When the 9/11 attacks slowed the travel sector to a crawl, investors in online travel companies such as Expedia
Patience has paid off, and the dot-com travel companies have never looked better. Expedia's fourth-quarter revenue has doubled to $164 million on $1.38 billion in gross bookings. Net income more than quadrupled during the period, for a $0.33-a-share showing.
The moral of the story is you can still make money gaining market share even as the market shrinks. Expedia is confident its stock will gain in altitude this year. It has declared a two-for-one stock split, and will be buying back $200 million worth of its own stock. This is no deadhead. The company is looking for revenue and pretax profits to grow by at least 42% this year. We even featured Expedia in our Stocks 2003 report.
Sure, your local travel agent may be mumbling about lousy business, but that's mostly because the online convenience and access to savings is winning globetrotters over.
Yesterday, Hotels.com's stock shot up 11.4% after a decent quarterly report and an upbeat outlook on lodging rates for the year. USA Interactive
While this doesn't make the sector recession-proof, it's worth noting that the slowdown in tourism last year only helped online players. Why? Because travelers could be more selective, given the number of airfare and hotel deals out there. The future -- like the sky -- is wide open.