Friday, July 27, 2012

Online Travel Stocks Up On Expedia’s Upbeat Results (EXPE, PCLN, OWW, TRIP)

Shares of online travelling services providers jumped sharply on Friday supported by Internet travel portal Expedia Inc’s (NASDAQ:EXPE) shares rose sharply on Thursday its second quarter profit beat analyst expectations with a surge in hotel bookings, a lower tax pay-out rate, higher corporate travel fees and advertising revenues. 

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Expedia’s net income fell 25 percent to $105.2 million or 76 cents a share, surpassing analyst estimates of 71 cents. Its shares gained $1.46, or 3.3 percent, to close at $45.71 in regular trading and then jumped $6.13, or 13.4 percent, to $51.84 in after-trading hours. Revenue rose 14 percent to $1.04 billion from $913.6 million, topping analyst forecasts of $987.3 million. 

Hotel bookings account for bulk of the company’s revenues and that business saw a 16 percent growth with overnight bookings seeing a 22 percent rise. The global travel industry is in a decline with rising airfares crimping demand and Expedia saw an 8 percent dip in revenues from air-ticket sales, as average realisation per ticket fell 11 percent.
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 With more of its revenues coming from outside the U.S. the company’s margins were boosted by a lower tax pay-out rate at 21.3 percent compared with 27.3 percent a year ago. 

The company said that while booking had risen, revenue per room had dropped 5 percent due to discounting and lower-priced rooms partly due to more lower-priced rooms and discounting by the company's Hotwire brand. 

Average airfares rose 5 percent, but lower payments from airlines resulted in Expedia getting 11 percent less per ticket.
Shares of EXPE soared 20.56% to $55.11 on high volume. Other stocks within the sector are following the same trend with Priceline.com Inc(NASDAQ:PCLN) is up 4.72%, Tripadvisor Inc(NASDAQ:TRIP) climbed over 3% and Orbitz Worldwide, Inc.(NYSE:OWW) added 2.86%.

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