Internet platforms and agentic travel-commerce partnerships: Muse partnerships raise the strategic stakes for online travel while opening transaction opportunities for Meta and Instacart

Overview

This Internet-sector event commentary examines the implications of Meta Muse partnerships with Expedia and Instacart. Morgan Stanley frames agentic platforms as a potential new top-of-funnel channel that can reshape travel discovery, booking economics, customer ownership, and competitive positioning across online travel agencies, while potentially expanding Meta's and Instacart's transaction funnels.

Core views

Expedia and Meta announced that users will be able to plan and book travel through Expedia directly within Muse, making Expedia the first major online travel agency to partner with the AI agent. Users can provide a destination prompt, after which Muse and Expedia are intended to organize hotels and related travel needs. Morgan Stanley expects the arrangement to function as a Connector: Muse would access a defined set of Expedia capabilities, such as hotel, flight, and package search and booking, rather than independently navigating Expedia's consumer site. Important unresolved details include the merchant of record, unit economics, data ownership, breadth of inventory access, specific product features, and loyalty-program integration. Morgan Stanley views Expedia's early move as a meaningful step toward a simpler trip-planning experience on a horizontal platform and potentially toward consumers booking travel with agents. In the near term, the firm believes the partnership could deliver incremental Expedia room nights at low acquisition cost. If the integration succeeds in shifting more planning and booking into horizontal agents and surfaces Expedia inventory more often or by default, Booking Holdings and Airbnb could face greater pressure to form comparable partnerships rather than risk ceding incremental traffic and customer relationships. The report compares this potential dynamic with paid search: even a company with superior supply may find it difficult to remain absent from an increasingly important discovery channel as user behavior changes. The report does not characterize future agent integrations as inherently negative for Booking or Airbnb; instead, it says execution becomes more important. Booking's differentiated scale, fragmented lodging supply, and proprietary information such as amenities, reviews, ratings, and room-level details could help it appear favorably from the first query through checkout. Morgan Stanley believes Booking can use current integrations much as it has used search to acquire users and convert agent-driven traffic into direct, repeat traffic. Its $230 target price uses about 18x average 2027/2028 GAAP EPS of about $13, below its long-term average P/E of about 20x excluding 2020 and 2021. The base case assumes high-single-digit revenue growth near term, more direct traffic and operating leverage, supporting low-teens-plus EPS growth. Airbnb may have more to lose if trip discovery and booking move from direct-to-platform behavior toward horizontal agents. Approximately 90% of Airbnb traffic is currently direct, while marketing is less than 2% of bookings, versus roughly 4-5% for Booking and Expedia. Morgan Stanley therefore argues that a loss of direct traffic could force Airbnb to work with agents and incur higher acquisition costs. The report acknowledges improving fundamentals: double-digit room-night growth, core-market acceleration, and product- and AI-led execution. But it remains cautious because sustained double-digit room-night growth and substantial margin expansion through 2028 are viewed as already reflected in the stock. Its $170 target price applies about 26x average 2027/2028 EPS of about $7 and assumes a roughly 30% premium to a regression of hotel and OTA peers. For Expedia, the partnership offers access to travel-specific AI tailwinds and could improve conversion and marketing returns, but Morgan Stanley continues to view its consumer position as the weakest among the three major OTAs. Expedia has improved platform consolidation, cost discipline, and marketing returns, but the report says it lags peers on supply differentiation and engagement. Its greater exposure to chain hotels and air, weaker consumer engagement, and higher marketing reliance leave it more exposed if horizontal agents disintermediate suppliers or capture the customer relationship. Expedia spends more than 5% of bookings on performance marketing, the highest of the three OTAs, largely on search. The $235 target price is based on about 10x average 2027/2028 GAAP EPS of about $23 and implies an approximately 45% P/E discount to Booking, slightly below the four-year average discount. The base case assumes roughly high-single-digit medium-term revenue growth, high-20s EBITDA margins from cost discipline and consolidation, but ongoing marketing investment and lower-margin B2B mix remain offsets. For Meta, the Expedia partnership is presented as a move from travel inspiration and mid-funnel activity in Reels and Stories toward transaction dollars and commissions. Morgan Stanley estimates offline travel spending at about $1 trillion, or about 3% of total offline consumer spending of about $30 trillion, while Booking, Expedia, and Airbnb are expected to spend about $15 billion on performance advertising this year. A more capable, personalized Muse travel agent could therefore allow Meta to capture more of the booking funnel. Morgan Stanley maintains an Overweight view and a $775 target price based on about 23x average 2027/2028 EPS of $34/$35. Its broader Meta thesis rests on a multi-year efficiency and productivity pivot, improving engagement and monetization, and potential upside from AI, subscriptions, and click-to-message. The report forecasts roughly 27% advertising-revenue growth in 2026 as AI supports Reels engagement, monetization, advertising performance, and measurement. Instacart also announced a Muse partnership that would turn prompts such as "Taco Tuesday" into a shoppable cart from a consumer's preferred retailer, followed by checkout and delivery. Morgan Stanley sees the use case as similar to Instacart's Clementine on-platform AI shopping assistant and notes that this is Instacart's fourth horizontal large-language-model integration. Although the arrangement could position Muse between Instacart and consumers, the firm views it as a potential growth and share-gain opportunity because Instacart has inventory across thousands of retailers, a delivery network, and substantial remaining offline grocery spending. The report cites roughly $1.6 trillion of grocery spending still offline and estimates that only about 11% of the approximately $1.8 trillion US grocery market is online. Morgan Stanley retains Equal-weight because customer cohort spending trends have raised concerns over growth and share loss in a highly competitive market, though advertising mix shift and what it considers a fair valuation provide offsets. Its $58 target price is based on about 8x average 2027/2028 adjusted EBITDA of $1.6 billion and implies about 18x 2027 EPS; the implied growth-adjusted EBITDA multiple of about 0.6x is described as about a 30% discount to the peer median and in line with subscale marketplace peers.

