Why Europe is a microcosm of wider trends in online travel

Phocuswright Europe 2019 begins in seven days - bringing together the smartest group of travel executives and startups that you're likely to find at an event in the region this year.

The development of online travel over the last 25 years is often seen through the prism of the brands that have emerged from the United States, with Expedia Group, TripAdvisor and Booking Holdings in particular seen as pioneers in the sector.

But their dominance does a disservice to the way that digitalization of the industry has often been born through the innovation and guts of companies that have their roots and focus in Europe.

Booking.com is perhaps the most obvious contender in this analysis, having found itself thrust into the limelight from its headquarters in Holland in the mid-2000s and eventually being snapped up by the Priceline Group, the former name of the giant that is now Booking Holdings.

There are three broad trends that illustrate the prowess of the region in the current online travel scene - but, equally, demonstrate how fragile the growth of the sector can be when one particular brand or market holds the reins of power.

Empires on edge (yes, our theme this year)

"Sprawling empires fracture more easily than one might expect," Phocuswright's analysts suggest, with mega-brands "prone to the perils of even bigger creatures, or more innovative upstarts."

Powerful entities are dominating regions all around the world, and Europe is no exception, with the aforementioned Booking.com and Expedia apparent masters of their craft on both sides of the Atlantic Ocean.

Their respective roles in the market are held by their ability to dominate the dark arts of digital marketing (with a sizable chest of dollars behind them) and tighten or loosen the screw with suppliers when it comes contracting.

But these superior positions are only as healthy as the market dictates at any given time.

As PhocusWire has noted previously, dominance comes at a cost (not just financially) - the beast (also known as Google) being fed by the pair is growing stronger and hungrier each year.

The search giant's influence up and down the travel funnel in leisure travel should be of considerable concern to everyone in the industry, but not least those that have ridden the wave of growth in online travel for years.

Other brands that have a seemingly strong hold on their respective sectors in Europe should also be on notice.

GetYourGuide, for example, could perhaps be forgiven that its emergence and profile in Europe was a fairly unassailable one until just a few years ago.

The efforts of TripAdvisor (through its Viator and later Bokun acquisitions) have shown that a company cannot expect to have a market to itself.

More recently, Asia Pacific-focused and -based Klook has stated its intention to target the European market for tours and activities.

Nobody expects brands with a powerful position to rest on their laurels - but the warning signs are certainly there.

Leading the charge, digitally

Europe's diversity in terms of nations and market forces has forced travel brands to think differently to their counterparts in, say, the U.S.

The airline sector has its problems financially, especially amongst some of the so-called flag carriers, but this has led to some brands to think beyond the confines of their traditional operations.

The Lufthansa Innovation Hub, for example, is arguably one of the pioneers in the sector with its mixture of investment in ideas and collaboration with startups and established brands (its partnership in Hopper is a case in point).

The air travel experience is ripe for an overhaul, and some airlines are recognizing this challenge and what, they hope, it means for their businesses in the long term.

Hotel groups in Europe such as Accor have adopted what some might even consider a startup culture to how they think about their digital strategy.

Some chains are perhaps saddled with what may be considered a conservative approach to understanding how digital is (or should be) at the heart of every modern travel company's program of innovation.

Accor's widely talked about online marketplace project may have lasted little over two years but the brand gained a lot about the mechanics of distribution and where it sits in the thinking of consumers and alongside its competitors.

Fail fast and fail often - not a slogan usually associated with traditional supplier-type brands, but a refreshing one that is clearly at the center of thinking for those hoping to transform their businesses and sectors.

Breakthrough brands give hope

Power, dominance - call it what it you like when describing the brands at the top of online travel sector's pyramid, but there is always room for others, the outliers, to carve out a role for themselves.

Lastminute.com is perhaps the best-known outlier that emerged at the turn of the century, as sites such as Expedia sought to expand into Europe.

Its strategy in the mid-2000s may be seen by some as an opportunity missed, but for years prior it had a brand, strategy and culture that was the envy of many.

More recently we have witnessed the incredible rise of Skyscanner (later sold to Ctrip for $1.75 billion) and a number of gig economy-type brands (such as Drivy) make their mark.

But these are the more high-profile companies - many of which are known outside of Europe.

Secret Escapes remains the hidden gem of the region, alongside the likes of HolidayPirates (the former was involved at Phocuswright Europe in 2018 and the latter at this year's event), with their highly focused strategies and ability to find a sustainable and influential role in the ecosystem of online travel.