Platformization in Tourism: Typology of Business Models, Evolution of Market Concentration and European Regulation Responses

Abstract

The paper serves to discuss the evolution of platform business models in tourism, the dynamics of market concentration, and regulatory interventions. We present the historical timeline of digitalization in tourism distribution models, starting from the Global Distribution Systems (GDS), and continuing with Online Travel Agencies (OTAs) and their market concentration in the duopoly of Expedia Group versus Booking Holdings Group. We continue to discuss the slow, yet uncertain, breaking of the global duopoly in the travel platforms market. On the one hand, the duopoly is challenged from the “bottom up”, where Airbnb is the most successful example, riding on the wave of popularity of the ideals of the “sharing economy” and the aftermaths of the 2008 global financial crisis. On the other hand, the duopoly is challenged from the “top down”—the most powerful digital players have started to extend their operations to tourism. The second section of the paper identifies three current areas of platformization in tourism operations—distribution, promotion and HRM. We analyze available industry and public statistics indicators in Europe for each of the three dimensions. Finally, we discuss the regulatory responses to the market concentration of travel distribution platforms. Although the challenge of market concentration is a global issue, and the threats are the same in many countries, we limit the discussion of regulation to the European context. In conclusion we discuss the possibilities of future development, and point to the threat of the further acceleration and interconnection of platformization and market concentration in the travel business.

1. Introduction

Platformization in tourism refers to the proliferation of digital platforms in tourism operations, starting with distribution but later extending also to other areas of business operations. To understand the most recent trends in travel platformization, we argue that we need to know and understand the development of digital business models in tourism in the last four decades. While digitalization is a defining feature of platformization in tourism, its main defining characteristics are the specifics of business models that aim for global market concentration.

We take the main defining characteristics of platforms to be both their digital nature and their business model characteristic—the interdependent business model in which the platform serves to connect at least two different segments of customers. The success of the business model depends on the satisfaction of both segments. Interdependent business models were very common even before the age of digital development; the most notable examples are mass media and travel agencies. The success of the typical advertisement-based business model of the mass media relies on the satisfaction of both the viewers and the advertisers. The success of travel agencies depends on the satisfaction of both the travel service providers and would-be travelers. With digitalization, these types of business models could start to achieve an unprecedented reach and build global oligopolies, which pose important challenges for market concentration regulations.

Despite extensive research on platformization in other sectors, a comprehensive exploration of its impact on tourism remains underdeveloped. The existing studies tend to focus on isolated aspects, such as the socio-economic implications of platform-mediated work or the spatial distribution of services. However, an integrated framework to understand the indicators, phases, and consequences of platformization in tourism is still lacking. Addressing this gap, the paper seeks to provide a holistic view of the evolution of digital platforms in tourism, examining their business models, the shift in market structures, and regulatory responses, particularly within the European Union (EU).

This study aims to answer the following research questions:

• How has market concentration evolved in the tourism industry under the influence of platformization?
• What are the key indicators of platformization in tourism, and how do they reflect the sector’s transformation?
• What are the major regulatory responses, particularly in the EU, to address challenges posed by platformization?

Even though the focus of this paper is on companies aiming at global operations, the authors are keenly aware of the western, primarily European, focus of their work. We present and discuss the U.S.-originated (with exception of Booking.com) travel platforms and their operations in the European market, as well as European regulation attempts.

2. Methods

To achieve the research objectives, the paper combines a chronological analysis of platformization trends with an analysis of tourism platform market data and a critical review of regulatory frameworks and socio-economic impacts. The methodology includes a synthesis of academic literature, a basic analysis of accessible European statistical data, an analysis of case studies from leading platforms, and the examination of European antitrust rulings.

The novelty of this research lies in its integrative approach, which synthesizes existing literature to identify key stages and patterns of platformization in tourism, while offering a comprehensive overview of its implications for market concentration and regulatory challenges. These insights contribute to the broader understanding of digital transformation in service industries, and offer practical implications for policymakers, industry stakeholders, and researchers.

First, we use a literature review to present platformization in tourism via the historical timeline of travel platform business models. This serves to introduce the typology of the most common travel platforms, the technological and business aspects of their operations, and the main players and developments in the market concentration of travel platforms. The typology builds on other relatively current typologies (e.g., [1,2]), but adds perspectives from the political economy and market concentration regulation.

Second, we discuss the definition of platformization in tourism as a characteristic of tourism operations, and identify three current areas within the tourism and hospitality sector: (a) tourism distribution, (b) tourism promotion, and (c) tourism human resources management (HRM). For each section, we look for appropriate indicators currently available in the European statistics, both industry association (HOTREC) and public data collection (Eurostat). We analyze the data from the perspective of platform market concentration.

Finally, we continue with the discussion on why market concentration needs to be regulated, and present a few examples of how countries in Europe and the EU addresses this issue in the world of travel platforms, particularly those involving Booking.com and Airbnb.

The following sections delve into the evolution of platform business models in tourism, the dynamics of market concentration, and regulatory interventions. A critical discussion highlights comparative perspectives and future research directions to deepen our understanding of this transformative phenomenon.

