Online travel stocks rise after report that OpenAI to scale back direct checkouts

• OpenAI found ChatGPT users research products in the chatbot but don't complete purchases through it, prompting a shift to focus on checkouts within third-party apps that integrate with ChatGPT
• Analysts view the news as 'incrementally positive' for online travel agencies, allowing Booking and Expedia to continue reaching consumers on AI platforms while reducing disintermediation risk
• Both Expedia and Booking Holdings were early adopters of OpenAI's plugin program when it launched in 2023

Summary: Online Travel Stocks Rally on OpenAI Shift Away from Direct Checkouts

Market Movement:

Online travel agency stocks surged on March 5 following reports that OpenAI plans to scale back direct checkout functionality in ChatGPT. Expedia jumped over 12%, Booking Holdings rose 8%, and Tripadvisor gained 5%.

Key Development:

According to The Information, OpenAI discovered that ChatGPT users research products within the chatbot but fail to complete purchases directly through the platform. The company will now focus on checkouts within third-party apps that integrate with ChatGPT rather than handling transactions directly.

Market Implications:

The news alleviates significant investor concerns about AI-driven disintermediation in the travel industry. Analysts had feared that generative AI tools could become dominant platforms for travel planning and booking, potentially bypassing traditional online travel agencies (OTAs).

Bernstein analyst Richard Clarke characterized the development as "incrementally positive" for OTAs, noting that "Booking and Expedia can continue to get in front of consumers on AI-platforms, lowering the risk of disintermediation."

Industry Context:

Both Expedia and Booking Holdings were early adopters of OpenAI's technology, partnering with the company when it launched its plugins program in 2023. This existing relationship positions them favorably to maintain customer touchpoints through ChatGPT integrations rather than losing traffic to a competing AI-native booking platform.

Bottom Line:

OpenAI's strategic pivot preserves the existing online travel agency business model while still allowing these companies to leverage AI technology through partnerships, reducing existential threats to their intermediary role in travel bookings.