Priceline.com Inc (PCLN), HomeAway, Inc. (AWAY) – Tourist Dollars: Is There Any Value in Online Travel Companies?

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The company seems poised to meet the projections, mainly on the back of an increasing internet traffic globally and a trend towards online travel booking. Moreover, the management recently announced that the firm will soon start offering higher-margin services, like insurance and maintenance, in Europe. Other markets like Asia and South America provide plenty of growth opportunities as well, and HomeAway, Inc. (NASDAQ:AWAY) has already been making an incursion in the field. Added to an acquisition strategy, other initiatives that promise to increase revenues include the pay-per-booking policy and scale-related cost-cuts.

Another webpage owned by the company, VRBO.com (Vacation Rental by Owner) “
has transitioned to a new platform and following a few defections during the transitioning process is well prepared for new growth due to the new tiered pricing. The company expects to offer 100% tiered subscription on its websites in the future” (SeekingAlpha.com).

Bonus track: Opportunities in China Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP)

deserves a special mention in this list. As the leading travel service provider in China, upside potential is much as demand continues to grow. Expected to deliver a 10%-15% average annual EPS growth rate over the next five years, I’d advocate on keeping a close eye on this company. Although it is recommended to hold at the moment, mainly due to its above average valuation, at 40 times its earnings, several catalysts make it an interesting investment opportunity. If the stock price declined, an attractive entry point would open for investors and you wouldn’t want to miss on it.

A strong brand name and presence in both the online and offline travel industry will help the company outperform its peers in the years to come. Moreover, its scale allows it to leverage over providers, making it less susceptible to economic downturns.

Bottom line

Although all of the above described companies seem poised to benefit from the evolving economic and market conditions, valuation makes HomeAway, Inc. (NASDAQ:AWAY) and, especially, Expedia Inc (NASDAQ:EXPE) less attractive than Priceline.com Inc (NASDAQ:PCLN). Holding compelling growth prospects and little risk factors while trading at a reasonable valuation, I’d recommend adding Priceline stock to your long-term portfolio.

Victor Selva has no position in any stocks mentioned. The Motley Fool recommends Ctrip.com International, HomeAway, and Priceline.com. The Motley Fool owns shares of Ctrip.com International, HomeAway, and Priceline.com. Victor is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Tourist Dollars: Is There Any Value in Online Travel Companies? originally appeared on Fool.com is written by Victor Selva.

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Victor is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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