3. Historical Evolution of Tourism Distribution Platforms

We start by delineating the development of the first travel platforms that preceded the internet—the Global Distribution Systems (GDSs) and the transformation from internal operations solutions to the B2B distribution, thus becoming what we nowadays consider a platform. With the rise of the internet online travel agencies (OTAs), a long-standing duopoly in the travel market was formed. The rise of social media allowed for the incorporation of free user labor in travel platform business models and additional revenue sources in data analytics. The “sharing economy” extended travel platformization to the area of platform work and algorithmic management. Finally, the entrance of large global players to the digital travel market and the quest for “super-apps” is threatening the power of the current travel platforms, seeking to replace it with potentially even greater market concentration. Figure 1 represents the historical timeline of the discussed trends.

3.1. Since 1960s: Global Distribution Systems (GDS) as the First Travel Platforms

The history of digitalization in the tourism industry long predates the invention of the internet. The growth of the airflight industry after WWII created difficulties in managing airline ticketing, which was first performed manually with the help of telephone connections, and later also with so-called magnetic drum memories. In 1953, American Airlines was the first to connect with IBM to create the SABER central reservation system. It was based on IBMs airflight solution, originally developed for military purposes. SABER connected the passenger seat flight availability information with terminals of airline’s ticket offices, and later also travel agents [3]. This was the birth of Central Reservation Systems (CRS), later becoming GDSs (Global Distribution Systems), which have ruled the world of travel reservation for decades, extending from airflight to other areas of travel operations, such as accommodation reservations.

The current GDS market is a global oligopoly dominated by four global market players. The three main companies are the U.S.-originated Sabre (originally supported by American Airlines as the main supplier), European Amadeus (originally supported by Air France, Lufthansa, Iberia, and SAS) and Travelport (originating from Apollo, an in-house system from United Airlines, which later became Galileo). According to Vinod [2], these three GDSs, even today, control 90% of the market share of B2B bookings. The fourth largest player is the Chinese company TravelSky [2]. However, even though they are originally digital solutions, their main defining element is not their digital character (or not only), but their business model; GDSs operate primarily as business-to-business (B2B) distribution systems, and their market rein has been fundamentally supported by the growth of tourism agencies as the intermediaries between the travel offer and the customers. Although the solutions were initially developed to optimize the reservation system or airlines internally, by the late 1960s, they started to include the travel agencies and to provide the offer to other airlines as well [3]. The GDS revenue stream is based on both the hotels/airlines and the travel agencies willing to pay for the software solutions. As such, Vinod [2] counts the GDSs as the first examples of the power of digital platforms, conceptualized by the large dependency of travel business entities on platforms to transact business at scale.

The airline reservation systems were also the first to be regulated within the antitrust regulation that occurred in the 1980s. At that time, the systems were developed in such a way that those owned by specific airlines were leased for use also to other airlines. The market competition policy specifically focused on the so-called “display bias”, whereby it has been shown that the systems were biased in the offer they would provide on the first screen displayed to the travel agents. In 1984, the US Civil Aeronautics Board introduced the Code of Federal Regulations, aimed at removing the display bias and preventing the discriminatory fees charged to rival carriers [3]. In 2004, the process was deregulated again, with the arguments that the market has changed dramatically and the CRSs were not the main gatekeepers of the travel reservation market anymore [4,5]. The time has now come wherein the digital reservations market has become dominated by the Online Travel Agencies (OTAs).

3.2. Since the 1990s, Online Travel Agencies and the Rise of the Travel Duopoly: Booking vs. Expedia

Even though attempts were made at direct reservation systems even before the internet, such as the 1985 eAAsySabre for the reservation of flights, hotels and cars [2], direct booking only took flight after the introduction of the internet. The reasons were related to both technology (providing easy access to customers) and business models. While the GDS business model depended on travel agencies’ revenues, they had to be careful about developing systems that would be perceived by travel agencies as taking up their market share [2]. The real change happened when new businesses emerged whose operations posed a direct competition to the travel agencies, as is clear also from their name: Online Travel Agencies (OTAs).

The first OTA was Travelocity, which started as a venture of Sabre. Since 2015, it has been owned by Expedia Inc., one of the two global digital giants owning most of the western OTA businesses. The other is Booking Holdings. Both the European-originated Booking Holdings and the U.S.-originated Expedia Group (both registered now in the U.S.) started in the same year of 1996. We have seen a period of extreme growth in investments into online businesses of various kinds, travel included (followed by the dot-com bubble financial crisis in 2000). While Booking.com started as a merger of two European startups, Expedia.com started as a division of Microsoft, and was spun off into a public company in 1999.

In the past 25 years, the two companies have built a large portfolio of travel companies. In 2023, Expedia Group owned Expedia, Hotels.com, Vrbo, Travelocity, Hotwire, Orbitz, Ebookers, CheapTickets, CarRentals, Expedia Cruises, Wotif and Trivago. In the same year, Booking Holdings owned Booking.com, Priceline, Agoda, Rentalcars.com, Kayak, and OpenTable. Their portfolios include online reservation systems for accommodation, ground transport, flights, activities and restaurants. While their primary business is in the area of OTAs, both companies also invested heavily in meta-search technology (Trivago for Expedia Gorup and Kayak for Booking Holdings), and recently also in artificial intelligence (AI).

The growth of OTAs allowed for the development of the meta-search business model—the main difference is that OTAs allow for the reservation of the offer, and thus need a business agreement with the provider, while meta-search engines compare the same offer in various OTAs, but also increasingly direct one towards the provider’s website. However, the display bias continues to be a problematic issue, just as it was with the GDS. Cure et al. [6], for example showed, that Booking Holdings Kayak is biased, since it provides more visibility to the Booking.com offer than that of its competition.

