The rapid ascent of generative AI rests on a simple operational truth: organizations that can harness and unify large, diverse datasets are able to build more efficient systems and deliver more relevant experiences. In travel and hospitality, every booking, modification, payment event, and on-property interaction produces signals that, when connected, enable faster decisions and more precise service. Generative models have become the engine that turns these signals into actions, refining distribution, streamlining operations, and elevating the traveler journey from planning through post-stay. Investment has followed. And the overwhelming majority (73%) of senior leaders  in hospitality reported increasing AI budgets, and industry analysis shows broad confidence that AI is improving core traveler touchpoints.

The question for executives is no longer whether to deploy AI, but how to design for what comes next. That next phase is agentic AI systems that don’t just analyze and recommend, but act with autonomy, in context, and at enterprise scale. Traditional automation excels at routine steps, yet struggles when data is incomplete, when systems are fragmented, or when conditions change mid-journey. Agentic systems operate more like collaborators than tools: they learn from machine data and human feedback, adapt to shifting inputs, and execute cross-functional work with speed and consistency. In an industry where an early-arrival note touches front office, housekeeping, F&B, and transportation, this shift from suggestions to end-to-end execution is decisive. 

The most visible pressures sit in distribution and the supplier–distributor relationship. Global chains and independents depend on a complex grid of GDS, OTAs, TMCs, wholesalers, and metasearch to reach demand. Each node imposes different content, pricing, and policy requirements, and stale or inconsistent data can create leakage, misrepresentation, and friction with partners. The architecture is resilient but not uniformly adaptive. Agentic AI changes tempo by translating property data into structured, channel-ready content in near real time, aligning availability and offer presentation to demand signals rather than schedules, and compressing the lag between a change in conditions and its reflection across channels. This is not a theoretical construct; it is the operating model required by a market that now moves faster than batch processes. 

Business travel exposes a second set of constraints, and an immediate opportunity for agentic systems. Despite decades of digitalization, a meaningful share of global corporate hotel bookings still triggers manual phone or email exchanges between agents and properties to confirm details, verify payments, collect invoices, or resolve discrepancies. DerbySoft’s AI Voice Agent was built for this class of work. Operating continuously across time zones, it confirms booking elements, validates virtual card details, and secures compliant invoices, reducing manual call costs for early adopters while freeing agents for higher-value program management. External coverage of recent pilots points to significant reductions in manual handling and a growing share of bookings completed without human intervention. 

Financial precision is the companion problem. Commission reconciliation has long consumed time and attention on both sides of the supplier–distributor relationship, with errors and omissions dragging out payment cycles and clouding cash-flow visibility. DerbySoft’s acquisition of Arise brought specialized AI automation for agent–hotel communication and commission reconciliation into our platform, consolidating booking data into unified records and accelerating accurate settlement for both TMCs and hoteliers. The transaction reflects a broader market direction: integrating targeted agentic capabilities into established connectivity to remove long-standing friction instead of adding yet another silo. 

Customer experience is where agentic AI becomes most tangible for travelers. A leading OTA recently introduced a planning assistant that builds and adjusts complex itineraries, rebooks automatically during disruptions, and communicates directly with customers—compressing wait times and lifting satisfaction by resolving problems at source. A major U.S. airline unveiled an AI-driven digital concierge integrated into its app to guide journeys, manage disruptions, and coordinate multi-modal options. Many hotel brands are rolling out AI concierges that curates hyper-local recommendations and coordinates on-property experiences with staff oversight. These initiatives differ in execution yet share the same principle: moving from episodic assistance to continuous, context-aware action. 

The marketing layer is evolving in parallel. Performance teams have long tuned budgets and bids across metasearch, paid search, and OTA media with sophisticated but manual routines. Agentic systems now adjust spend and creative in response to demand patterns, inventory, and audience signals in real time. DerbySoft’s AI-powered digital marketing solutions reflect that direction, combining automation with optimization to manage multichannel performance at operational speed. The outcome is not just improved return on ad spend, but a marketing function that is synchronized with distribution and revenue rather than adjacent to it.

These capabilities are powerful, but adoption is not automatic. Most hotel companies operate dozens of systems—PMS, CRS, POS, spa, CRM, transport—procured over years, each with its own data model and API posture. Incomplete integrations force handoffs, and edge cases remain common in daily operations. Successful implementations therefore start with high-impact workflows where data quality and interfaces are within reach, layer in human oversight for exceptions, and expand as confidence and connectors mature. Industry guidance stresses data integration, explainability, and measured piloting as critical to trust and scale, especially where autonomy touches financial transactions or traveler itineraries. 

