The Ratings Game: Business travel could be big in 2018, and these companies would lose out

2018 is poised to be a big year for business trips, and that could spell trouble for Expedia Inc. and Priceline Group Inc.

Corporate profits are strong and capital spending is increasing, according to analysts at MKM Partners, which suggest that businesses will be more open to sending their employees on trips next year. But business travelers tend to be more loyal to specific hotel brands, and they’re less likely to book through channels like Expedia EXPE, -0.49%  or Priceline PCLN, -0.21% An influx of corporate travelers could reduce the pressure that hotel chains feel to list weekday rooms on online-travel sites, added the MKM analysts led by Rob Sanderson.

Sanderson is concerned about Expedia’s positioning going in to 2018, given that the company’s room-night growth has disappointed, even with hotel occupancy rates at record levels.

“We think this is related mostly to supply tightness, which is crowding out online-travel agency customers and may be driving them into alternative accommodations more and more,” Sanderson wrote. Airbnb is one such alternative, but Expedia could benefit if consumers choose to book on HomeAway, its own vacation-rental site.

Expedia could be more vulnerable to pressure from a surge in business travel than Priceline, given its larger share of the domestic market, but Sanderson believes that corporate travel remains “an incremental concern nonetheless” for Priceline. He downgraded shares of both companies to neutral from buy on Thursday.

Meanwhile, Sanderson is upbeat about other players in the travel space. He upgraded shares of Hyatt Hotels Corp. H, +1.07%  to buy, given the company’s heavy exposure to corporate travel. The firm already had buy ratings on Hilton Worldwide Corp. HLT, +0.59%  and Marriott International Inc. MAR, +0.23%  Rental-car companies Avis Budget Group Inc. and Hertz Global Holdings Inc. could also benefit after struggling of late.

Filed in: Top News Tags: 

You might like:

Snap Spectacles review: Nothing to see here Snap Spectacles review: Nothing to see here
Key Words: Steve Kerr expresses dismay with league management — not the NBA’s but the NFL’s Key Words: Steve Kerr expresses dismay with league management — not the NBA’s but the NFL’s
Irish voters flock to the polls for historic referendum on abortion, with exit polls favoring liberalization Irish voters flock to the polls for historic referendum on abortion, with exit polls favoring liberalization
Commodities Corner: Rising angst around global politics doesn’t move gold like it used to Commodities Corner: Rising angst around global politics doesn’t move gold like it used to
Qualcomm will gain more than its rivals do, as artificial intelligence grows at the ‘edge’ Qualcomm will gain more than its rivals do, as artificial intelligence grows at the ‘edge’
NewsWatch: 6 things NOT to buy at Memorial Day sales NewsWatch: 6 things NOT to buy at Memorial Day sales
Your Digital Self: The future of shopping will include body mapping, robot assistants and ‘just walk out’ stores Your Digital Self: The future of shopping will include body mapping, robot assistants and ‘just walk out’ stores
Market Snapshot: Dow, S&P 500 end lower as oil wallops energy sector, but tech shares buck the trend Market Snapshot: Dow, S&P 500 end lower as oil wallops energy sector, but tech shares buck the trend

Leave a Reply

Submit Comment
© 2018 Stock Investors News. All rights reserved. XHTML / CSS Valid.