You might want to sit down with a strong drink if you’re an online travel agency (OTA). A new study has landed and doesn’t make for soothing bedtime reading. According to Propellic, an AI-first digital marketing agency with a nose for disruption, the brave new world of Google’s “AI Mode” is ushering in an era where direct bookings reign supreme, leaving OTAs floundering on the sidelines.
The headline figure? A thumping 56% of bookings flow directly to hotels and activity providers, while a meagre 10% dribble through the OTAs in Google’s AI-powered planning journeys. That statistic will have hotel sales directors smiling over their morning espresso while OTA executives chew their fingernails down to the quick.
AI as the New Competitor
“Generative AI is now the new competitor to OTAs,” warns Paul Teddy, Senior Director of Operations at Propellic. And he’s not being melodramatic. The research, carried out in partnership with Eric Van Buskirk of Clickstream Solutions and Kevin Indig, publisher of Growth Memo, studied more than 300 booking journeys, 71,000 words of transcripts, and thousands of clicks and swipes inside Google’s AI Mode.
Teddy is clear: direct bookings enjoy a natural advantage, but without a solid GEO strategy, optimised content, local targeting, and booking incentives—even hotels could fumble the ball. “This represents an opportunity to achieve disproportionate ROI with a relatively small budget,” he adds.
Translation: if you’re a hotelier, the AI playing field is there for the taking.
The Google Business Profile Revolution
Perhaps the most sobering revelation for traditionalists is that the humble hotel website has been relegated to second place. Google Business Profile is the new primary storefront for hotels, attractions, and restaurants.
Click on a local pack, and a neat little profile card brimming with reviews, photos, and price comparisons pops up before the user scrolls down to those old-fashioned “10 blue links.” As Propellic notes, Google has woven these mini-profiles straight into AI responses. Travellers are engaging with them early and often.
Hotels can no longer rely solely on a slick website. Their Google Business Profile is no longer just a business listing; it’s their shopfront, brochure, and booking engine rolled into one.
Trusting the Machines
Now here’s the kicker: travellers actually trust AI recommendations. Hotels, activities, and destinations suggested within Google’s AI Mode scored an impressive 4.3 out of 5 in user trust ratings. That’s higher than many humans would rate their in-laws.
This surge in trust translates directly into higher conversions. People listen when AI tells them where to stay or what to do, and more importantly, they book.
From Keywords to Conversations
The research also found that long, conversational queries rapidly replace old-school keyword searches. Instead of typing “Sydney hotel CBD,” users ask Google AI Mode questions like, “Where’s the best boutique hotel in Sydney for a long weekend near the harbour?”
This subtle shift means travel marketers must rethink how they structure content. It’s no longer enough to sprinkle keywords like Parmesan on a pasta. You need content that answers questions with natural flow and nuance, crafted for conversations rather than clunky search strings.
As Brennen Bliss, Propellic’s CEO and founder, says, “LLMs blur the phases of the traditional funnel into one environment. The new competition is about controlling the collapsed funnel inside the AI ecosystem. Whoever owns that interaction wins the traveller.”
Inline Links: The New Battleground
The study also uncovered another gold nugget: users in AI Mode are more inclined to click inline text links within AI responses, rather than side-panel citations. In other words, if you’re not in the inline text, you’re out of sight and out of mind.
That makes appearing in those prime inline passages more critical than ever. And the game’s rules are changing faster than you can say “search engine optimisation.”
Yesterday’s Best Practices Won’t Do
Propellic’s study leaves no doubt that yesteryear’s “dreaming, planning, booking” funnel is dead and buried. Today’s funnel is a collapsed, AI-powered labyrinth where every stage of the travel journey unfolds within Google AI Mode. The only reason travellers step outside is actually to confirm a booking.
To keep up, brands must align their strategies with these new realities:
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Optimise Google Business Profiles so they shine above the fold.
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Structure content for conversations, not keywords.
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Invest in an in-line presence to capture all the crucial clicks.
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Blend paid, owned, and earned media so the message is consistent wherever the traveller lands.
As Bliss concludes: “Content across owned landing pages, Google Business Profiles, earned media, and paid media should be structured, designed, and written to match user questions, behaviours, and preferences.”
Final Word
The message for OTAS couldn’t be clearer: adapt or fade into irrelevance. The AI era has rebalanced the scales, favouring direct bookings and businesses that embrace Google Business Profiles and conversational content.
Travel brands that evolve with user behaviour and apply insights from studies like Propellic’s will be best placed to capture tomorrow’s bookings. As for the rest? They risk watching from the sidelines while AI quietly ushers their customers straight into the arms of competitors.
For those keen to dig into the complete research, Propellic has published the study here: Propellic Research.
By Prae Lee
