Booking Holdings and Expedia Group report third-quarter earnings this week, and while both companies are expected to show that travel demand held up over the summer, the conversation on their earnings calls is likely to center on a longer-term worry: artificial intelligence.
Booking reports Tuesday after the market closes, with Expedia following on Wednesday. Truist Securities, the investment bank, told clients it expects AI to dominate both calls, even as the near-term operating backdrop remains reasonably healthy across the US, much of Europe, and Asia-Pacific outside China.
The firm also flagged that Expedia looks slightly better positioned for a quarterly beat, helped by improving US hotel pricing. But that is a near-term observation. The bigger debate is what Wall Street calls "AI disintermediation."
What AI disintermediation actually means
Online travel agencies, or OTAs, sit in the middle of the booking process. Travelers come to their apps and websites, search for flights and hotels, and the agencies earn a commission or markup when a booking is completed. Their business depends on being the place where trip planning starts.
AI chatbots and assistants threaten that position. If a traveler asks an AI tool to plan a trip and book a hotel, the assistant could surface options directly, or hand the user off to a hotel or airline without ever sending them through Booking or Expedia. In industry jargon, that is "top-of-funnel" discovery moving away from the OTAs.
That matters because customer acquisition is one of the biggest costs for these companies. If organic traffic — people arriving on their own — declines, the agencies may have to spend more on advertising to replace it, or lean harder on discounts and promotions to convert browsers into bookers. Either path pressures profit margins.
Truist's view is that it will take a few more quarters to tell whether AI is genuinely changing traveler behavior or whether the concern is mostly hype, especially with demand uneven across regions. That uncertainty is why the firm expects management teams to face repeated questions about it.
What investors will be listening for
Because the quarter that just ended is largely in the past, earnings-day moves in travel stocks often hinge on guidance and commentary rather than the reported numbers themselves. For Booking and Expedia, several details will matter more than the headline revenue and profit figures.
- Traffic sources: How much of the companies' bookings come from direct channels versus paid marketing. A rising share of paid traffic would suggest acquisition costs are climbing.
- Marketing efficiency: Whether ad spending is generating bookings at a similar rate to prior periods, or whether the companies are paying more for each customer.
- Repeat and loyal customers: Whether users keep coming back without being prompted. Strong repeat usage would be evidence that the OTAs still own the customer relationship.
- Regional demand: Truist noted the backdrop is decent in the US, much of Europe, and Asia-Pacific outside China, but uneven overall. Any softness in a major region could weigh on the outlook.
Investors may also look for any commentary on how the companies are using AI themselves — for example, to improve search, personalize recommendations, or handle customer service. If AI raises costs for the industry but also creates efficiency gains, the net effect on margins is not obvious yet.
What it means for investors
For ordinary investors, the key takeaway is that this is a story about the durability of a business model, not just one quarter of bookings. Travel demand has been resilient, and that supports near-term results. But if AI assistants become the default starting point for trip planning, the OTAs could face structurally higher costs to attract customers.
That would not necessarily show up immediately in earnings. It would appear gradually, through rising marketing expenses, lower take rates from promotions, or slower growth in direct traffic. Those are the kinds of trends that can quietly erode margins over several years.
It is also worth remembering that predictions of disruption often arrive before the disruption itself. AI trip planning is still developing, and travelers have historically shown a strong preference for familiar booking platforms, especially when something goes wrong with a reservation. Truist's point is that it will take time to separate real behavioral change from speculation.
For now, the earnings calls are a chance to hear management's latest read on both demand and the AI threat. Investors should treat any single quarter's results as less important than the direction of travel on traffic sources, marketing spend, and customer loyalty. Those clues will shape how the market values Booking and Expedia over the medium term, even if the near-term travel picture stays steady.
