BofA: MakeMyTrip leads India OTA AI push as global peers race to embed technology

Bank of America says online travel agencies are accelerating AI investment, but shares of major OTAs have de-rated on concerns that AI could disrupt discovery, compress take rates, and raise personalization costs. MakeMyTrip has seen the steepest multiple de-rating at 35%, though incumbents appear relatively well positioned as they retain fulfillment and proprietary data advantages. The article highlights agentic AI trends in the U.S. and China, with Trip.com and MakeMyTrip integrating AI more deeply into search, booking, and post-booking support.

Analysis

The market is treating this as an AI-disruption scare, but the near-term equity impact is likely a multiple compression story, not an earnings collapse. OTAs still control fulfillment, payments, and post-booking servicing, so the first-order risk is take-rate pressure at the margin rather than a wholesale disintermediation of demand. That makes the de-rating most interesting in the higher-quality compounders: the market is discounting a structural loss of traffic before there is evidence that agentic AI can reliably solve the hardest part of travel commerce — inventory fragmentation, cancellations, and exception handling.

The second-order winner may be the platform layer, not the OTA layer. If Google and OpenAI become the default discovery gatekeepers, they can tax traffic while preserving the conversion step for incumbents, which means OTAs may be forced into a lower-margin distribution arms race to buy back demand. That dynamic favors GOOGL as the traffic toll collector, while Trip.com and MakeMyTrip have a better chance of defending share because they own more localized workflows and non-English conversational interfaces, which are harder for general-purpose agents to replicate quickly.

The market may also be underestimating the cost side benefit of AI for large incumbents. If AI improves self-serve conversion and reduces customer support load, margin gains can show up faster than revenue displacement, especially in Asia where hand-holding is still a conversion lever. The bigger medium-term risk is not “AI replaces OTAs” but “AI shifts bargaining power to whoever owns the discovery surface,” which should compress valuations for EXPE first and leave BKNG relatively insulated because of its broader supply-side leverage and stronger merchandising stack.

Consensus likely overstates how quickly agentic booking will scale and understates how sticky travel habits are once consumers hit the payment/changes stage. The setup is asymmetric: if AI adoption disappoints over the next 6-12 months, these multiples can re-rate higher on modest earnings beats; if adoption accelerates, the valuation damage should first hit weaker brands and less differentiated platforms. That argues for separating AI-enabled efficiency from AI-enabled disruption rather than blanket shorting the sector.

Key Decisions for Investors

• Long BKNG / short EXPE for 3-6 months: BKNG has better supplier leverage and more diversified monetization; EXPE is more exposed to traffic disintermediation and should underperform if AI-driven discovery shifts accelerate.
• Add GOOGL on weakness with a 6-12 month horizon: if agentic travel becomes a real consumer behavior, Google monetizes the toll road into booking intent with limited incremental capital intensity.
• Hold/accumulate MMYT on pullbacks for 6-12 months: Myra and local-language workflows are a stronger moat in a market where non-English, high-touch travel planning remains common; risk/reward improves if AI adoption is slower than feared.
• Avoid chasing further downside in TCOM; instead sell puts or structure a risk-defined long into earnings: China full-stack AI integration can support efficiency gains, and the market may be underpricing margin upside from support deflection.
• For tactical traders, use a short EXPE / long BKNG pair into any further AI selloff over the next 1-2 quarters; the short leg has the cleaner catalyst while the long leg is protected by quality and cash flow durability.