Expedia will provide its hotel booking platform to support city break and hotel-only sales across Thomas Cook distribution channels in Europe.
Thomas Cook said the multi-year deal would offer customers over 60,000 more hotels in global city and European domestic locations.
The agreement will also “significantly reduce” the cost and complexity of its city breaks and hotel-only business, the company added.
Thomas Cook chief executive, Peter Fankhauser, said by simplifying its operations “this will free us up to focus on holidays to our own-brand and selected partner hotels in sun and beach locations”.
"The combination of Expedia's portfolio of hotels and best-in-class online technology will transform Thomas Cook's city breaks and hotel-only offer for customers while helping the business take an important step forward in delivering our strategy for profitable growth,” he said.
“I am confident this marks the first step in a long-term and mutually beneficial relationship with Expedia."
Expedia will use its technology to support bookings for hotels either on its own website or as part of a holiday package through Thomas Cook's primary websites, contact centres, stores and distribution to affiliated travel agents.
Shore Capital repeated a 'buy' rating and target price of 120p on Thomas Cook.
"We see this development as a continuation of its strategy to focus on its own higher margin holiday content and follows on from its recent deal with Webjet for third party sun and beach offering," said analyst Greg Johnson.
"Recent updates from Thomas Cook have been encouraging reflecting a robust booking environment and the ongoing transformation of the business towards higher quality owned content."