The sector examples you referenced underscore this trajectory. During irregular operations, agentic systems detect disruption signals, rebook inventory against policy, notify travelers, and resolve downstream logistics without waiting in a queue. In trip planning, agents assemble itineraries that adapt to preference shifts, availability, and local context rather than serving static recommendations. In pricing and revenue, models apply continuous context to protect yield while staying competitive. In loyalty, programs move from passive accrual to proactive engagement that anticipates attrition risk and responds with relevance. In hotel operations, agents coordinate housekeeping and maintenance against live occupancy and arrival forecasts, reducing waste and smoothing peak loads. Each is a version of the same structural change: decisions moving closer to the moment they are needed. 

The implications for GDS and TMC workflows are pragmatic rather than rhetorical. GDS remains essential infrastructure for enterprise travel, but the work surrounding it—content quality, policy enforcement, exception handling, reconciliation—benefits from agents that act across systems. TMCs can redeploy human time from repetitive verification to advising on program design, supplier strategy, and traveler well-being, while traveler experiences improve because problems are addressed before they become calls. Reports covering AI deployments across airlines and intermediaries suggest that this pattern is beginning to scale, and that regulatory scrutiny will rise alongside it, particularly in areas like dynamic pricing and explainability. Governance and transparency will therefore sit alongside engineering as leadership priorities. 

DerbySoft’s roadmap aligns to these realities. Connectivity remains the foundation, because agents are only as effective as their access to accurate, timely data and the ability to execute safely across systems. The addition of AI Voice Agent targets one of the industry’s most entrenched operational bottlenecks: repetitive outbound calls to properties. The integration of Arise’s automation strengthens the financial backbone by unifying records and compressing reconciliation cycles. Our digital marketing solutions extend autonomy to the growth engine, so demand generation adjusts with the same agility as distribution. These are not discrete tools; they are complementary capabilities designed to reduce friction across the travel commerce stack. 

What comes next is a design challenge more than a technology purchase. Teams will need to clarify where autonomy creates value and where human judgment must remain primary, and they will need to build clear escalation paths between the two. Leaders will need to invest in data disciplines that support agentic behavior across brands, regions, and partners. And they will need to engage proactively with evolving regulation to ensure that pricing, personalization, and decisioning remain transparent and fair. Those moves turn AI from capability into advantage.

DerbySoft’s moves, from acquiring Arise to launching AI Voice Agent and expanding AI-powered marketing, signal how the industry is shifting from automation to autonomy. These are not isolated innovations but part of a larger convergence where intelligence is embedded directly into the connective tissue of travel commerce.

The future belongs to organizations that embrace this shift. AI is now table stakes. The competitive horizon lies in agentic intelligence: systems that do not simply support decisions, but carry them out, ensuring that operations, distribution, and guest experiences move in sync with the speed and complexity of global travel.

About the Author

Duane Overgaard is the Divisional CEO, Hospitality, of DerbySoft. With over 30 years of experience in the hospitality industry, he has a diverse skill set that includes account management, business development, and contract negotiation.

Learn More About DerbySoft

For anyone who has spent decades in the hotel and travel business, you learn that what seems like a policy debate in Washington or a tariff on paper often becomes front-page in traveler conversations around the world. The cost, the image, the welcome all matter. 

Over the years, economic storms, competitive destinations, regulatory shifts have taught us one constant: traveler sentiment doesn’t respond to just price. It responds to confidence, to whether a place feels worth risking the long trip, the visa, the unknowns.

Tariffs are one of those underappreciated forces. Not always top of mind for hoteliers or destination marketers, but critical nonetheless. They raise operational costs, ripple into pricing, and often, though less visibly, shape impressions abroad. When travelers in Asia, Europe or Canada begin to question whether value is slipping, it shows up in forward bookings, in cancellations, in the stories travel editors tell. That’s where we are now.

This article uses recent passenger-arrival data, hotel performance metrics, and incoming surveys to trace how tariffs are shifting travel behavior from region to region; how those shifts are reflected in lodging performance; and what the trail looks like going into 2026, a year that promises both opportunity and risk.

What the Numbers Are Saying

In the first half of 2025, STR reported that international arrivals to the U.S. were down about 3.1% (per I-92 data) versus the same period last year. That downturn isn’t evenly distributed: some cities, particularly Las Vegas, are seeing sharper drops in inbound traffic. Regions like the Mountain and West South Central have also shown softening demand. Since overseas arrivals contribute an estimated 4–7% of all U.S. hotel room-night demand, even modest drops in inbound travel can ripple outward which could translate into a loss of around 3 million room nights sold.

