the bigger point. Is that... And they haven't even... They haven't even consolidated these two nights. They haven't even tried yet. Yeah. And Dennis, I want to say this in defense of Expedia and Arianne and that whole team. Which, you know, By the time we get the hate mail, we're already like 40 minutes into this podcast. They won't even hear this part. But I want to say this in defense of them. And this is a really important quote that Dennis puts in the story. The products are not comparable. Expedia has a proper, dare I say, world-class B2B white label product. When you buy white label from Expedia, you get to build your own platform and you can make it look however you want.

44:01Sarah Kopit: You can make it say whatever you want. when Lufthansa which is the customer of B2B of you know of Bookin when Lufthansa does it it's just an affiliate link it just clicks off from their website to Bookin's website and now you're dumped into the Bookin flow that is not an ideal experience it's not a perfect experience and so when we talk about volume remember that there is more to this game than just volume there is the quality of the product there is the margin of the product there is the sellability of the product. And I think it is worth pointing out that that's why I almost think it's accidental.

44:37Like Expedia, like Expedia has built a, and by the way, by Fuller's own estimates, Expedia is

44:45Sarah Kopit: growing much faster, almost twice as fast on the B2B business as Bookin is. So Expedia is taking market share. So what we assumed was that Expedia had this huge B2B business and Bookin had the small B2B business might actually be incorrect. The right assumptions might actually have been Bookin actually had this huge B2B business. And because they neglected it, and because they didn't make it a consolidated sector, Expedia has grown from almost nothing to a huge business that is now on the scale of Bookin. Does that make sense? It's all about the narrative and the framing a little bit. The framing might be off, but we say, oh my God, I can't believe Bookin has called Expedia when actually what might have happened is Booking just had this giant B2B business hidden in all of its brands.

45:32Sarah Kopit: Expedia saw the opportunity. They built a great product. They are growing double digits in B2B. And maybe the internal teams in Booking are saying, oh my God, Expedia now sells as many B2B as us. Time to restructure this org and really fight back.

45:46Seth Borko: maybe you know listeners i will say that one of the great joys of my job at skift is that every once in a while i get to sit in a room with seth and work on things like analysis and methodology and he gets to teach me a little bit about uh how the sausage is made so to speak with research and analysis. And I feel like you guys all just got a little bit of a window into what that is actually like. It's a really good time, I will say. And this is a fascinating one, both from you and from Dennis. And I can't wait to see how Glenn answers his questions on stage. Shall we go to some winners and losers this week?

46:36Sarah Kopit: Let's do a quick winners and losers.

46:37Seth Borko: So my winner this week is it's very similar Airbnb hosts because of new affiliate links they are putting out themselves. So this is kind of crazy. Like over the weekend, things started popping up on social media where a bunch of hosts, Airbnb hosts, were getting these messages from Airbnb saying, you know, we are going to give you an affiliate link like you the host so you can go out there basically and market yourself and if you do that and if somebody uses this link it was interesting because trying to figure out if it was real or not because the percentages were different some people got a six percent link some people got a ten percent link and this is down from the 15.5 percent that is now standard across the board that hosts get charged.

47:31Seth Borko: So anyway, it was real. We confirmed it. It was real. Airbnb really is doing this as a pilot. And so hosts out there, for the ones that want to go out and do a little bit of that marketing themselves, which I think a lot of them do, they're going to get a break on their, they could get a break on their fee. So they're my winners of the week.

47:55Sarah Kopit: that's awesome i mean that's a really interesting it it's funny how all this stuff i know it's effectively just affiliate marketing it's affiliate marketing for creators affiliate marketing for businesses and affiliate marketing for hosts it's it's making a comeback i guess that phoebe gate story where her affiliate marketing business was a fraud i guess she was on to something she just was also a fraud allegedly a fraud sorry i shouldn't accuse a billionaire of a fraud there you go i have a loser of the week it's a bit of a cheeky one i apologize but my loser of the week is anyone who is going to miss out on the skiff global forum because oh seth oh man okay i'll allow it but okay yeah well i'm getting excited for it you were just referencing it like uh it is coming up as an internal skifter you may not know this you may just see you know the market or whatever but like this is obviously our biggest event of the year it's what the entire company is oriented around and it is we are basically filming this at the very start of september and once the the clock the calendar clicks forward and the eight becomes a nine and it's september it is officially sgf season skip global forum season for me and um we i think we do have some affiliate links like there are some if you're a skiff research subscriber we have a link for you and there are other things um i hope you will come we're going to cover creator economy we're going to have a creator summit we're going to cover expedia and arian we're going to cover glenn fogle we're going to cover airbnb if this if you if you made it through a 45

49:31Seth Borko: we're going to have a live tourism summit i mean we've got all sorts of stuff going on this year

49:35Sarah Kopit: and we're going to have a 45 minute podcast where we geek out on uh on online travel and commissions and distribution and and cylons then you should come to the global forum and we are

49:48Seth Borko: going to have a very special guest it's a surprise guest it is and we're going to leave it at that

49:54Sarah Kopit: you're going to have to come to see who it is to see who the surprise surprise guest is all right uh i think that's it for now thanks for listening let us know your feedback what you thought i think this is a pretty uh in the weeds but pretty controversial but also important topic we'd love to hear your feedback on it and as always thank you for listening to this gift travel podcast. We will see you next week. Have a good one.

50:14Seth Borko: Thank you. See you next week, everybody.