3.3. Since the 2000s, Using the Free User Labor and Selling Online Analytics: Tripadvisor

After the dot.com bubble burst in 2000, the capital investments in online businesses decreased, and companies began actively looking for new types of business models. This was a time of profound changes in the way the internet operated, then described with the term “web2.0”. The main characteristic of this new phase of development is the exponential growth of user-generated content, as allowed by the solutions that no longer required programming language or other technical expertise to publish online. This saw the growth of online blogs and the beginning of social media as we know it today. Facebook was established in 2004, YouTube in 2005, and Twitter (now named X) in 2006.

The realization that many people were highly motivated to publish online for free brought important changes also for the travel platforms. Tripadvisor was amongst the first to start incorporating the free labor of user-generated content into their business model. This allowed for a reduction in costs and the incorporation of word-of-mouth, or the classical “social proof”, technique of promotion. The incorporation of user reviews soon became the standard offer also on OTAs of that time.

Free user labor allowed for the growth of the Tripadvisor business model, which relies on revenue from tourism providers who pay for the seamless incorporation of their promotion with user-generated reviews, and for access to data analytics. This allowed Tripadvisor to operate similarly as a mass media company, with revenues from advertisements, rather than as an OTA, which would gain revenues from reservations. For a while, Tripadvisor has been part of the Expedia Group, but it was spun off as a public company a few years later. Nowadays, using the opportunities raised by the meta-search business model, Tripadvisor also operates as a meta-search engine, offering links to reservation sites with claims of driving direct booking. Currently, Tripadvisor Group, including Viator and TheFork, is a major player in the western online reservation market. Based on the Eurostat experimental statistics, it is one of the four main accommodation reservation systems that, since 2020, have been required to report their detailed data, which Eurostat collects and publishes as a complementary data source to national statistics on tourism flows in the European Union [7].

3.4. Since the 2010s, Challenging the Travel Duopoly from Bellow: Airbnb and the “Sharing Economy”

Just as the dot.com bubble crisis was followed by new developments in online business models, so was the 2008 financial crisis, hitting the Western world and the U.S. particularly hard. Part of the response was the onset of new business models termed with various names, such as the “sharing economy”, “peer-to-peer networks”, the “collaborative economy”, or the “platform economy”.

Dredge and Gyimóthy [8] provided a typology with examples of travel-related platforms as a “collaborative economy” in tourism, covering the areas of accommodation (e.g., Airbnb, Couchsurfing), transportation (e.g., Uber, Fun2Boat, city bike sharing programs), food (e.g., EatWith, Feastly), experiences (e.g., Sidetour, Localaids), as well as more marginal areas such as sharing travelling equipment (e.g., Rent-A-Suitcase), finding travelling companions (e.g., Wandermates, TripTogether), temporary jobs while on travel (e.g., Jobbadical) or people who can look after one’s home while away (e.g., TaskRabbit).

The defining feature of “sharing economies” is said to be the “sharing” of resources, such as accommodations in the case of Couchsurfing or HomeExchange. Critics were quick to point out that the “sharing economy” term should be reserved only for the business models that are in line with the ideology of sharing, participation and collaboration. For example, Oskam and Boswijk [9] claim that platforms such as Airbnb and Uber do not represent an embrace of openness, inclusivity and the commons, but “network capitalists”. Similarly, Drahokoupil and Fabo [10] criticized the use of the term “collaborative economy”, as used by the European Commission, as a misleading concept, as “the trend is in fact just an extension of the market mechanism”.

Even though “sharing economy” platform development later turned out to be more about the provision of labor, i.e., platform work, than the real sharing of resources, it has allowed for a new entrant to challenge the duopoly of OTAs. Airbnb and its subsidiaries are nowadays considered to be the fourth major player in the online accommodation booking market. Airbnb used both the positive discourse surrounding the sharing economy and the fact that, especially in the U.S., the 2008 economic crisis meant that more people were economically struggling, and were more inclined to provide accommodation hosting to secure some extra income. This allowed Airbnb to provide accommodation at lower prices than OTAs, and to successfully enter the market. However, after securing its market position, Airbnb has gradually changed from “shared accommodations”, as the promoted offer, to “entire accommodation”. Landlords have increasingly replaced their long-term tenants with more profitable short-term leases, in place of the original “sharing economy” idea of the tenants sharing their accommodation to derive extra income. Some research data indicate that almost half of the analyzed Airbnb listings are so-called multi-listings—posted by hosts with two or more listings, indicating the growth of professionalism [11]. According to Sans and Quaglieri [12], in 2015, 2.5% of hosts controlled 30% of all home rentals in Barcelona. The consequent effects on the rental market have led many countries to introduce various types of short-term rental regulations [13,14]. According to Oskam and Boswijk [9], low-end hotels and B&Bs have adapted, and started to use Airbnb as just another online booking platform.

Complementary to the development of “platform work” was the birth of “algorithmic management”. These new types of platforms have introduced algorithmic management to manage the work related to the extreme numbers of service providers, including the case of Airbnb hosts [15,16,17]. Further, algorithmic management has been an important step in the extension of platformization in tourism from the area of online distribution to other areas of operations, such as managing housekeeping or HR in general.

