TikTok parent ByteDance's chatbot is now giving travel-booking sites a run for their money. And yours.

Tanner Brown

Consumers in China have good reason to wonder whether AI travel agents - engaging and efficient as they are - have a hidden agenda

Shoppers crowd a Beijing shopping area on Oct. 7 - the final day of the travel-intensive seven-day National Day holiday.

For a late-summer trip to Qingdao with her parents, Tang Hong had a fairly particular lodging wish list. The hotel had to be quiet, cost around 400 yuan ($56) a night, and be close enough to the sea for a stroll. Good taxi access wouldn't hurt.

Normally, she'd spend ages comparing listings, reading reviews and checking maps. This time, she told Doubao, a Chinese AI chatbot, what she wanted and let it narrow the choices. She liked the results, she said.

The chatbot, however, has something else going for it: It can make money when travelers book.

ByteDance, the privately held company behind TikTok, has begun charging participating hotels a roughly 12% fee on certain bookings completed through Doubao, its popular AI assistant. That's up from the 8% those transactions previously incurred when treated as ordinary orders on ByteDance's Douyin video app.

Hotels aren't paying for the chatbot to say nice things about them. They're paying when a reservation turns into a transaction. But the arrangement raises an awkward question: When an AI assistant recommends something to buy, whose interests is it serving?

That question affects an increasing number of travel-services consumers. During China's October holiday, hotel orders through Doubao rose more than 56% from the year-earlier period, according to figures released by Douyin's local-services unit. The company didn't disclose an absolute booking count, so it's too early to say how much business the chatbot is taking from established travel websites.

Qu Chuang, a digital-economy researcher at Shandong University, put it this way: "We used to judge AI by active users and time spent. Now it's about how many people spend money through it."

Hotels, unsurprisingly, are doing the math. On a 500-yuan room, a 12% fee comes to 60 yuan, compared with 40 yuan at the previous 8% rate.

That 12% isn't extraordinary for hotel bookings. A Shandong hotel manager told Dazhong News that conventional online travel agencies charge his property 11% to 13%. What's different is that the new middleman looks less like a booking website than a friendly, knowledgeable travel adviser.

One guesthouse operator in Chongqing told the Chongqing Daily he could live with the higher fee if Doubao brought him customers he wouldn't otherwise get. But if it merely redirected people who would have booked through Douyin anyway, he wasn't interested. "It's the new customers that matter," he told the newspaper.

Consumers have another concern: price.

In August, reporters at China's National Business Daily compared rooms offered through Doubao with listings on Douyin and Trip.com. In the publication's sample, Doubao was frequently more expensive, sometimes by as much as 80 yuan, or roughly $11.

A separate check by financial-news outlet Yicai found a luxury suite at Beijing's Peninsula Hotel listed for 2,915 yuan through Doubao, versus 2,624 yuan on Trip.com and 2,332 yuan quoted directly by the hotel. Other Chinese reporters, however, found cases where Doubao offered the lower rate. Discounts and booking terms can complicate comparisons, and none of these tests establishes that the AI commission caused the price gap.

ByteDance has said merchants can't buy their way into better recommendations. Liu Xing, a Doubao public-relations executive, said publicly that hotels pay a channel fee only when an order is completed, not for advertisements or preferential rankings.

That distinction matters. Zhang Yi, chief analyst at Chinese research firm iiMedia, nevertheless warned that "revenue sharing itself creates a risk of [customer] steering."

Trip.com Group (HK:9961) (TRPCF) (TCOM) has a lot riding on how people book rooms. The Singapore-based company collected 6.6 billion yuan, about $969 million, in accommodation-booking revenue in the second quarter, up 6% from a year earlier. It has its own AI operation, along with hotel relationships and customer-service and booking infrastructure built over years.

Rival Meituan (HK:3690) isn't standing still. Searches through its Xiao Tuan AI assistant were up 29% during the October holiday from the same period a year before, the company reported. Alibaba (BABA) (HK:9988) has connected its Qwen chatbot to services including travel bookings and food delivery.

A room recommendation is the easy part. Cancellations, missed check-ins and arguments over what the hotel promised are harder. Established booking platforms have spent years learning how to deal with such issues.

But an AI assistant hears travelers describe their budgets, preferences and plans in their own words. The company that gets those conversations may eventually control which hotels - and which booking platforms - are considered.

For investors in Trip.com, Meituan and global travel websites such as Booking Holdings (BKNG) and Expedia (EXPE), the question is whether consumers will keep opening booking apps at all.

For travelers, meanwhile, the old advice still applies: Before taking the chatbot's recommendation, check the price somewhere else.

More dispatches from Tanner Brown:

China's middle class is quietly stockpiling cash - 'shadow saving' - and it could short-circuit the global economy

A $420 camera for $10: China's young consumers would rather rent than buy. It's a problem for the government and the economy.

Penny pinchers are putting the squeeze on the all-powerful Chinese central government

-Tanner Brown

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