On the forecasting front, CoStar and Tourism Economics recently lowered their projections for 2025–2026 U.S. hotel growth. Revenue per available room (RevPAR), occupancy, and demand projections were all adjusted downward in light of softening international travel and cost pressures. Surveys tell a complementary story. Respondents in several international markets report being less likely to visit the U.S. because of the political environment  including trade policy and its perceived implications. Another report shows declining travel intention in key source markets with only a few (for instance, India) bucking the trend.

Regional Ripples: How Different Source Markets Are Responding

Asia-Pacific & China

In Asia, especially China, leisure and student travel are behaving more cautiously. Surveys show that uncertainty over visa processes, travel costs, and perception of political climate are making people postpone or reroute trips. While exact figures diverge by source, data from STR (international arrival declines) is consistent with what we hear from travel agents and booking platforms in Asia. (E.g., less forward booking from China into U.S.) The Skift data confirms this flattening (or decline) in intent, though there isn’t yet a public source that quantifies precise drops by percentage for every market in Asia apart from China.

Canada & Mexico

Here the effects are more visible and immediate. A Reuters piece in March 2025 detailed how Canadians are increasingly hesitant to travel to the U.S., citing negative rhetoric and rising tariffs affecting goods. Canadian arrivals are part of the “4-7%” inbound hotel demand figure, declines from Canada (and weakening car/air crossings) are contributing meaningfully to the drop in international arrival numbers. 

Europe

European travelers are showing mixed signals. Intention surveys (Skift) capture concerns related to cost, political climate, and visa/entry complexity along with tariffs. While not every European market is down sharply, many are placing U.S. travel lower on priority lists. Data from STR shows international arrivals broadly down; since Europe is a large contributor to overseas inbound traffic, it is affecting RevPAR in gateway and destination markets.

Other Regions

Markets in the Middle East, Africa, and Latin America show more varied behavior. High-income travelers remain more resilient, often less sensitive to marginal cost changes. But for price-sensitive segments in Latin America or travelers from countries with weaker currencies, tariffs and the strong U.S. dollar are squeezing affordability. Sources like Skift and forward booking data indicate these segments are more likely to delay or substitute U.S. travel with closer or lower-cost alternatives.

How Tariffs Are Showing Up in Hotel & Travel Performance

The influence of tariffs on travel doesn’t reveal itself in a single headline number; instead, it shows up in the fine print of hotel forecasts, performance reports, and booking behavior. Costs of imported goods  from linens and uniforms to kitchen supplies and technology  are climbing. Food and beverage programs in particular are feeling the squeeze, as tariffs on imported wines, spirits, and specialty ingredients cut into margins. Hotels can only absorb so much before some of that cost makes its way to the guest.

The broader picture is one of a market losing a little steam. According to CoStar and STR’s latest forecast, RevPAR for U.S. hotels is projected to decline by about 0.1% for full-year 2025, with demand expected to remain flat or slightly negative. Occupancy, once a bright spot, is now projected to hover around 62.5%, a notch lower than earlier expectations. These numbers may not signal crisis, but they reflect a sector where growth has stalled just as international sentiment is softening.

Not all hotels are experiencing this equally. Reports show a clear split by tier: luxury and upper-upscale properties continue to outperform, buoyed by travelers who are less sensitive to price increases and still willing to pay for premium experiences. By contrast, midscale and economy hotels are under pressure, exposed to cancellations, shorter booking windows, and more price-sensitive guests. For operators in these segments, the margin for error is shrinking.

Group business, another vital indicator of health, is showing signs of weakness. STR’s weekly tracking highlights a year-over-year decline in group demand that has persisted for several weeks. In major markets such as Las Vegas and Houston, forward bookings are lagging well behind actualized occupancy, suggesting that planners are holding back on commitments or pushing decisions closer to event dates. The result is a widening gap between expected and realized business, leaving hoteliers with less visibility into future demand.

Some good news on the horizon. Executives from the major U.S. airlines said last month that American passengers booking premium airfares helped fill their international flights and that demand for domestic flights was picking up after a weaker than expected showing in the first half of 2025.

Looking Toward 2026

As 2026 approaches, the outlook for U.S. hotels and travel demand depends heavily on how tariff policy evolves. If current measures remain in place and no major trade agreements provide relief, the industry is likely to face a subdued first half of the year. 