While the 2020–2023 COVID-19 pandemic hit the tourism industry especially hard, the post-pandemic growth in travel was extreme, and the industry recovered relatively fast. As with the other two crises, the pandemic was also followed by a growth in changes in travel platform business models. The bet at that time was on the growth of XR and virtual experiences, since the post-pandemic situation saw the bust of many of the virtual experiences’ businesses. A case in point would be the Amazon Explore platform, which offered the live-streaming of virtual tours, combined with shopping experiences based on an intertwining with Amazon’s retail business, and it finished its operations shortly after the pandemic ended [18].

The post-pandemic development has instead revolved around another trend: the growth of generative AI and its implications for the travel sector. AI has allowed previously smaller market players to increase their market share. The best-known example would be the airline reservation system Hopper [19,20]. Hopper has been using AI in the context of the enormous database of airlines’ past performances in order to predict future prices. The uncertain state of affairs after the pandemic gave Hopper an important competitive advantage in securing the predicted price, reducing the risks for the customer. It provided this service also to other travel platforms; however, they soon began developing their own AI systems, often buying AI startups to join their overall portfolio.

3.5. Since the 2020s, Challenging the Travel Duopoly from Above: The “Scary 5” and the “Super-Apps”

The development that has been challenging the duopoly of Booking Holdings and Expedia is the entrance of stronger digital players into the realm of travel, which Oskam and Zandberg [21] termed the “Scary 5” scenario. From the Western perspective, most notably, the issue of Google entering the travel reservation arena has been the focus of wonder and worry for other platforms. In 2016, Oskam and Zandberg [21] pointed to the fact that Google would, in that case, go against its own interest, since it relies on advertising revenues from OTAs, especially the two largest ones. In 2024, Google had already launched its own travel solutions, such as Google Travel or Google Flights, and had in general incorporated travel options into their Google Maps as a meta-search facility. The latest Airbnb annual report [22] refers to this risk as the fact that some of the largest digital players have important advantages in reaching their current base of users, and point specifically to Google and Apple, and the dangers in them favoring their own travel service or including other types of bias.

The trend in competition amongst the largest digital platforms currently seems to be the race to position themselves as at least regional if not global monopolies, via reaching the status of “super-apps” that offer most service to a user within one single platform. Airbnb’s annual report [22] refers to this trend as the danger of having its offer biased or even excluded from these “super-apps”. In the West and especially in Europe, the most likely winner of this level of market concentration seems to be Google, and it remains to be seen what the market concentration will be in the future. In the next sections, we will analyze available data on platformization in tourism, discuss why market concentration is an important focus of regulation, and present the past policy attempts made in Europe in addressing market concentration in the world of travel platforms.

4. Indicators of Platformization in Tourism

The term “platforms” in tourism and hospitality research gained popularity only after the introduction of the so-called “sharing economy platforms”. An overview of the current literature on the term platforms and/or platformization in tourism shows that authors primarily have these types of platforms in mind when referring to platformization in tourism (e.g., [23,24]), or related concepts such as “platform-mediated tourism” (e.g., [25]). However, as argued above, we count as tourism platforms all digital intermediaries in the sector, starting with the global distribution systems (GDSs) developed from the Central Reservation Systems (CRSs) starting in the 1960s. As defined in the introduction, we take platformization in tourism to mean the proliferation of digital platforms in tourism operations, whereby we focus on platforms as business models of intermediation.

The calls for the regulation of tourism platforms have commonly been accompanied by calls for transparent data. For example, in a 2019 joint statement, the European Federation of Food, Agriculture and Tourism Trade Unions (EFFAT) and the Hotels, Restaurants & Cafés in Europe association (HOTREC) called upon public authorities to take measures to:

• Increase efforts to regulate the economic activities of the platform economy through legislation to limit the negative impacts on businesses and employment in the hospitality and tourism sector;
• Collect coherent data;
• Create measured deterrents for operators not respecting requirements by legislation through appropriate sanctions;
• Guarantee that legislation is fully respected by all providers of hospitality and tourism services, through effective enforcement, supported by resources and legal powers for public authorities to do their jobs correctly, so that customers are protected, employees are treated fairly and entitled to their rights, and responsible businesses enjoy a fair competitive environment/level playing field [26] (p. 2).

In order to “collect coherent data”, it is necessary to identify the indicators of platformization in tourism. Here, we focus on platformization in relation to market size and market penetration, and identify the first steps made in European data collection on the platformization of the three areas of tourism operations that have seen the greatest rise in platformization to date—distribution, promotion and human resources management (HRM). Although platformization in tourism is often discussed in relation to other areas, such as urban development, we argue that those trends, while pertinent to platformization in tourism, should be considered as impacts of platformization, and are beyond the scope of this paper.

4.1. Platformization of Tourism Distribution

The first and longest held area of operations that were “platformized” in the sector concerned the distribution channels. This is the area that also received the most attention from industry associations and public agencies involved in data collection. The main indicator of platformization in hotel distribution is the digital platforms market share. Such data have been collected in Europe by the HOTREC association since 2013. Every two years, they perform a survey amongst European hotel representatives [27]. As seen from

Table 1. Market share of online distribution channels in the European hotel market since 2013. Source: [27] (p. 20).

