Booking Holdings Named Top Online Travel Pick as Morgan Stanley Assumes Sector Coverage

Morgan Stanley has assumed coverage of the online travel agency (OTA) sector, designating Booking Holdings (BKNG) as its preferred stock with an Overweight rating. In a new report, the investment bank outlined a thesis that favors companies with unique property inventories and strong direct consumer traffic as artificial intelligence begins to reshape travel search.

Analyst Ratings and Price Targets

The bank initiated its latest ratings with distinct views on the three major players, based on their strategic positioning and valuation:

• Booking Holdings (BKNG): Rated Overweight with a $230 price target. Analysts called its risk/reward profile the "most compelling," citing its 4.7 million unique properties and a direct booking mix in the mid-60% range.
• Airbnb (ABNB): Rated Equal-weight with a $170 price target. The bank noted Airbnb's "leading 90% direct traffic mix" and improved execution make sustained double-digit growth more credible.
• Expedia (EXPE): Rated Underweight with a $235 price target. According to the note, Expedia's valuation discount to Booking has narrowed and no longer reflects its greater exposure to more commoditized chain-hotel and air travel markets.

The AI Opportunity

Morgan Stanley views artificial intelligence not as a threat to OTAs, but as a "new acquisition channel and product opportunity," according to analyst Matthew Cost. The bank expects that while horizontal AI tools will act as a new search layer driving high-value traffic to booking platforms, travel-specific AI agents will help OTAs enhance discovery and personalization.

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However, the note cautioned that "execution will determine the winners" in this new landscape. The bank believes platforms with strong, unique supply relationships—such as independent hotels and alternative accommodations—will gain an advantage as this type of inventory is harder for third-party AI tools to contract directly.

Market Outlook

The bank's positive long-term view is supported by continued growth in travel spending and online adoption. Morgan Stanley noted that global leisure travel is still only about 70% penetrated online, leaving an estimated $700 billion in bookings offline.

This provides a significant runway for growth, with the bank forecasting that online travel bookings will grow at a compound annual rate of approximately 7% from 2026 to 2030. This trend, combined with the strategic shifts driven by AI, underpins the bank's preference for OTAs with differentiated assets like Booking Holdings.