Analysis framework

Morgan Stanley starts with the announced product partnerships and the still-undisclosed operating terms, then assesses how agentic discovery could change traffic, customer ownership, conversion, and acquisition costs across travel platforms. It compares each company's supply, direct-traffic position, engagement, marketing intensity, and ability to integrate with agents, and supplements the event analysis with company-specific bull, base, and bear cases and earnings-multiple target-price frameworks.

Methodology notes

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Agentic platforms may shift travel and grocery discovery from direct channels and search toward horizontal AI agents.

  The report traces how a change in the discovery layer could affect traffic acquisition, customer relationships, inventory visibility, booking conversion, margins, and competitive share for platforms and suppliers.

• Valuation methodsP/E and PEG Valuation

  Price targets for Meta, Expedia, Booking, and Airbnb apply P/E multiples to forecast EPS.

  Morgan Stanley values each company using a selected multiple on average 2027/2028 EPS, with peer, historical, or regression-based comparisons used to contextualize the multiple.

• Valuation methodsEV/EBITDA valuation

  Instacart's target price is based on an EBITDA multiple.

  The report applies an approximately 8x multiple to average 2027/2028 adjusted EBITDA and compares the implied growth-adjusted EBITDA multiple with peers.

• Event-Driven and Behavioral FinanceEvent-driven analysis

  The Muse partnerships are analyzed as an event that could alter competitive behavior and platform participation.

  The report evaluates the announcement's immediate strategic consequences and the conditions under which competitors may need to respond.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Meta Platforms (META)

  Muse's Expedia partnership may move Meta from travel inspiration and mid-funnel engagement toward booking transactions and commissions.

  Strengths

  Structural efficiency focus, improving engagement and Reels monetization, AI-driven product opportunities, subscriptions, and click-to-message.

  Comparison

  Meta has historically lagged platforms such as Google in paid travel spend and acquisition.

  Risks

  Weaker engagement, slower Reels monetization, macro pressure, advertising-targeting regulation, and higher data-center capital intensity.

• Expedia (EXPE)

  First major OTA partner for Muse, potentially gaining incremental room nights and lower-cost acquisition while facing execution and disintermediation risks.

  Strengths

  Improving platform consolidation, cost discipline, marketing returns, B2B growth, and potential AI-led conversion improvement.

  Weaknesses

  Weakest consumer engagement and supply differentiation among the major OTAs; higher exposure to chain hotels and air.

  Comparison

  The target valuation implies an approximately 45% P/E discount to Booking, slightly below the four-year average discount.

  Risks

  Horizontal agents could disintermediate Expedia's supply, weaken consumer share, raise marketing needs, and dilute margins through B2B mix.

• Booking Holdings (BKNG)

  Could face pressure to join horizontal agents but is viewed as well positioned to negotiate favorable terms and convert agent traffic into repeat direct traffic.

