Global hotel groups are dusting off an old weapon for a new kind of fight: loyalty. As online travel agencies (OTAs) continue to skim fat commissions and a new class of AI “agents” promises to shop, compare and book rooms on travellers’ behalf, the biggest brands are trying to pull demand back onto their own platforms — and keep it there — with points, perks, member-only rates and increasingly personalised experiences.
The logic is simple. Direct bookings are cheaper to acquire, richer in data and more controllable in terms of pricing and customer relationship. Third-party distribution, by contrast, can be a tax on margins. OTAs typically charge double-digit commissions that hoteliers have long grumbled about, and the rise of AI assistants threatens to make price comparison even more frictionless — and therefore even more brutal.
Yet loyalty is not a magic shield. It is expensive to fund, hard to differentiate in a crowded marketplace, and increasingly vulnerable to the very technology it is supposed to neutralise. The bet is that points can anchor behaviour even when an algorithm is doing the shopping. The challenge is that algorithms may not care.
A Distribution Battle Dressed Up as a Membership Drive
Hotel loyalty programmes began as a relatively blunt instrument: stay often, earn free nights. Over time they became sophisticated demand engines, capable of nudging customers to book direct, buy ancillary services and remain within a brand’s ecosystem. For the largest chains, scale is the flywheel: the more members they have, the more bookings they can steer away from intermediaries.
That steering matters because intermediaries still capture a meaningful share of demand. In industry surveys, direct online bookings and OTA bookings often sit neck-and-neck, underscoring how contested the middle of the funnel remains.
The real fear is not merely Booking.com or Expedia — it is what comes next. If travellers increasingly delegate decisions to AI tools — “find me a quiet hotel near King’s Cross under £220 with a gym and late checkout” — then the interface that wins becomes the one that controls the transaction and the data. That could be an OTA with a better AI wrapper, a tech platform that aggregates inventory, or a device-level assistant that learns a traveller’s preferences over time.
Why Loyalty Still Works — For Now
There are three reasons global hotel groups continue to lean into loyalty even as the ground shifts beneath them.
First, economics. Every booking shifted from an OTA to a first-party channel preserves margin. Even when commission rates vary, the principle holds: paying a third party to “own” the customer is costly. Loyalty allows hotels to offer better deals on their own sites without collapsing public pricing.
Second, data. Direct bookings produce higher-quality customer data: frequency, preferences, purpose of travel, price sensitivity and on-property spend. That data fuels personalisation and trains recommendation engines. In an AI-led market, data is not just marketing fuel — it is competitive ammunition.
Third, defensibility. OTAs dominate the top of the funnel. Loyalty dominates the bottom. It converts a hotel shopper into a repeat guest who begins their journey inside a brand ecosystem.
This is why hotel groups increasingly market their apps like consumer platforms rather than corporate utilities.
Loyalty as the Interface of the Frequent Traveller
In effect, hotel groups are trying to become the default interface for their most profitable customers — business travellers, affluent leisure guests and families who return to the same destinations — while letting intermediaries fight over the rest.
That explains the shift from basic free-night schemes to experiential perks: upgrades, priority check-in, flexible cancellations, airline partnerships, and credit-card integrations. Loyalty is becoming less about discounts and more about convenience and recognition.
The AI Twist: Loyalty as Both Moat and Target
AI agents compress the customer journey. Where OTAs once won by being the best catalogue, AI tools may win by being the best decision-maker.
The optimistic view for hotels is that loyalty becomes an API advantage: members logged into brand apps receive personalised offers, room preferences and bundled services — delivered instantly by AI.
The pessimistic view is more dangerous. If AI assistants can optimise across loyalty programmes automatically — maximising points and minimising cash — then loyalty stops being emotional and becomes mathematical.
That would hollow out the psychological glue of loyalty: status, progress and belonging.
Loyalty Is Getting More Expensive
Free nights are not free. Upgrades displace revenue. Elite benefits increase operating costs. Credit-card partnerships create point liabilities.
Owners often bear these costs while corporate brands capture the customer relationship. When occupancy is high, this tension is manageable. When markets soften, it becomes combustible.
At the same time, points inflation has become endemic. When everyone offers rewards, differentiation shifts to service — which is harder to scale across thousands of properties.
OTAs Are Not Standing Still
OTAs are investing heavily in loyalty, payments, alternative accommodation and AI-driven search.
They still control global demand, offer brand-agnostic comparison, and remain essential for independent hotels that lack marketing muscle.
AI may strengthen their position by placing a conversational layer above suppliers, turning hotels into inventory providers rather than brand destinations.
Is Loyalty a Good Bet?
Yes — but only if loyalty becomes a product, not a promotion.
It will remain powerful for frequent travellers and corporate customers. But the risks are real:
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Commoditisation by AI
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Rising cost base
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Inconsistent on-property delivery
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Weak technology execution
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Pressure for rewards to travel across ecosystems
The future will not be “loyalty beats OTAs”. It will be a hybrid world where hotel groups control their best customers — and platforms control the rest.
The Next Moat Is Marketing, Not Points
The real advantage is not points. It is first-party data.
Hotels that own customer identity can personalise pricing, target offers and retain customers far more effectively than any intermediary.
That makes loyalty less about free nights — and more about owning the customer relationship in an AI-driven economy. This story forms part of our European business newsroom, covering finance, policy and corporate Europe.
And that, ultimately, is the battle global hotel groups are really fighting.
