Distribution and intermediation are increasingly recognised as critical factors for the competitiveness and success of the tourism industry in general, and SMTEs in particular. Small and medium-sized tourism enterprises (SMTEs) have always suffered from the distribution function of their marketing. The rapid development of bookings through electronic media introduces several opportunities for innovative SMTEs which use ITs to develop their virtual size and to communicate with clientele and partners. However, traditional SMTEs which fail to adapt and take advantage of the new opportunities will face significant competitive disadvantages and may jeopardise their future prospects. This paper builds on research undertaken in Greece, France, England and Wales. A fairly comprehensive analysis of the European SMTEs illustrates their strengths, weaknesses, opportunities and threats and explains that strategic actions is required to improve their competitiveness in order to survive the intensive competition emerging in the global marketplace. Most of the research was based on personal interviews and the qualitative analysis attempts to illuminate the cost and benefits of the representation of SMTEs on the Internet. Exploratory research illustrates the factors often considered by SMTEs in adopting ITs and the Internet. The paper also argues that there is some evidence that investment on electronic presence and distribution through the Internet represents good value for money, as bookings start to materialise for innovative operators. The paper concludes with a case study of small accommodation establishments in York, UK which illustrates the above points. The paper concludes that innovative entrepreneurs who re-engineer their business processes and take advantage of the emerging opportunities will gain major benefits and enhance their profitability and viability in the global marketplace.