What Should Be Travelling Inside an Investor’s Portfolio: Priceline.com Inc (PCLN) and More

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There has been a stark change in the travelling business in the past decade. I remember how we used to plan everything about our annual family trip by consulting numerous travel agents for rates, discounts and other added facilities.

Now things have simplified a lot and the credit goes to the likes of Priceline.com Inc (NASDAQ:PCLN)Tripadvisor Inc (NASDAQ:TRIP) and other similar players in the market. These companies have made life simpler for tourists, but the question remains: Are they a boon for investors?

Priceline.com Inc (NASDAQ:PCLN)

Review your holiday spot

Tripadvisor Inc (NASDAQ:TRIP) is the leading online platform for travel reviews. There has been incredible rise in traffic and content expansion on a global basis which has helped it perform well, despite increases in operating costs. The number of unique visitors on the company’s website, which indicates its future growth, is on an increase.

Total monthly unique visitors on the company’s branded sites increased about 45% in Q4 2012. There was a strong growth around the globe especially from Asia-Pacific, which contributed well over 75% of the total increase. Over 60% of TripAdvisor’s traffic comes from places other than the core U.S. and UK region.

The company offers its content in 21 different languages across the globe which has been the reason behind a plethora of new members every year. In the current year, TripAdvisor plans to further improve its brand image in the Asia-Pacific markets by accretion of more local language content.

Social media websites like Facebook have helped the company’s business greatly. Till the last quarter, TripAdvisor applications were the second most popular application on Facebook. Last year, the company doubled the number of members acquired through Facebook. This has helped it to grow its marketable members by nearly 100% from last year to 44 million.

The increase in the use of mobile phones and smartphones has also helped in the increase in traffic on the company’s website. The company has significantly enhanced its smartphone user interface which is evident from the facts that its smartphone and tablet app downloads have doubled to more than 31 million mobile unique users in Q4.

TripAdvisor’s expenses after it spun-off have risen noticeably, as most of the services such as accounting, legal or taxation was previously obtained through Expedia Inc (NASDAQ:EXPE). Moreover, the company’s profit margins are on a decline in its per-click commission fee received from Expedia, which is its most significant source of revenue. Margins may shrink further as the company constantly invests in various marketing campaigns throughout the year.

TripAdvisor has always been ambitious when it comes to growth. It has shown remarkable growth in emerging markets and there is still ample scope in these markets. The company is using social media and mobile in its favor which will help the company grow its top and bottom line in the future. These reasons lead me to recommend TripAdvisor.

Is Priceline.com a buy?

Priceline.com is among the world’s largest online travel agents and it operates with sites including priceline.com, booking.com, agoda.com and rentalcars.com. It offers hotel reservations in 99 countries in 41 different languages, and has performed very well throughout.

The company isn’t afraid of acquiring companies to broaden its business base and its acquisition of Booking.com, which was done in 2005, is delivering in full force by generating more than four-fifth of its current revenue. As of 3Q 2012, the acquisition has appreciably increased its hotel properties to 245,000 which is almost 44% up compared to last year’s.

Priceline.com has recently acquired Kayak Software Corp (NASDAQ:KYAK), which well-known for enabling travelers to search and compare flights from a number of travel sites at once, for $1.8 billion. The acquisition should strengthen company’s lagging air travel business but the pricey acquisition leaves a modest margin of safety for the company.

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