Back in 2015 the sector felt relatively untroubled, with the key change being the EU’s adoption of the Package Travel Directive which increased consumer protection requirements with various new rules including stronger insolvency protection and clearer consumer rights for cancellations.
These changes increased both the complexity and costs for tour operators and were quickly put to the test as Europe experienced a wave of geopolitical turmoil from 2015 to 2017, including Islamist terrorism like the Paris attacks in 2015 with 137 people killed or the attempted coup in Turkey in 2016.
These problems often led to a drop in demand in the impacted areas, leaving operators shifting capacity to other destinations as both they and their customers became more risk averse.
Meanwhile, UK tour operators were left dealing with further uncertainty following the Brexit vote in 2016 with a deal and ultimate departure occurring four years later in January 2020.
The main result for UK tour operators was an increase in paperwork, visas and costs for employing British staff based overseas that remains today.
Whether or not the uncertainty created by the Brexit led to the demise of the Britain’s oldest tour operator, Thomas Cook, in September 2019 remains unknown, but the impact was felt across the Continent.
At the time of Cook’s collapse, there were 600,000 customers overseas, a quarter of whom were from the UK, necessitating major repatriation efforts while the operator’s aircraft, brand and even logo were sold off to various parties with Hong Kong’s Fosun Tourism Group launching Thomas Cook Holidays a year later.
Having exposed the weakness of the Thomas Cook model which included high debt, reliance on seasonal cash flows and its exposure to uncontrollable external events, both the UK and the EU went into another round of legal, regulatory and consumer protection scrutiny which added another layer of complexity to the sector.
Covid comes
While these events were all extremely testing for the tour operator sector they quickly paled to nothing once an unknown coronavirus was detected in Wuhan, China, in December 2019.
The coronavirus, better known as Covid-19, led to the World Health Organisation (WHO) first declaring it as public health emergency of international concern in January 2020 before labelling it as global pandemic in March.
International borders closed, airlines cancelled millions of flights and the idea of leisure travel went out of the window, a situation that remained largely unchanged until 2022 when in Europe the lockdowns ended and business resumed.
While the immediate trend was for domestic and short-haul travel in the first summer of travel, Europeans have since returned to the skies with the Airports Council International Europe releasing figures showing that year-on-year growth of 7.4 per cent in European airport passenger traffic in 2024 had pushed the total to 2.5 billion, 1.8 per cent above pre-pandemic levels.
Consumers are now looking for increasingly sustainable options while booking online more with operators offering a more personalised service backed by dynamic pricing as a result.
Operators are also awaiting the results of one key experiment which has seen Europe’s low cost carriers (LCC) move into the package travel market.
EasyJet Holidays was launched by the airline in November 2019 and, despite the pandemic, in October 2024 became the UK’s fourth largest tour operator when it renewed its ATOL licence for 3.05 million pax while it also operates out of Switzerland, Germany and France.
This undoubtedly was part of the inspiration behind the announcement in February 2024 that Tui would start selling Ryanair flights and ancillaries as part of its packages.
While neither company has commented in detail on the results of the deal, the omens look good with Ryanair reporting a 7 per cent increase in passenger numbers to 203.1 million for the 12 months ending July 2025, having become the first European airline to have carried more than 200 million passengers in a year as of March 2025.
Tui’s figures are equally positive having just recorded its best Q3 from April to June in 2025 with 5.9 million customers while winter 2025/26 bookings are 1 per cent up with average selling prices increasing 3 per cent while popular destinations include the Canary Islands, Egypt, Spain and Cape Verde.
Rise of the OTAs
About the same time it cut the deal with Tui, Ryanair also came to similar flights and ancillaries sales agreement with a number of OTAs, confirming the importance of the strictly online distribution channels in today’s travel landscape.
Pre-pandemic, the European OTA market share grew from 19.7 per cent in 2013 to 29 per cent in 2019 and then to about a third in 2024 and has been credited with driving spends on additional nights.
The sector has taken advantage of the shift from desktop to mobile seen during the pandemic having invested heavily in mobile sites and apps while they have also benefitted from the growing transparency offered by meta-search sites.
As a result, according to global data company Aggregate Intelligence Europe is now the largest OTA market in the world, accounting for 32 per cent of global OTA revenue and is predicted to grow from generating $96.5 billion in 2025 to $140 billion by 2030.
Booking.com has been the clear winner from the growth accounting for about 69 per cent of Europe’s hotel OTA market and, while it does not do regional breakdowns, now offers 31 million properties worldwide.
While Europe is seeing strong growth again in the travel sector, the final component that is currently driving its success and will only increase in importance is the emergence of AI.
The technology has already proved to be vital in everything from analysing consumer browsing behaviour to understanding online social signals to offer highly personalised itineraries.
Behind the scenes, it is driving increased dynamic pricing, ancillary upselling through optimising add-ons and yield optimisation, allowing even the smallest tour operators to forecast demand and adjust their inventory accordingly.
Further efficiencies include automated itinerary building and supply chain optimisation while chatbots and virtual assistants are now handling common queries, bookings and cancellations far more efficiently than humans.
They are also proving to be vital in handling risk assessment when insuring travellers and are becoming a vital tool in the fight against fraud.
Indeed, such is the power of AI in the European travel distribution sector now that it will be fascinating to see where it leads it in the next decade.
By Edward Robertson