	Market Share 2023	Market Share 2021	Market Share 2019	Market Share 2018	Market Share 2017	Market Share 2015	Market Share 2013
Online Distribution Channels = Platforms	(n = 2394)	(n = 3124)	(n = 3044)	(n = 2166)	(n = 2593)	(n = 2188)	(n = 2221)
Online Booking Agency (OTA)	29.1	27.1	27.1	27.3	26.9	22.3	19.3
Global Distribution Systems (GDSs)	1.1	0.9	1.4	1.4	1.9	2.7	2.0
Social Media Channels	0.6	0.7	0.7	0.7	0.5	0.5	0.5

, the market share of online booking agencies (OTAs) has been steadily increasing in the past 10 years, while the market share of global distribution systems (GDS) reduced from 2% in 2013 to 1.1% in 2023. On the other hand, social media channels account for a relatively stable, yet minimal, share of the hotel distribution market (less than 1%). Similar indicators could be collected for distribution channels within other tourism subsectors, such as transportation (e.g., flight reservations), food and beverage, and experiences and events.

The extension of platformization to the informal sector of accommodation offerings brought about by the “sharing economy” platforms has spurred a push towards the collection of data not at the level of hotels or accommodation providers, but directly on the platforms. Eurostat experimental statistics have collected and aggregately published data from the four main accommodation reservation platforms in Europe—Booking.com, Expedia, Tripadvisor and Airbnb—since 2018.

Table 2. Aggregated market share of the four main reservation platforms in the European accommodation market since 2018. Data source for calculations: Eurostat [7,28].

	2023	2022	2021	2020	2019	2018
Aggregated market share of Booking.com, Tripadvisor, Expedia and Airbnb	23.31	20.69	19.42	18.66	16.56	14.60

illustrates the aggregated market share of these reservation platforms in the European accommodation market from 2018 to 2023. We have calculated the market share from Eurostat data on “Guest nights spent at short-stay accommodation offered via collaborative economy platforms by country of residence of the guest—experimental statistics” [7] and “Nights spent at tourist accommodation establishments by country of origin of the tourist” [28]. The limitation of this calculation is the assumption that all the nights reported by the platforms were also reported to the national statistical offices (i.e., were legal, and there is a system in place to follow the homestay accommodation sector also at the national level).

The data presented in Table 2 demonstrate a consistent increase in the aggregated market share of four main platforms over a six-year period, reflecting the deepening platformization of the tourism distribution sector. Starting at 14.6% in 2018, the market share of these platforms grew steadily, reaching 23.31% by 2023. While the overall market concentration remains below 30%, the rapid growth highlights the increasing dominance of these platforms in the European accommodation market.

This expansion underscores the platforms’ ability to leverage digital tools, network effects, and innovative business models to attract consumers and accommodation providers alike. Platforms like Airbnb have further diversified the market by integrating informal accommodation offerings, while others such as Booking.com and Expedia have continued to consolidate their positions through strategic partnerships, advanced data analytics, and tailored marketing efforts. These dynamics have not yet led to high levels of market concentration, but indicate a trajectory of growing influence, making it natural to anticipate further increases in their share in the coming years.

Given this rapid growth, it is essential for regulatory authorities to actively monitor the situation. Ensuring a balanced and competitive market will require vigilance and timely interventions if necessary, especially as platformization continues to reshape the tourism sector. Regulatory oversight should aim to foster innovation and consumer choice while preventing potential market distortions in the future.

Table 2 thus provides a crucial lens through which to understand the evolving dynamics of the European accommodation market, and serves as a basis for discussions on future policy actions and market developments.

4.2. Platformization of Tourism Promotion

We saw in Table 1 that social media represents a very low share of hotel distribution according to the HOTREC survey. However, social media belongs to the area of promotion, or tourism operations, rather than to hotel distribution (although admittedly the two areas are ever more intertwined within the digital world). Indicators of platformization in tourism and hospitality promotion would include data on the usage of social media and other types of digital platforms within the tourism sector. Such data have been collected by Eurostat since 2014 within the category of internet usage by sector [29]. According to their data (See Figure 2), the accommodation sector has the largest share of enterprises using social media, even more than the information and communication sector, indicating a high extent of platformization in the promotional operations of the sector.

4.3. Platformization of Human Resources Management (HRM) in Tourism

The “sharing economy” platforms have accelerated the trend of digitalization of HRM operations in tourism. While various forms of digital software for personnel management have existed since long before the rise of such platforms, we count as platformization only the types of digital solutions that allow platforms to be intermediaries between the workers and their work, either digital (e.g., online communicating with the guest) or non-digital (e.g., cleaning the apartment). The exact boundaries between distribution and HRM operations are blurring, similarly to the trend of blurring the boundaries between distribution and promotion, as argued above. However, the indicators of the platformization of HRM could be found in the field of types of work, such as the Eurostat experimental data on digital platform workers [30]. In 2023, the national statistical offices of 16 EU countries for the first time included questions on digital platform work within the regular EU Labour Force Survey (LFS). The data (see Figure 3) showed relatively low shares of people participating in digital platform work—less than 1% of those surveyed. Transport, taxi services and renting are the services most typically associated with the tourism sector. However, cleaning/handiwork and creating content services are also present within the sector, as is the case with travel influencers (e.g., [31]). If platform work and algorithmic management continue to increase their market share, we expect data collections to follow these trends and provide more detailed distinctions.

