ChatGPT: How Conversational Bots will be the New OTAsReading Time: 3 minutes
In late November 2022, OpenAI unveiled ChatGPT to the world, calling it a trained model that interacts in a conversational way. I’m sorry if the title of this article misleads you, but heads up, this is not an article about ChatGPT. It’s an article about how conversational bots based on Large Language Models (LLMs) can shape the future of hotel distribution and the hospitality industry.
Unlike many other technologies, this is a breakthrough that virtually everybody can understand and see many uses, a key one being online search. It’s simpler to pose a question and get a straight answer, rather than browse through different websites looking for that specific piece of information that we need.
If what ChatGPT shows us is a glimpse of a not-too-distant reality, where we will have conversational bots helping us, it can indeed change the way we search for information. And one of the things we search for information about is hotels.
How could Conversational Bots influence the Guest Search Experience?
When researching destinations and accommodation options, we conduct the search in an aspirational way until we have a shortlist, or at least a more precise idea of the hotel where we want to stay. At this stage, we start looking for reviews and doing some comparisons to make a decision. Soon, we will probably have bots helping us do these tasks.
I personally don’t think that a Bot helping me complete a reservation on a hotel website improves my experience. Typically, I prefer to just go to the Booking Engine (BE), do my own exploration and make a decision.
But, if you tell me that conversing with a bot can help me decide through hundreds of hotels at a specific location, that could be a game changer. If we can chat about it, and I can tell the bot what I don’t like about the suggestions presented and what I’m looking for until we reach a consensus where I would say: “That’s exactly what I was looking for!” – At that point, I could complete the reservation and do the payment online.
This may well be the future of online reservations. In the same way, ChatGPT and related technologies can disrupt Google. Online Travel Agencies (OTAs) can also be disrupted and replaced by the Conversational Online Travel Agents (COTAs), powered by AI. How we search and consume information will change forever, affecting how hotels distribute their inventory and sell their rooms.
And what exactly will be the Impact on Hotel Distribution in the Future?
This scenario affects distribution in many different ways. Like any other business that sells services online, hotels’ strategy goes through SEO (Search Engine Optimization), SERPs (Search Engine Results Pages), and Ads (Mostly Google). Everything hotels do is around these three pillars to get online visibility. Hotels also have their industry-specific distribution channels: OTAs, GDS, and Meta. All of these – hotel specific, and non-hotel-specific – are on the verge of disruption.
SEO and SERPs would not even be in the conversation because if the search engines are replaced by bots, none of these would exist. Chatbots would simply give you a straight answer to your question: “The best hotel to travel with family in that location is this one, and I got to this conclusion by using the information on these five sites.” That’s it. No SERP. However, ads could still be possible because the bot could also add: “I have these advertised suggestions for this specific location that fit your criteria:”. The problem is that the ad space available will be reduced compared to the search page results.
This conversational format gives us two new challenges regarding visibility. First, fewer listed sites mean fewer visibility possibilities. Second, fewer ads mean more expensive ads, assuming that the demand for ads won’t decrease.
Fewer and more expensive ads would not only affect hotels but also OTAs who heavily rely on search and ads to drive traffic to their websites.
But there’s the other side regarding the OTA’s: why should I browse through those boring websites when I can simply talk to a conversational AI who would do the heavy lifting for me? Why should I go through a bunch of hotels when I can simply ask exactly what I want from an AI that will present the best hotels with the characteristics I’m looking for? And so, the hotels listed on OTAs would face the same new challenges: less visibility, and higher pricing.
How can Hotels Leverage this Disruption for their Direct Distribution?
Less visibility and higher pricing are not fatalities. This is just another disruption in the industry. AI is giving hotels tools to better understand guests and optimize pricing and online presence, automating lots of customer support tasks. So, it’s perfectly natural that the surrounding ecosystem also changes. Now, more than ever, it is important for hotels to optimize their online presence by providing excellent websites with relevant content and offers aligned with the customers’ expectations.
Hotels’ online content needs to be both high quality and relevant. The more specific the better, because this content will be used to feed LLMs (Large Language Models) that will reference where they get the information to respond to users’ inquiries.
And this is, of course, an opportunity to increase direct bookings because no one is better than the hoteliers to create the best content about their hotels.