Online travel services like Expedia (EXPE), Orbitz (OWW), and Priceline (PCLN) have been flying in rough weather. But don’t count them out yet.
Hotel occupancy rates are improving, according to Smith Travel Research, a travel consultancy. The U.S. hotel industry reported higher occupancy rates the week ending April 9, according to its data.
In year-over-year comparisons, occupancy was up 4.8 percent to 62 percent, the average daily rate increased 4.7 percent to $101.22, and revenue per available room finished the week up 9.8 percent to $62.80.
That's good news for Expedia, Orbitz and Priceline, which offer hotel bookings on their sites.
Priceline’s business momentum, international growth opportunities, management, marketing strategy, and strong financial position are all likely to drive up its stock prices going forward, says Zacks Investment Research.
"With demand strengthening considerably following the recession, we remain optimistic. We therefore have an 'outperform' rating on PCLN shares," says the research firm.
Expedia, meanwhile, could be a good buy due to a recent business decision. The company said it would spin off its hotel and airline reviewer TripAdvisor into a separately traded company.
TripAdvisor revenue has risen about 34 percent year over year, while the core Expedia side of the business grew about 8 percent in 2010, Justin Patterson, an Internet and e-commerce analyst with Morgan Keegan, tells Reuters. "Between the two assets, the spin-out has largely been designed to realize value in TripAdvisor," Patterson said.
Other analysts have applauded the move, upgrading Expedia ratings on the news.
Orbitz, meanwhile, has taken a few hits lately: It's being sued by American Airlines, which claims in a civil antitrust lawsuit against Orbitz and part owner TravelPort arguing the two companies monopolize American's tickets.
Orbitz recently received a downgrade in its stock rating to hold from buy from the Benchmark Company.