Tripadvisor Inc (TRIP), Expedia Inc (EXPE) and Orbitz Worldwide, Inc. (OWW), And The Rest Of Travel’s Underrated Plays

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A recent change that TripAdvisor made that is negatively affecting its revenues deals with a new hotel pricing model. Called metasearch, critics point out that its ability to allow customers to make their own hotel reservations (or other arrangements) by directly contacting a property is affecting revenues as customers become acclimated. Though company execs hail it as a “wonderful complement,” investors may have to wait several quarters to see how this new strategy is panning out.

Expedia Inc (NASDAQ:EXPE) reported in April that its revenue for the first quarter was $1.1 billion, versus the roughly $965 million that had been estimated. The higher amount represented a 24% increase from last year. Earnings per share totaled $0.25 compared to the $0.23 that was expected. While this is good, the company has quite a ways to go in reversing its negative earnings trend. It’s been on a decline since the third quarter of 2012, when it was $1.32.

A major drain on Expedia Inc (NASDAQ:EXPE) has stemmed from Hotwire, which saw its usage drop off due to Super Storm Sandy. Hotwire is also being challenged by several trends, including constraints in the inventories of domestic rental car companies. That has led to these companies raising their prices, nearly obliterating the deep discounts consumers expect to receive.

Buying Trivago is a good idea for the company to expand its reach. Expedia Inc (NASDAQ:EXPE) acquired it earlier this year. The company’s service compares hotel prices. Trivago was supposed to help Expedia Inc (NASDAQ:EXPE) in several areas, including increasing its reach to the European market, as well as helping it further build its corporate client base.

This acquisition can help Expedia Inc (NASDAQ:EXPE) be better able to compete with Priceline, too. Investors should watch its performance over the next year to see if it produces meaningful results.

When Orbitz Worldwide, Inc. (NYSE:OWW) reported, it had to reveal an EPS loss of $0.10 per share, but that turned out to be just fine, as the company reported a profit. Its revenues were up 7% to roughly $203 million, which was better than the $198 million that had been expected. The news was enough to boost Orbitz Worldwide, Inc. (NYSE:OWW)’s shares by as much as 20% during intraday trading on Wednesday.

Orbitz Worldwide, Inc. (NYSE:OWW) is benefiting from a partnership it began last fall with American Express Travel. The two teamed up so that Orbitz Worldwide, Inc. (NYSE:OWW) is the engine that powers American Express’ consumer travel site, replacing Travelocity.

Orbitz Worldwide, Inc. (NYSE:OWW) CEO Barney Harford had this to say about Amex on the conference call:

I’d also say that the majority of the growth that we’re reporting today is driven by growth in business lines other than the American Express partnership. That being said, the American Express is certainly a significant contributor to growth right now.

So while the Priceline “negotiator” is the largest of these companies by market cap ($37 billion compared to Expedia’s and TripAdvisor’s roughly $7 billion), the smaller companies are learning ways to stay competitive. Through acquisitions and partnerships, they are trying to make their brands stand out.

The article Don’t Discount Smaller Players in the Travel Space originally appeared on and is written by Tedra DeSue.

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