What Is Fueling the Boom in Online Travel Stocks?

Business Travelers Help Boost Online Travel Stocks

So, why are online travel stocks doing so well in terms of both earnings and share price performance?

I think the most obvious answer is that despite the recession, many people (not all) still are trying to travel the way they have in the past.

Now to be certain, there has been a decline in both airline traffic and hotel occupancy rates in the first half of the year. But the fact that these
online travel agencies are doing so well despite this overall decline tells me that the migration toward getting the best price for airfare and hotels
is in full effect.

Besides the move on the part of consumers to seek out the lowest possible prices for their vacation travel, there is one other key reason why I
think companies like Expedia, Priceline and Orbitz are doing so well, and why they may continue doing well for the remainder of 2009 and beyond. That
reason has to do with the mandate to cut cost in the corporate world. If you look at the huge numbers of companies reporting earnings, you see that
many managed to best estimates based largely on cost cutting. Part of that cost cutting effort involves using online travel agencies.

According to an article in the July 24 edition of Investor’s Business Daily, many corporate travel managers have been forced to cut the cost
of basic travel expenses due to the recession. According to the piece, “Firms are telling execs to move their seats from the front to the back of
the plane — and to find budget-class hotel rooms.” In tough economic times, both corporations and consumers look to save every dime, and great
way to do this is to book travel via these online travel agencies.

Next – More Good News for Online Travel Stocks Ahead