Booking built an agent that undercuts Booking.com

On September 29, Vrbo told its hosts that from October 29 all but a very small number of them pay the same commission: 12%. Property managers connected through software had been paying 5%. Most other hosts paid about 8%. And the hosts on Vrbo's older plan, the ones who paid a flat annual subscription and kept every booking after that, are being moved onto the 12% too. By AirDNA's count, via Skift, that plan covers about one US listing in eight. The few it exempted are subscription listings kept on criteria Vrbo will not name, and no one can join them.

The same day, Booking Holdings launched Lola.

Lola is an AI travel assistant, built in five months by about twenty people under Steve Hafner and Paul English, the founders of Kayak. You tell it what you want to do this weekend and it plans and books it: hotels, restaurants, activities, airport services. "At Kayak, we were trying to solve what's the best flight," Hafner told Skift. "At Lola, we're trying to solve for what should I do this weekend." There is a free tier. There are also paid tiers at $5 and $25 a month, on twelve-month terms, and members get hotel rates up to 10% and 15% lower. Skift priced a four-night Miami Beach stay at $783 for a top-tier member. The same stay was $997 on Booking.com and on Expedia.

Booking.com is owned by Booking Holdings. So is Lola. One of them is $214 cheaper.

Put that next to what Vrbo did the same morning. One company took a subscription and turned it into a commission. The other took a commission and turned it into a subscription. They did it to different people, and that is the whole story.

Hosts are the side that cannot easily leave. A vacation rental lives on the two or three platforms that bring it guests, and a manager with forty properties on Vrbo does not walk because the rate went from 5% to 12%; they complain, loudly (one industry executive told Skift people "feel more violated by Vrbo raising commissions than when Airbnb did it last year"), and then they pay. Airbnb ran the same move a year ago, putting most software-connected hosts on a 15.5% host-only fee. Vrbo calls its version aligning with industry standards, which is accurate. It is not going as far as Airbnb did, either. Guests will still see a service fee, smaller and "dynamic," with no number published yet. The direction is plain enough. The fee moves toward the side with nowhere else to go.

Travellers are the side that can leave, and an AI assistant is the thing that makes leaving cheap. A person comparing hotels across three tabs gives up at the second one. An agent does not. Once the comparison is free, the commission sitting inside a hotel price stops being invisible, and anything invisible that becomes visible becomes contestable. Lola's answer is to share it. Not abolish it: English told the Boston Business Journal that Lola expects to make money from "memberships and vendor commissions." The vendor still pays. The member gets part of it back, and pays a subscription for the privilege.

Lola's marketing says there are "no sponsored results. No paid placements. No ads. Ever." I believe them, and it is a sharp line, because it is aimed less at the traveller than at every other assistant that will eventually sell placement. If agents make commissions contestable, the agent that publicly does not take money to rank things gets to argue it is on your side. Whether a company that also owns Booking.com, Priceline, Agoda and Kayak can be on your side against its own other properties is a question Lola's terms do not need to answer yet.

There is a reason nobody has made this work before, and it has a name. Rate parity is the clause that keeps a hotel from selling a room cheaper anywhere else than on the platform. Tripadvisor tried a subscription in 2020 and 2021: $99 a year, no commission to hotels, savings passed to members as lower rates. Hotel chains objected publicly to rooms being shown far below their published prices, the scheme was turned into post-stay cash back within months, and the whole programme was shut in 2024. Member rates behind a login are the travel industry's long-standing way around parity, because a rate you have to join to see is usually not the public rate a parity clause protects. Lola's tiers are built exactly that way.

And Vrbo, the same week, wrote rate parity into its new host terms, reaching even hosts' own direct websites, before backing off after the blowback and promising to let hosts price lower on their own sites. One side of the industry is tightening the clause that keeps the commission hidden. The other is designing its new product around the gap in it.

I do not think these are two companies disagreeing. I think they are running the same calculation and pointing it at different sides. Take more from whoever is stuck. Give some back to whoever an agent is about to make mobile. Vrbo is doing the first half. Booking, which also owns Kayak, is doing both: Booking.com keeps the commission and Lola rebates it, and the company wins either way as long as the traveller stays inside the family.

That is what makes Lola interesting rather than cute. When I wrote that the OTA is the spread that regulators and AI answers both want to compress, the open question was who would compress it first. Booking's answer appears to be: itself, in a separate product, with a different name, before someone else's agent does it to Booking.com from outside.

A company that builds the thing that undercuts its flagship is telling you what it thinks the flagship's margin is worth in five years. Vrbo, raising its take on the people who cannot leave, is telling you the same thing from the other side. The spread does not disappear. It moves to whoever owns the side that cannot walk away, and an agent is how a traveller stops being that side.

—TJ