Shares of Booking Holdings (NASDAQ: BKNG) were sliding today as investors appear to be betting that the world's biggest online travel agency (OTA) will be among the losers from Meta Platforms' new Muse AI agent. Today's slide comes one day after rival Expedia partnered with Muse. ET, Booking stock was down 3.8%.
Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase.
"Act 2" is the global rollout. Continue » There was no company-specific news out on Booking today, but investors are adjusting their positions to account for the anticipated disruption from Muse, which has become the most downloaded app on both the App Store and Google Play. Muse can handle tasks from booking travel to filling out forms, and can even negotiate for discounts or refunds.
Understandably, investors are worried it could circumvent OTAs like Booking that rely on users going to its platforms to find a range of options for hotels, flights, and rental cars. Yesterday, Expedia said in a post on X that it was joining Muse. Users can tell Muse about travel plans, and Muse will handle the booking.
Expedia stock popped at the end of yesterday's session on the news, but gave back all of those gains this morning, showing that investors are skeptical that even its partnership can save it from disruption. Booking and the other travel stocks have survived similar threats before, such as Google's entry into travel bookings, but Muse does underscore the risks of the OTA business model, as these platforms are essentially middlemen. They don't own any inventory, and they generally don't have the kind of unique inventory that a branded platform like Airbnb has.
It's far too early to predict the demise of Booking, Expedia, and their peers, and investors have wrongly jumped to similar conclusions before. For example, many thought Google Search would wither in the face of chatbots like ChatGPT, but that hasn't happened. Consumers have built habits of booking travel through these OTAs.
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