Forecasts from analysts suggest that overall performance will stay soft through at least mid-2026, with only modest gains in occupancy and demand. Luxury and destination markets are positioned to fare better, supported by high-spend travelers who are less sensitive to rising costs. In contrast, midscale and economy properties—already struggling with cancellations and shorter booking windows—may continue to lag behind.

Pricing trends tell a similar story. According to forecasts, average daily rates are projected to rise by just 0.8% in 2025, driven more by rate creep than by genuine demand growth. That dynamic points to soft spots ahead for the mid-market, where competitive pressure will limit how much operators can raise prices without losing guests.

Group business will be another bellwether. STR’s weekly data already shows weaker forward bookings, with planners hesitant to commit large blocks far in advance. The question for 2026 is whether group demand will recover its usual visibility or remain defined by short lead times and last-minute decisions. If the latter persists, hotels in convention-driven markets such as Las Vegas and Houston will face continued uncertainty.

Beyond hotel metrics, several external signals will be just as critical to watch. International arrival data from the I-92 program will reveal whether inbound travel is stabilizing or slipping further. Exchange rates, particularly against the Canadian dollar, Mexican peso, and the euro, will shape affordability perceptions. Visa and travel policy friction, always a sensitive factor, could either ease or compound challenges. And in the background, tariffs will continue to add cost pressures to food and beverage, imported goods, and hotel operations—costs that ultimately feed into guest pricing and sentiment.

The road to 2026, then, is not without opportunities. A more stable policy environment, even without major tariff rollbacks, could help restore traveler confidence and bring longer booking windows back into play. But if current friction persists, particularly in key source markets, the USA risks delaying recovery and diverting growth to other destinations.

What Leaders Can Take From This

The data is clear: tariffs are already affecting travel sentiment. It’s not just a whisper in trade or economic reports—it shows in how many people are booking (or not), in how hotels are planning, and in what travelers are saying in survey after survey.

For those of us in hotels, destination marketing, airlines, or tourism boards, the imperative is to attend as much to perception as to pricing. Stabilize policies where possible; make the travel experience clear, predictable, affordable; segment offerings mindful of the growing divide between those who are sensitive to cost and those less so.

Because 2026 offers both a stage and a test. If trade tensions cool, if messaging about openness grows stronger, and if major events like the FIFA World Cup are leveraged well, the U.S. could see a sharp uptick in inbound travel.

But if current friction persists, particularly in key source markets, there is a potential risk in delaying a recovery and allowing other destinations to continue their growth. 

About the Author

Duane Overgaard is the Divisional CEO, Hospitality, of DerbySoft. With over 30 years of experience in the hospitality industry, he has a diverse skill set that includes account management, business development, and contract negotiation.

Learn More About DerbySoft

A new wave of digital payment innovation is making transactions faster, safer, and more efficient for travel and hotels, virtual credit cards are leading the charge.

For decades, air, hotel, and car bookings defined the structure of most trips, with experiences often treated as a secondary choice—something travelers added on after the essential logistics were in place. That model is changing rapidly. Today, experiences are no longer an afterthought. They are becoming the reason people travel in the first place.

Research confirms this shift. Travelers increasingly make destination choices based on the activities they can enjoy once they arrive. A joint study from Skift and McKinsey found that experiences now represent a global market exceeding $1 trillion annually, with structured, paid activities such as tours, events, and attractions accounting for roughly a quarter of that value. Younger generations in particular are prioritizing experiences above other categories of spend, with over half of Gen Z travelers reporting that they would rather reduce their budget for flights, food, or shopping than cut back on activities during their trip. The trend shows no signs of slowing, and it is reshaping the way the industry must think about distribution, partnerships, and customer engagement.

The rise of experiential travel is fueled by more than just shifting consumer values. Social media has become a powerful amplifier, transforming moments into signals of cultural relevance and personal identity. A photo taken at a concert, a cooking class, or a guided hike is not simply a memory—it becomes part of a traveler’s narrative and an influence on their peers’ decisions. This dynamic has created a self-reinforcing loop, where demand for unique, authentic moments continues to accelerate. For suppliers, distributors, and technology providers, this presents both an opportunity and a challenge.

The opportunity is evident: experiences drive engagement, loyalty, and incremental spend. Packages that include experiences consistently achieve higher satisfaction ratings, with net promoter scores as much as 15 to 20 points higher than those without. The challenge, however, lies in the fragmented structure of the sector. Unlike air travel, which consolidates around a relatively small number of carriers, or hotels, which can be organized by chain and segment, experiences are delivered by millions of small operators across the globe. Many are local businesses, sometimes run by a single individual, who are passionate about their craft but lack the digital infrastructure to connect efficiently with international travelers.

