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:

Victor Garber on ‘Hello Dolly!’ and his start in New York theater Victor Garber on ‘Hello Dolly!’ and his start in New York theater
‘Black Panther’s’ strong weekend box office makes it biggest-ever February release ‘Black Panther’s’ strong weekend box office makes it biggest-ever February release
Outside the Box: Seniors will pay the price for Trump’s Medicare cuts Outside the Box: Seniors will pay the price for Trump’s Medicare cuts
BookWatch: 3 ways to transform your 1-person business into a $1 million operation BookWatch: 3 ways to transform your 1-person business into a $1 million operation
American schools rethink building design to protect students from mass shooters American schools rethink building design to protect students from mass shooters
This is how much credit-card debt makes you undatable This is how much credit-card debt makes you undatable
Why terrified Florida students live-streamed the mass shooting at their high school Why terrified Florida students live-streamed the mass shooting at their high school
The Wall Street Journal: Pope Francis renews, expands Vatican sex-abuse panel The Wall Street Journal: Pope Francis renews, expands Vatican sex-abuse panel

Leave a Reply

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