U.S.-based online agencies have seen a bookings explosion in European markets and are racing to establish supremacy there. Either by acquisition or by organic growth, the top travel companies have made European expansion a priority.

Expedia said in May its international bookings increased by 26 percent, compared with a 10 percent gain in domestic markets. Priceline said its bookings more than doubled in Europe in the first quarter.

The trouble is that while bookings growth is substantial, the companies have yet to realize benefits in line with the high costs of expanding into fragmented European markets, said PhocusWright analyst Lorraine Sileo.

She noted the high integration costs Cendant incurred in the wake of its February 2005 acquisition of European travel company ebookers.

"When they purchased it, it probably looked good, but it's declined in popularity," Sileo said.

Sileo and other experts said some travel companies are struggling to break into European markets where travel trends differ from those in the United States.

Some say Priceline may have hit the right strategy by developing partnerships with independent hotels that many European travelers favor over chain hotels.

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