This fragmentation has real consequences. Despite the size of the market, nearly half of all experience bookings still occur offline, either through hotel concierges, local agents, or direct walk-ups. Even online, discovery can be frustrating. For a traveler planning a visit to Paris, the number of available tours of the Eiffel Tower has grown from 244 in 2019 to over 765 today. Without effective curation, travelers are faced with overwhelming lists, often with inconsistent descriptions, variable quality standards, and unclear expectations. For distributors such as airlines, hotels, and online travel platforms, this creates a complex balancing act: how to provide meaningful, trustworthy options at scale without overwhelming the customer or compromising margins.

The complexity of this challenge is precisely why technology must take center stage. Experiences need to be integrated into the booking journey with the same reliability and seamlessness as flights and hotels. Doing so requires platforms that can normalize fragmented supply, aggregate it at scale, and deliver it in a way that feels curated and relevant to the traveler.

At DerbySoft, this has been a guiding principle. We view connectivity as the foundation of modern travel distribution. By integrating disparate systems and enabling real-time availability, we create the infrastructure that allows experiences to be surfaced where travelers are already making decisions, whether that is when booking a flight, reserving a hotel room, or browsing a travel app in-destination. Without this kind of intelligent connectivity, the industry cannot deliver on the promise of experiential travel at scale.

But connectivity alone is not enough. The discovery process must also evolve. Travelers expect experiences to be easy to find, tailored to their interests, and presented in a way that reduces decision fatigue. Insights from McKinsey highlight how traveler preferences fall into distinct profiles—from “social adventurers” who plan every detail in advance, to “relaxed researchers” who prefer spontaneous booking after arrival. This diversity requires more than a static listing of activities. It calls for platforms that can leverage data, AI, and personalization to anticipate what will resonate with each traveler at the right moment.

Timing plays a critical role. Whereas flights and hotels are often secured months in advance, experiences are frequently booked last-minute or even while on-site. This introduces additional complexity into distribution, as platforms must support both advance planning and spontaneous decision-making. A traveler might want to book a culinary class months ahead to secure a spot, but decide on a walking tour the same morning based on weather or mood. Systems that cannot accommodate this flexibility risk missing out on a significant portion of demand.

Thematic travel adds another layer of opportunity and complexity. Major events such as concerts or sporting competitions can drive surges in demand, with travelers spending over $1,000 on hotels, dining, and transport when attending. Yet these opportunities are time-bound and episodic. Unlike evergreen attractions, they require distribution platforms to quickly adapt inventory and marketing strategies to capture demand in narrow windows. Again, only flexible, well-integrated platforms can make this commercially viable for operators and distributors alike.

For hotels and airlines, integrating experiences into their core offerings is not just a matter of ancillary revenue, it is becoming essential to their value proposition. Hotels can use experiences to differentiate their brand and enhance loyalty programs. Airlines can bundle experiences into packages, provide in-destination options during layovers, or use them to add value to frequent flyer programs. Both sectors stand to benefit from higher margins and improved customer satisfaction if experiences are seamlessly included in the booking journey.

This is the future DerbySoft is working toward: a connected ecosystem where experiences are no longer siloed but fully integrated into travel distribution. Our platform enables suppliers to extend their reach, distributors to broaden their value proposition, and travelers to access curated, bookable options without friction. The result is a win for all stakeholders, operators gain visibility, distributors generate new revenue streams, and travelers enjoy a trip that feels more meaningful and complete.

The growth of experiential travel is not a passing trend; it reflects a structural shift in consumer behavior and expectations. Spending on experiences has outpaced spending on physical products by a wide margin, increasing 65 percent since 2019. Experiences are becoming the currency of travel, shaping both demand and loyalty. The industry’s challenge is to ensure that this demand is met with systems that are as seamless and scalable as the experiences themselves are memorable.

The market is large, fragmented, and still maturing. That combination creates both risk and extraordinary opportunity. As travel continues to evolve, those who succeed in capturing the experiential segment will not only tap into significant revenue potential but also redefine what it means to deliver value in travel. The key is technology that makes the complex simple, the fragmented whole, and the overwhelming accessible.

Experiences are no longer peripheral to travel. They are central. The industry must rise to the occasion, and DerbySoft is committed to building the foundation that makes it possible.

About the Author

Duane Overgaard is the Divisional CEO, Hospitality, of DerbySoft. With over 30 years of experience in the hospitality industry, he has a diverse skill set that includes account management, business development, and contract negotiation.

Learn More About DerbySoft