Analysis finds 37% of travelers already use AI large language models embedded in online travel sites to plan and book trips.
- Online Travel Agency (OTA) commissions remain steep at 15%-30%, but AI is reshaping how prominence and relevance are priced in recommendations
- In North America, 65% of hotels reported staffing shortages in 2025, and labor costs rose 11.2% year over year
As travelers increasingly rely on AI-based digital assistants to plan and book trips, hotel discovery is moving from search and scroll to ask and book.
In this shift, hotels will compete for inclusion in a traveler’s short list of AI recommendations—requiring a stronger digital footprint, more integrated data, and AI-native commercial and operational capabilities, according to a new analysis developed by NYU School of Professional Studies (NYU SPS) Jonathan M. Tisch Center of Hospitality and Boston Consulting Group (BCG). The report, titled AI-First Hotels: Faster to Build, Leaner to Operate, and Richer in Customer Experience , is being released today.
“AI is changing how hotels are discovered, chosen, and booked—and it’s also changing how hotels run day to day,” said Tom McCaleb, a BCG managing director and partner and coauthor of the analysis. “As AI assistants take on more of the shopping and planning work, hotels will need to shift from optimizing for pages and ads to optimizing for algorithmic relevance and ensure their operations can deliver on more personalized guest expectations at scale.”
“Hotels are under pressure to do more with less while still delivering distinctive experiences,” said Nicolas Graf, a Chaired Professor and Associate Dean at NYU SPS and coauthor. “AI can help remove friction from back-office work and routine tasks, freeing teams to focus on higher-value guest moments – provided the right data foundations and operating model are in place.”
Discovery and Distribution Shift Toward Algorithmic Relevance
For years, hotels have balanced the benefits and costs of online travel agencies (OTAs). However, AI is poised to reshape the customer acquisition equation. Traditional tradeoffs, such as 15%-30% commissions, limited access to guest data, and reduced brand visibility, may be compounded as AI-based assistants aggregate and weigh content from a broader universe of sources and surface only a fraction of recommendations.
Three priorities stand out for hotels aiming to remain discoverable:
- Machine-readable, high-trust digital content that answers traveler questions consistently across platforms.
- Distribution readiness for AI-driven environments, where prominence and relevance in recommendations are increasingly tied to new fee and placement models.
- More dynamic revenue management that continuously adjusts pricing and channel allocation as demand shifts.
Operational Pressure Makes AI’s Economics Immediate
AI adoption is accelerating in hotel operations as companies contend with labor pressure and margin constraints. Labor costs make up about half of gross operating margins, and in North America 65% of hotels reported staffing shortages in 2025, alongside an 11.2% year-over-year increase in labor costs.
Early deployments show tangible operational impact, such as 20% faster room cleaning and preparation through AI-synchronized housekeeping schedules aligned with checkouts and staff availability. Moreover, AI-enabled waste-tracking tools that provide real-time kitchen analytics have yielded roughly 50% food waste reduction within eight months.
Data and People Are the Enablers and the Key Scaling Factors
AI performance depends on robust, integrated information on guest behaviors and facility operations, but many hotel companies still operate with a patchwork of systems that do not integrate well. Nearly half of hoteliers report difficulty accessing critical information, and many spend significant time stitching together reports to see a complete picture of the business.
The workforce challenge is also significant. Only 2.9% of full-time employees in travel and tourism possess AI skills, compared with 21% in tech and media, although AI-skilled hospitality roles are growing nearly 5% year over year.
Download the publication here.
Media Contacts:
BCG:
Eric Gregoire, +1 617 850 3783
gregoire.eric@bcg.com
NYU:
Michael DeMeo, +1 212 992-9103
michael.demeo@nyu.edu
