Thomas Cook has formed a strategic alliance with Expedia, which will see the U.S. travel giant supply hotels for its city and domestic holiday business.

Both sides will aim to benefit from the multi-year agreement with Expedia providing the technology for the bookings, while at the same time Thomas Cook will have the option to offer its core sun and beach package holidays on Expedia sites globally, broadening its distribution.

Also as part of the new alliance, Thomas Cook’s primary websites, contact centers, stores and distribution to affiliated travel agents will eventually be powered by the Expedia platform for various types of travel bookings.

This obviously has the benefit of reducing costs for Thomas Cook and at the same time offers Expedia greater scale in Europe.

The agreement is part of the UK-based tour operator’s attempts to refocus its hotel offering. Instead of directly managing a massive range of hotels, Thomas Cook is concentrating on a smaller number of own-brand and partner properties with the rest effectively outsourced.

The Expedia deal follows a similar tie-up with Australia-based Webjet’s European unit Sunhotels, which covered 3,000 mainly sun and beach hotels.

On a call with analysts, Chief Executive Peter Fankhauser said the deal would result in a one-off cost of $13 million (£10 million) but would save around $20 million (£15 million) over the next two years. Together with the Webjet deal, Thomas Cook will save an estimated $27-$33 million (£20-£25 million).

Fankhauser also left the door open for future partnership agreements potentially in the airline sector but he declined to comment on the possibility of a joint bid for Air Berlin.

Fankhauser, said: “Joining forces with a company that has the global reach and expertise of Expedia will allow Thomas Cook to further simplify our systems and processes. At the same time, this will free us up to focus on holidays to our own-brand and selected partner hotels in sun & beach locations where we know we can really make a difference to customers. I am confident this marks the first step in a long-term and mutually beneficial relationship with Expedia.”

Expedia brand president, Aman Bhutani, said: “Expedia’s Global Partner Solutions business brings to life the ability to leverage the strength of our technology and operations for our partners, powering leading brands with private label booking engines, agent tools, web services and operations for all travel products, including lodging, flight, package, and car rental.”

Photo Credit: A Thomas Cook retail outlet. The company has struck a hotel outsourcing deal with Expedia. Thomas Cook