From The Standard Online:
thestandard.com
Online Travel Companies Stumble
By Miguel Helft
Sep 18 2001 04:08 PM PDT
Online travel agenices, one of the few bright spots in the otherwise scarred world of e-commerce, say business is down in the wake of last week's coordinated hijackings by terrorists.
For much of this year, one of the few bright spots in the battered e-commerce industry -- and among Internet companies overall -- was the online travel sector. A handful of companies including Cheap Tickets, Expedia, Priceline and Travelocity saw their shares rebound dramatically through the summer, as most other e-tailers continued on a long downward spiral.
Now, in just two days of tumultuous stock trading, those gains have been all but wiped out, as investors fear a dramatic slowdown in air travel will trample the sector's prospects for growth.
On Tuesday, as shaky airlines recouped some of their losses from Monday on news that the government might help bail out the industry, most online travel sites continued to slide. Expedia, Travelocity and Priceline all reported a sharp drop in bookings in the days following the tragic terrorist attacks on the World Trade Center and the Pentagon on Sept. 11.
Shares of Travelocity fell 15 cents, or 1.2 percent, to close at $12.41 on the Nasdaq, after falling more than 40 percent on Monday. The company said Tuesday that bookings fell to between 30 percent and 40 percent of normal levels on the days immediately following the attacks. However, the company said that because of stronger-than-expected business in July and August, it expects to meet its previous profit targets of 8 cents to 10 cents a share for the quarter ending Sept. 30.
Rival Expedia, in which cable television company USA Networks is buying a majority stake, saw its shares drop $4.36, or 18.2 percent, to $19.64 on the Nasdaq, following a 33.8 percent decline on Monday. Expedia said that bookings during the five days following the attacks were down between 35 percent and 40 percent from levels for the same days in the prior week. The figures do not include cancellations, which the company said were "significant."
Shares of Priceline fell 66 cents, or 21.9 percent Tuesday, to $2.35, following a 40 percent decline on Monday. Priceline said that bookings Monday and Tuesday for all travel products, which includes air tickets, hotel rooms and rental car reservations, ran at approximately 40 percent and 35 percent respectively below the levels that were booked on Monday Sept. 10. Priceline blamed the decline on "reduced customer demand, interruptions in availability associated with anticipated schedule changes and an increase in refunds of previously booked reservations."
All three companies said booking levels have begun bouncing back in the last couple of days and added they remained optimistic about their long-term prospects.
"It's too early to assess the near-term impact on our business, but long term, we believe our travel bookings will again increase at an attractive growth rate," Gregory S. Stanger, Expedia's CFO, said in a statement.
``Individually we all feel the effects of this tragedy; and as a business, the travel industry is feeling the immediate effects -- as is every business in some way,'' Terrell B. Jones, president and CEO of Travelocity, said in a statement. ``While we may not be able to control those effects in the near-term, our business model is sound." Jones said the company expects to update investors on fourth-quarter projections at the time of its third-quarter earnings report in October.
"Predictions as to the extent and the timing of a full recovery are still premature, but we expect our business to recover at roughly the pace of the overall travel industry," Richard Braddock, chairman and CEO of Priceline, said in a statement. "We believe priceline.com is ready and able to weather a travel slowdown." Braddock noted that Priceline ended the most recent quarter with $165.7 million in cash and no debt.
Cheap Tickets, which is based in the U.K., gained 5 cents, or 0.5 percent, to close at $12.60, after a 23.6 percent fall Monday.
Hotel Reservation Network, which offers online bookings for discounted hotel rooms, also dropped sharply on fears that consumers and businesses will scale back their travel plans. Its shares fell $5.07, or 18.3 percent, following a 25.6 percent drop Monday. The company, which is controlled by USA Networks, had seen a surge in business in recent months as consumers feeling the pinch from the economic slowdown hunted for cheap hotel rates.
Meanwhile, airline stocks, which dropped 40 percent Monday, erasing some $12 billion in shareholder value, rebounded slightly Tuesday, after U.S. Secretary of Transportation Norman Mineta said he was preparing a $24 billion rescue package for the industry. The Amex Airline Index climbed about 5 percent during the day, before ending the session up only 2 percent at 71.28. |