5. Addressing Market Concentration: The Need for a Robust Competition Policy in the Tourism Industry

Competition serves as a cornerstone of economic health, driving innovation, enhancing efficiency, and broadening customer choice by encouraging businesses to improve their offerings [32]. A robust competition policy is vital to maintaining open and dynamic markets, curbing monopolistic tendencies that could hinder growth and harm costumers. By fostering fair competition, this policy plays a critical role in promoting long-term economic development. Antitrust law is central to this framework, as it maintains market balance by preventing unfair competitive practices, such as price-fixing, market sharing, and the abuse of market power. These legal measures are essential to protecting customer welfare, stimulating innovation, and upholding a competitive market structure.

Antitrust regulations in the European Union prohibit practices among market participants that restrict competition and the abuse of market dominance [33]. These regulations are derived from two key provisions within the Treaty on the Functioning of the European Union (TFEU). Firstly, Article 101 TFEU forbids agreements between independent market participants that limit competition. One of the most serious violations of Article 101 is the formation of cartels, where competitors may engage in practices like price-fixing or dividing markets among themselves. Secondly, Article 102 TFEU prohibits dominant firms from abusing their market position. Examples of such abuses include imposing unfair pricing, limiting production output, or withholding innovation, all of which harm costumer welfare. These articles are foundational to European antitrust policy, designed to promote fair competition and protect costumers.

The rapid platformization of the tourism industry has led to serious worries about market concentration and anti-competitive behavior, especially with regard to the dominance of a small number of large companies [34]. Competition authorities around the world are expressing significant concern over the fact that a few online platforms play a major role in shaping today’s global tourism industry.

A biennial report from Statista [35] on market shares within the European hotel industry has highlighted that Booking.com dominated the OTAs sector, securing a 69.3% market share. Expedia followed, with 11.5%. In 2023, Booking.com emerged as the global leader among OTAs in terms of revenue, generating over USD 21 billion. Expedia and Airbnb ranked second and third, with revenues of approximately USD 13 billion and 10 billion, respectively. The global online travel market was estimated to reach nearly USD 600 billion in 2023. Online transactions played a significant role in the travel and tourism industry, accounting for more than two-thirds of total revenue in that year.

The data presented above clearly indicate a significant market concentration within the OTAs sector, especially when evaluated through traditional concentration indices such as the Herfindahl–Hirschman Index (HHI) and Concentration Ratio (CR). For example, Booking.com’s market share of 69.3%, combined with Expedia’s 11.5%, suggests that just two companies control the vast majority of the European OTA market, yielding an HHI value well above 2500, which signifies a highly concentrated market according to antitrust guidelines [36,37]. The concentration ratio (CR2), which considers the top two firms’ combined market shares, would exceed 80%, further reinforcing the dominance of these firms. Such high levels of concentration are concerning from a competition policy perspective, as they suggest limited room for smaller competitors and potential harm to consumer welfare due to reduced competition. These indices underscore the necessity of robust antitrust enforcement and regulatory oversight to mitigate the risks associated with this level of market control.

5.1. Price Parity Clauses: A Mechanism for Market Control in the European Tourism Industry

The European Commission has long identified the dominance of major OTAs, such as Booking.com and Expedia, as a critical concern within the tourism industry, given their ability to control a significant portion of the market. Through the Directorate-General for Competition, the Commission has been central in maintaining market fairness by addressing the competitive imbalances within the platform economy. In particular, starting in the early 2010s, European regulators observed how Booking.com and Expedia leveraged network effects and data strategies to form a duopoly, limiting competition and customer choice.

One of the main practices under scrutiny was the use of price parity clauses, which prevented hotels from offering lower prices on their own websites than on OTAs. These clauses became the focus of numerous investigations, including one in the United Kingdom (UK) in 2012, following a complaint that Booking.com, Expedia, and InterContinental Hotels had engaged in price-fixing [38,39]. The investigation revealed the anti-competitive nature of the “most-favoured nation” clauses, as they blocked smaller OTAs from offering discounts, thereby stifling price competition. The UK competition authorities, alongside the European Commission, deemed such practices anti-competitive under Article 101(1) of the TFEU, arguing that the agreements between OTAs and hotels were not genuine agency relationships, but distribution arrangements, and thus subject to competition law.

The investigation into Booking.com’s anti-competitive practices was not limited to the UK. A similar antitrust case emerged in Germany in 2015, where the Bundeskartellamt (German Competition Authority) ordered Booking.com to remove its “best price” clauses from contracts with hotels. These clauses, similar to those investigated in the UK, required hotels to provide Booking.com with the best rates and conditions across all platforms, which significantly limited competition [40]. While Booking.com had modified these clauses to allow lower prices on other platforms, it continued to prohibit hotels from offering better deals on their own websites. Unlike competition authorities in France [41], Italy [42], and Sweden [43], which accepted this modification (referred to as the “narrow best price” clause), the Bundeskartellamt ruled that even the revised clauses were anti-competitive. They restricted hotels’ ability to set prices freely, and hindered new platform entrants, ultimately limiting consumer benefits by reducing pricing flexibility and competition in the market. This decision reflected wider efforts by the European Commission, as seen in previous investigations, to ensure that the dominance of OTAs like Booking.com and Expedia does not stifle market competition. By challenging such restrictive practices, European regulators, including the Bundeskartellamt, sought to restore a more competitive environment, where smaller platforms and hotels could offer costumers greater choice and fairer prices.

