Online Travel: A Nightmare at 20,000 Feet
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
So, maybe there was a gremlin pulling up the cowling plates on the wing of your flight…the one you booked through an online travel agency. You feel like the young William Shatner in the Twilight Zone episode “Nightmare at 20,000 Feet.” you’re sweating, you’re squirming ,you’re beating your head with your fists as you wait on the phone for someone..anyone to believe your tales of travel woe. But you’re having just as much luck as he does with the flight crew. Until finally you say to yourself something bad happened and.. “I’m the only one who does know.. right now.”
You are so ticked off after spending hours on the phone to get a refund or resolve the problem you’re driven to write a review before you get carried away in a straightjacket. Here’s where Trip Advisor Inc comes in. The user-generated review website offers a chance to vent your spleen for the world to know about hotels, airlines, vacation rentals and restaurants. It has become the first stop for many travel bookings. I know it saved me from staying at a terrible hotel in New England after I read multiple reports on trolling prostitutes, broken needle debris by the ground floor rooms and lack of security.
Trip Advisor (NASDAQ: TRIP) was spun off by parent Expedia Inc in December 2011 and has had an almost uninterrupted climb for close to a double from the IPO price of $23.99 to a high of $47.81. It has a P/E of 34.17 and a 6.05 billion market cap. Institutions hold 82.5% and insiders hold 13.99%. The company has a profit margin of 26.58% and an operating margin of 42.85%, but has debt of 414.63 million with total cash of 208.62 million.
One thing about Trip Advisor that is troubling is that there are regular reports of hotels and restaurants writing their own puff pieces and passing it off as those of customers’,in essence, trying to game the system since there’s the natural human tendency to be more verbal after a negative experience than a positive one. That said, this is the go-to site for the straight skinny on travel.
Then there’s Kayak Software Corp (NASDAQ: KYAK) which is an online booking site that aggregates all the other sites like Expedia, Priceline, Orbitz and hotels’ and airlines’ own sites to save time in price comparison. As Kayak IPO’d re it brought renewed focus to the online travel sector. The company was founded in 2004 by the co-founders of Expedia, Orbitz and Travelocity. According to what little info can be found it last reported 733 million in revenue for a profit of 17 cents a share, improving from a loss the year before. Very little info can be found on customer reviews of the service especially since it’s not the actual booking vendor of the destination hotel, flight or car rental. I’ve used the service myself and it did save a lot of time. Going forward it’s very difficult to tell if Kayak will climb like fellow IPO Trip Advisor has.
What of Trip Advisor’s parent Expedia? I have to say I’ve had my Shatner moments with Expedia trying to get a refund (and eventually did after two and a half hours) but I’ll try to be fair. Expedia has a market cap of $5.99 billion and a 57% debt to equity ratio. Expedia is down from its 52 week high of $65.78 to $47.16, but is up almost 50% from its March Q1 earnings release in which it beat analyst expectations by 10 cents. The company has a 15.64 P/E and is the only one of these names with a yield, currently at .80%. Considered a hedge fund fave, it is held 107.40% by institutions and has high insider confidence with 23.44% held by them. The thing about Expedia is that on customer reviews like website Get Human reviews, it only receives a 2.1 out of 5 (5 being the best) with a phone responsiveness rate of 34 minutes average. Expedia reports July 26.
Negotiate This!
Speaking of Mr. Shatner, and priceline.com Incorporated (NASDAQ: PCLN), The Negotiator has been instrumental in raising consumer awareness over the years of the name your own price option when booking helping to make priceline the booking behemoth (market cap $33.30 billion) it is today. Priceline has a 30.25 P/E and is down from its April 10 high of $774.96. It is up 26.83% for the 52 weeks. This is also a favorite of hedge funds and institutions with 101% being held by them and a 6.20% of the float held short. Like Expedia it has debt with 51.95% debt to equity ratio. Personally, I’ve never had a bad experience booking through them and have had some very pleasant surprises. On the Get Human reviews it has the best score of the big name bookers including Travelocity of a 3 out of 5. Priceline reports August 7.
Some of the worst consumer complaints come from Travelzoo Inc, which is not a booker but a Groupon like service which offers specials on travel. Travelzoo (NASDAQ: TZOO) is close to 52 week lows trading at $20.32 and is down 64.68% over the last year. It also has a very high short share of the float at 40.40%. Insiders still believe and hold 53.26% and institutions hold 23.80 %. Its P/E is 15.81 and it missed analysts’ revenue estimates coming in with $39.4 million on July 19, but it did beat on EPS of $0.45. This one has no debt.
It seems they be suffering the same daily deals sector malaise as Groupon, but there are fans who especially love their Wednesday Weekly Top 20 deals. And the stock is certainly beaten down.
The aptly tickered Orbitz Worldwide, Inc. (NYSE: OWW) once trading at $14.00 in 2008 had traded just below $2.00 last fall but has risen to $4.54 this summer. It has a -.32 EPS and holds $440.48 million in debt to its $187.66 million in cash. However, it has institutional sponsorship of 90.90% of the float and 1.71% by insiders and 6.80% of the float held short. They are making a concerted push onto mobile platforms and expect that mobile commerce to double over one year according to President Chris Orton.
On the Get Human website it is rated a 2.6 out of 5 with a slightly better phone responsiveness of 23.6 minutes. Orbitz reports August 6.
So which are the best, priceline has a high P/E but it is the best of breed in the space and Trip Advisor is certainly performing well. The others are at your own risk .
leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Priceline.com and TripAdvisor. Motley Fool newsletter services recommend Priceline.com, Travelzoo, and TripAdvisor . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
