While planning a vacation is exciting – especially if it will take you to a destination where you’ve never been – it can also be somewhat frustrating. First, going somewhere sight unseen can oftentimes be hit or miss with regard to accommodations and local activities.
In addition, the costs can really add up. But thanks to some online resources, travelers can already be familiar with all that their next trip has to offer – along with local area discounts – and investors are also reaping the benefits.
There’s no place like Home(Away) for shareholders
HomeAway, Inc. (NASDAQ:AWAY) is considered the leading online marketplace worldwide for the vacation rental industry. This Austin, Texas-based company serves its users – both property owners seeking renters and those who are preparing to travel – by matching future vacationers with the “perfect” accommodations.
The company recently announced its first-quarter 2013 earnings numbers – which would make any shareholder jump for joy. The company’s total revenue of more than $79 million was up 24% year-over-year. HomeAway, Inc. (NASDAQ:AWAY) also posted net income of $5.3 million for the quarter, which is up nicely from $2.4 million during the first quarter of 2012.
HomeAway’s financial performance is estimated to remain strong due in large part to the company’s recent distribution partnerships with three-leading timeshare entities. These deals include listing timeshare units from two of the companies on the HomeAway, Inc. (NASDAQ:AWAY) website in order to help vacant and unsold units become rented or sold.
Overall, the partnership with these companies should cement a strong synergy between HomeAway and the overall timeshare industry. Although HomeAway, Inc. (NASDAQ:AWAY) currently pays no dividend, the prospects for share growth over the next 12 months are positive, with many market analysts giving these shares a rating of Buy.
Getting good advice pays off
Likewise, shares of Tripadvisor Inc (NASDAQ:TRIP), the online travel company that focuses on helping its site users “plan the perfect trip,” have also been rewarding investors. In fact, shares recently hit a new 52-week high. This company’s stock is up over 26% year-to-date in 2013 – and peak travel season has not even arrived yet.
In March, Tripadvisor Inc (NASDAQ:TRIP) became the only online travel provider to have its app pre-installed in the highly advertised new Samsung Galaxy S4 smartphone. (Samsung is also using TripAdvisor’s content to power its own travel apps.)
As Tripadvisor Inc (NASDAQ:TRIP) continues to improve its mobile presence, things are likely to remain positive for both the company and its shareholders. This is due in part to the rate of growth in tablet and smartphone users, which is expected to exceed the growth rate of TripAdvisor’s overall user base.
When TripAdvisor announces its first-quarter 2013 financials in early May, its earnings are expected to be up in excess of 20% with an anticipated 23% increase in revenue. Although many analysts are currently giving these shares a rating of Hold, Tripadvisor Inc (NASDAQ:TRIP) could pay off nicely in the long run.
What about the discounts?
Certainly, whether traveling or staying home, everyone loves a discount – and those who use Groupon Inc (NASDAQ:GRPN) are exposed to many. This Chicago- based online coupon site has attained tremendous growth over the past few years. Due to a more recent slowdown, Groupon Inc (NASDAQ:GRPN) replaced its founder Andrew Mason as the company’s CEO in late February in hopes of bringing in some fresh perspective.
Recently, Groupon users made a rush to a deal that the company had with Starbucks Corporation (NASDAQ:SBUX) allowing members to obtain a $10 coffee gift card for $5. The deal was so popular that it literally crashed the Groupon website – temporarily.
One of the keys for Groupon’s continued growth will be determining exactly how the company’s discount model will fare over the long term. This is especially the case given that most coupon users are not repeat customers.
However, Groupon Inc (NASDAQ:GRPN) has a strong balance sheet with $1.2 billion in cash and no debt. With an EBITDA margin in the mid-to-high single digits, and projected revenue growth of almost 10% this year, I expect Groupon’s balance sheet to become even stronger going forward. With all the pros and cons in mind, Groupon is rated by many analysts as a Hold at the present time.
Just as with Groupon Inc (NASDAQ:GRPN), both HomeAway, Inc. (NASDAQ:AWAY) and Tripadvisor Inc (NASDAQ:TRIP) will also need to be careful to keep enticing offers in front of current customers in order to keep users coming back. Like with any other business – whether online or offline – it costs a great deal less to keep your present customers than it does to obtain new ones.
In the world of discounting – especially as it relates to travel – competition is growing. With this in mind, all three companies will also need to continue differentiating themselves in order to stay top-of-mind with their users. Otherwise, price-conscious consumers are likely to jump ship to other options with potentially “better deals.”
The bottom line
As the economy continues to come out of its recessionary mode, consumers are beginning to travel again – although many are still seeking discounts through coupons or other related avenues. In terms of shareholder profitability, HomeAway, Inc. (NASDAQ:AWAY) appears to offer the most – at least at the present time – in terms of both short-term and long-term profitability.
The article 3 Websites That Every Traveler – and Investor – Must Consider originally appeared on Fool.com and is written by Nauman Aly.
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