The European Commission’s scrutiny of OTAs did not conclude with the 2015 cases against Booking.com and Expedia in the mentioned EU countries. Recognizing the persistent risks to market competition, the Commission maintained a close watch on the sector, conducting a series of market studies to assess the evolving competitive dynamics. The European Competition Network report [44] analyzed the effects of regulatory changes to OTAs’ parity clauses across ten EU Member States. The shift from “wide“ to “narrow“ parity clauses, which previously required hotels to offer the same rates and availability on OTAs and their own websites, aimed to enhance competition. However, the report found a limited impact; 79% of hotels did not differentiate prices between OTAs, and 69% maintained similar room availability across platforms. Some variation was noted in France and Germany, but overall, competition remained constrained. OTAs’ commission rates also stayed stable.

The report concluded that the modifications to parity clauses did not significantly disrupt the dominance of major OTAs like Booking.com and Expedia. While regulatory interventions eased some restrictions on hotels, the competitive landscape showed minimal changes. This outcome reinforced broader concerns over the effectiveness of antitrust efforts in addressing market concentration and maintaining fair competition in the digital economy.

After the initial analysis in 2016, the European Commission [45] produced an external market study covering the years 2017 to 2021. This study, which included six Member States (Austria, Belgium, Cyprus, Poland, Spain, and Sweden), aimed to monitor any shifts in hotel distribution practices following the regulatory interventions targeting the anti-competitive use of price parity clauses by OTAs.

Despite the regulatory efforts, the 2022 market study revealed no substantial changes in the competitive landscape within the EU’s hotel accommodation distribution sector compared to 2016. Booking.com and Expedia continued to dominate, holding significant market shares, with OTAs accounting for 44% of independent hotel room sales—a slight increase from 2016. The study found that the removal of wide and narrow price parity clauses in countries like Austria and Belgium had not significantly altered the distribution practices of hotels. Hotel commission rates paid to OTAs remained stable or slightly decreased, while OTAs continued to use commercial tactics, such as visibility incentives, to maintain competitive advantages.

This ongoing market monitoring by the European Commission underscores deep concerns about the entrenched dominance of a few large OTAs. Despite legal interventions, the structural barriers to competition remained intact, as reflected in both the 2016 and 2022 studies. The persistence of these competitive dynamics highlights the difficulty in fostering a truly open and competitive market in the face of platformization, further reinforcing the need for continued regulatory oversight to protect customer welfare and encourage fair competition.

5.2. Ensuring Fair Competition in the Digital Economy and OTA Markets: The Role of the Digital Markets Act

Following persistent challenges in regulating the dominance of large OTAs, the European Commission continued its efforts to improve competition in the digital marketplace. This led to the adoption of the Digital Markets Act (DMA), which aims to ensure fair competition in the digital sector by regulating the largest digital platforms, referred to as “gatekeepers” [46]. Gatekeepers, such as major search engines, app stores, and messaging services, must comply with specific obligations and prohibitions under the DMA to prevent anti-competitive practices and promote market fairness [47].

The DMA, which came into force on 1 November 2022 and became applicable on 2 May 2023, identifies gatekeepers based on objective criteria. It establishes rules for their operations, requiring them to, for example, allow interoperability with third-party services and grant businesses access to data generated on their platforms. In contrast, gatekeepers are prohibited from self-preferring their own services in rankings or restricting users from uninstalling pre-installed software. These measures are intended to foster a more contestable and open digital market.

By introducing the DMA, the European Commission aims to address the structural issues in the platform economy, ensuring that digital markets, including OTAs, remain competitive and open to new entrants [48,49]. This regulatory framework complements existing EU competition rules and reflects the Commission’s broader goal of promoting fairer competition in both digital and tourism-related markets. To achieve this, the Commission will conduct market investigations to ensure that the new rules are effective and up to date. These investigations will serve several purposes, including identifying gatekeepers, updating obligations when necessary, and addressing systematic violations of DMA rules. Should gatekeepers fail to comply, significant penalties will be imposed, including fines of up to 10% of global annual turnover, or 20% for repeated breaches. Additionally, periodic penalty payments of up to 5% of daily turnover can be applied. For severe and repeated infringements, the Commission may impose structural or behavioral remedies, such as the divestiture of business units as a last resort [46].

By embedding flexibility in the DMA, the European Commission ensures that the regulation can keep pace with the continuously evolving digital landscape. This complements its broader effort to enhance competition in digital and platform-based markets, including OTAs. As part of this commitment, the DMA works alongside existing competition policies to target anti-competitive behavior and promote fairness across sectors, reflecting the Commission’s overarching goal of preventing the concentration of market power by dominant digital platforms like Booking.com and Expedia [50]. The use of market investigations and strong enforcement mechanisms ensures the continued effectiveness of the DMA in promoting competition and consumer welfare across the digital economy.

5.3. Booking.com’s Market Power Under Scrutiny: Recent Regulatory Actions in Spain and Italy

Following the adoption of the DMA, European competition authorities have intensified their efforts to address anti-competitive practices in the OTAs market. The DMA, which targets digital “gatekeepers” like Booking.com, seeks to ensure competitive fairness and prevent the consolidation of market power by dominant platforms. As part of this broader initiative, national competition authorities in countries such as Spain and Italy have taken significant regulatory actions against Booking.com, citing its restrictive practices that limit competition and consumer choice in the hotel booking sector. These cases underscore the importance of the DMA in curbing market concentration and ensuring a competitive digital marketplace across Europe.

