OTAs face headwinds from a slowdown in travel
Booking.com and Expedia are experience slowing travel growth as cash-strapped consumers become more cost-conscious and seek "value play" vacations
The analysts at Truist Securities attribute their Hold ratings on Booking and Expedia to slowing macro travel growth. Despite the companies' strong positions in the global online travel industry - Booking with a significant presence in Europe and Asia-Pacific, and Expedia leading in North America - this cautious outlook prevails.
Key takeaways
- Both Booking and Expedia are implementing strategic initiatives to drive growth and improve efficiency;
- Booking.com is expanding beyond traditional lodging with its Connected Trip initiative, increasing its offerings in alternative accommodations and driving engagement with its Genius loyalty program;
- Expedia is streamlining its corporate structure, consolidating its loyalty programs and moving away from a heavy reliance on performance marketing as part of its turnaround efforts;
- Despite these efforts, challenges remain. Booking's average daily room rates remain flat in early 2024, while Expedia's Vrbo brand faces mixed performance due to changing travel patterns and legacy market share challenges.
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