  Strengths

  Scaled and differentiated lodging supply, proprietary travel information, and established search-acquisition capabilities.

  Comparison

  Its target multiple is below the long-term average P/E of about 20x excluding 2020 and 2021.

  Risks

  External agentic travel adoption could reduce high-margin direct traffic and make Expedia and hotel-direct suppliers more competitive for acquisition.

• Airbnb (ABNB)

  May be pressured to partner with agents if travel discovery shifts away from its direct channel.

  Strengths

  Improving growth algorithm, double-digit room-night growth, product execution, and potential AI-related efficiency benefits.

  Weaknesses

  High reliance on direct traffic means loss of the direct channel could require higher customer-acquisition spending.

  Comparison

  The target price assumes a roughly 30% premium to a hotel-and-OTA peer regression.

  Risks

  One-time product-cycle benefits, lower hotel contribution, OTA competition in alternative accommodation, higher marketing intensity, and unproven incremental ROIC.

• Instacart (CART)

  Muse integration may expand the shopping funnel and support grocery-delivery share gains, though it can place Muse between Instacart and consumers.

  Strengths

  Retailer inventory breadth, delivery infrastructure, prior horizontal-LLM integrations, and a large underpenetrated grocery market.

  Weaknesses

  Recent new- and existing-cohort spending trends raise concerns about forward growth and share loss.

  Comparison

  Its implied ~0.6x growth-adjusted EBITDA multiple is described as ~30% below the peer median and in line with EXPE and LYFT.

  Risks

  Slower online grocery penetration, slower advertising-mix shift, weaker cohort behavior, and investment needs that weigh on profitability.

Key data

• Meta offline consumer-spend addressable market~$30 trillionMorgan Stanley identifies this as the main addressable market for agentic offerings.
• Offline travel consumer spending~$1 trillionAbout 3% of the report's estimated ~$30 trillion of offline consumer spending.
• OTA performance advertising spend~$15 billionExpected this year for BKNG, EXPE, and ABNB combined.
• Airbnb direct traffic~90%Share of platform traffic currently coming direct, making channel displacement a material issue.
• Instacart US grocery market~$1.8 trillion; ~11% onlineMorgan Stanley describes grocery as a large, underpenetrated online opportunity.
• Instacart price target$58Based on ~8x average 2027/2028 adjusted EBITDA of $1.6 billion.
• Meta price target$775Based on ~23x average 2027/2028 EPS of $34/$35.
• Expedia price target$235Based on ~10x average 2027/2028 GAAP EPS of ~$23.
• Booking Holdings price target$230Based on ~18x average 2027/2028 GAAP EPS of ~$13.
• Airbnb price target$170Based on ~26x average 2027/2028 EPS of ~$7.

Impact & implications

Morgan Stanley argues that successful agentic integrations could turn horizontal AI platforms into a more important source of travel and commerce demand. This may create incremental conversion and low-cost traffic opportunities for early participants, but it can also transfer customer ownership and increase paid-acquisition pressure for platforms with weaker engagement or heavier reliance on direct traffic.

Risks

• The commercial structure of the Muse partnerships remains unclear, including merchant of record, unit economics, data ownership, inventory access, features, and loyalty integration.
• Horizontal agents may capture the customer relationship and raise permanent traffic-acquisition costs for travel platforms.
• For Expedia, weaker consumer engagement and chain-hotel and air exposure could heighten disintermediation risk.
• For Airbnb, a shift away from direct traffic could increase customer-acquisition costs and constrain margins.
• For Meta, slower engagement or Reels monetization, regulation affecting ad targeting, and data-center execution could weigh on growth and free cash flow.
• For Instacart, competitive intensity and weakening customer cohort spend could impair growth and share.

What to watch

• The partnership's merchant of record, economics, data ownership, inventory breadth, features, and loyalty-program integration.
• Whether Muse produces incremental travel demand and booking conversion rather than simply reallocating existing traffic.
• Whether Booking and Airbnb pursue similar horizontal-agent integrations and how they execute them.
• The impact of agentic channels on direct traffic, paid marketing intensity, and customer relationships for travel platforms.
• Meta's ability to turn Muse and AI engagement into transaction, advertising, subscription, and click-to-message monetization.
• Instacart customer-spend trends, grocery online-penetration progress, logistics efficiency, and advertising mix shift.