In July 2024, Spain’s National Commission for Markets and Competition imposed a fine of EUR 413.24 million on Booking.com for abusing its dominant position in the OTA market [51]. The investigation revealed that Booking.com’s market share in Spain fluctuated between 70% and 90% during the investigation period, solidifying its dominance. This allowed the platform to enforce narrow price parity clauses, preventing hotels from offering lower prices on their own websites. Additionally, Booking.com prioritized hotels with higher bookings, thus limiting competition by reducing the visibility of smaller hotels and competing OTAs. These practices, active since 2019, were found to have significantly impeded competition and reduced consumer choice, leading to the hefty fine.

Similarly, in Italy, the Italian Competition Authority launched an investigation into Booking.com’s practices in March 2024, citing potential abuses of dominance in violation of Article 102 TFEU [52]. Booking.com allegedly favored hotels in its Preferred Partner Programme, increasing their visibility in search results in exchange for higher commission fees and commitments to maintain competitive pricing on the platform. The platform’s ability to apply automatic discounts without the hotel’s consent, known as Booking Sponsored Benefits, further entrenched its control over pricing, limiting the freedom of hotels to set their own rates on other channels. This strategy distorted competition by restricting the market opportunities for smaller OTAs, potentially leading to higher prices and fewer options for consumers.

Both the Spanish and Italian cases underscore the significant concerns regarding market concentration in the OTAs sector. Booking.com’s practices, particularly price parity clauses and ranking systems, have been consistently criticized for their exclusionary effects on competition. These investigations align with the objectives of the DMA, which aims to ensure that digital platforms operate fairly and do not abuse their gatekeeper positions. Through fines and regulatory oversight, European authorities continue to tackle anti-competitive behaviors in the tourism industry, promoting fair competition and protecting consumer welfare.

6. Conclusions

This paper provides an in-depth review of the platformization of tourism, tracing its evolution, analyzing its impact on market dynamics, and addressing the regulatory challenges that arise from this transformation. Through a comprehensive synthesis of existing literature, case studies from leading platforms such as Booking.com and Airbnb, and European industry data and public statistics, as well as an examination of EU antitrust rulings, the paper contributes to understanding the stages and patterns of platformization, and offers insights into its broader implications for the tourism industry.

The platformization of tourism has fundamentally altered traditional business models in the sector. Digital platforms have reshaped service offerings and market dynamics, opening opportunities for new actors to participate in the industry. Particularly notable is the rise in the number of hosts, enabled by platforms like Airbnb, which has democratized access to the tourism market. However, this transformation has not come without consequences. The dominance of a few major platforms, including Booking.com and Airbnb, has led to increased market concentration, raising concerns about monopolistic practices and reduced competition in the tourism market. The concentration of power in these platforms highlights the need for a more robust and adaptive regulatory framework to ensure a fair and competitive market that protects both consumers and smaller service providers.

In light of these findings, several recommendations emerge. First, there is a critical need for policymakers to develop regulatory frameworks that can keep pace with the rapid growth and diversification of digital platforms in tourism. These regulations should not only focus on the market power of dominant platforms, but also address the socio-economic impacts of platformization, such as the shifting employment landscape and the growing role of individual hosts. Second, the ongoing monitoring of platformization’s effects on the tourism sector is essential, particularly with regard to changes in service delivery, the professionalization of hosts, and shifts in consumer behavior. By tracking these trends, stakeholders can better understand the evolving nature of the market and respond proactively to emerging challenges. Lastly, collaboration between regulators, platform operators, traditional businesses, and other stakeholders is vital to creating a balanced approach that maximizes the benefits of platformization while minimizing its potential negative effects on local economies and traditional tourism infrastructures.

This study is limited to the currently available data. Future research should aim at the operationalization of and collection of data pertaining to platformization in all tourism subsectors—accommodation, transport, experiences, and food and beverage. Figure 4 depicts the five main subsectors and three areas of tourism operations currently subject to platformization—distribution, promotion and HRM—examples of which can be found, to various degrees, in all main tourism subsectors. Currently, the available data presented in this paper are highly limited, focusing mostly on accommodation amongst the five subsectors, and distribution amongst the three areas of platformized operations. Future research should extend the knowledge pool on tourism platformization both vertically and horizontally, along these two dimensions. Vertically, more conceptualization and data collection is needed on the extent of platformization within each area of operations beyond market size and concentration. Horizontally, more work is needed on platformization in areas beyond accommodation. Research questions such as “How does platformization manifest in food and beverage?” or “Does it manifest and how will it manifest in the future in destination management, which is a largely public governance area of tourism?” will be useful.

While the platformization of tourism offers significant advantages, such as improved service access and expanded consumer choices, it also presents several risks. The growing dominance of platforms has the potential to undermine the diversity of the tourism market, especially in urban areas where traditional businesses may struggle to compete. Moreover, the regulatory landscape must continue to evolve in order to address the complexities introduced by digital platforms, ensuring that they operate in a way that supports a competitive and fair market.

The platformization of tourism is a complex phenomenon that requires careful attention be paid to both its opportunities and its challenges. To ensure that the sector evolves in a sustainable and inclusive manner, further research is needed to understand its long-term effects, while policymakers must adapt regulatory frameworks to keep pace with the dynamic nature of the platform economy. By taking these steps, it will be possible to harness the benefits of platformization while safeguarding the interests of all stakeholders involved in the tourism industry.