Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
|
|
|
|
Searching for Value in Online
Travel Stocks |
Published: March 6, 2006
Just fifteen years ago, booking a flight and hotel was often an
expensive and laborious process. Finding a good deal on a hotel meant
calling several major hotel chains and asking for a rate quote over the
telephone. And booking a flight likely involved calling multiple
airlines to find the most direct flights, cheapest travel dates and best
fare deals. For international travel, language barriers made booking a
relatively simple trip even more difficult.
Alternatively, travelers could hire a specialized travel agent to do all
the legwork for them. Often travel agents could find better deals and
more appropriate accommodations, but they also charged a significant
commission -- as much as 1% to 5% of the cost of the trip itself. These
high costs and inefficiencies were par for the course in the travel
industry, where little had changed in the five decades leading up to
1990.
Enter the Internet. Nowadays, consumers can click on two or three
websites and find literally thousands of hotel, car rental and flight
combinations within minutes. Smaller independent hotels that were
previously unknown to most consumers now get as much exposure as the big
chains on a variety of travel websites. And booking commissions are
normally less than $10 per trip -- a tiny fraction of the commissions
that prevailed just over a decade ago.
 Growing
Market Share
Convenient and cost-effective, it should come as little surprise that
the online travel industry has been on a tear in recent years. According
to Internet research firm Jupiter Research, online travel sales will
account for around 25% of all bookings in 2006 -- up from less than
15% just three years ago. By 2009, roughly one-third of all U.S. travel
revenues will be handled via the Internet. As you can see in my chart,
Internet travel will become increasingly important over the next few
years.
Overseas Opportunities
But the U.S. is just the proverbial drop in the bucket. Globally, online
travel sales are growing even faster.
In Europe, consumers typically have at least 4 weeks of vacation time
annually compared to just 1 or 2 weeks for the average American; that
spells multiple trips booked every year. And online commerce and
Internet penetration in Europe stills lags the U.S. It should come as no
surprise then that online travel growth rates remain far higher
overseas.
And then there's Asia. Fifteen years ago, few consumers in India and
China could afford to travel outside their home nations. But thanks to a
rising middle-class consumer, Asians are increasingly traveling both
domestically and abroad. In fact, according to the China Daily
newspaper, international travel has grown more than 50-fold in the past
two decades.
Growth opportunities also abound in India. Up until the mid-1990s, air
travel in India was dominated by state-owned airlines; ticket prices
were prohibitively high. But after liberalization a decade ago,
increased competition has resulted in lower fares and faster growth. As
a result, air travel abroad has been growing at a nearly +50% clip in
India in recent years.
According to travel industry research firm PhoCusWright, U.S. online
travel bookings grew about +19% in 2005 over 2004 levels. But
internationally, online travel bookings grew by nearly +120% -- more
than 5 times the rate seen in the U.S.
Fat Profit Margins
Rapid growth in the online travel business has helped fuel impressive
sales gains for a handful of online travel companies. But that's only
half the story -- online travel websites are also far more profitable
than traditional offline travel agency operations. The reason is simple:
scalability. Specifically, when a traditional travel agency wishes to
expand, it has to hire more agents. Meanwhile, expanding abroad requires
setting up a local office with agents speaking the local language, and
that type of infrastructure can get expensive.
But in the online world, once a website is designed and set up, it
can handle a tremendous number of users. Growth in sales does not
necessarily require commensurate growth in the labor force -- a handful
of website designers and technicians can maintain the site regardless of
the number of customers served. This scalability is behind the fat
profit margins enjoyed by online travel firms.
Market Leaders Remain in Charge
A handful of U.S.-based online travel firms were first movers in the
online travel industry. These companies not only dominate the U.S.
market, but they've also leveraged their size and existing
infrastructure to expand internationally. As a result, these American
players also dominate many fast-growing foreign markets.
While AOL and Yahoo, among others, are now entering the online travel
space, they're at a significant disadvantage. Specifically, several
highly popular online travel sites already have an established brand
name and customer base in online travel -- consumers tend to be loyal to
established brands both on and offline. Furthermore, existing websites
have deals with literally tens of thousands of independent hotels and
airlines all over the world, allowing them to offer wider selection and
choice for consumers. It takes time to build up that sort of network.
With these points in mind, in the table below, I present a list of some
of the best-positioned online travel companies. And in the text that
follows, I examine two of my favorite firms in this industry . . .
Editor's
Note:
Throughout the remainder of this article, StreetAuthority.com founder
Paul Tracy and his staff provide a closer look at several of today's
leading online travel stocks and issue a host of predictions on their
future prospects. To view the remainder of this
article, you'll need to subscribe to our premium Market Advisor
newsletter. Please visit one of the following links to continue...
Good investing!
-- Paul Tracy
Editor
StreetAuthority
Market Advisor
| To
receive in-depth guidance on today's leading investing
opportunities each month, plus access to five model
portfolios, please subscribe to Paul Tracy's premium investment
newsletter -- the StreetAuthority
Market Advisor. |
Paul Tracy
founded StreetAuthority and became Chief Investment Strategist in 2001. Prior to
that he spent several years as Managing Editor at a multi-million dollar
financial publishing firm with over 150,000 subscribers. In addition to
his role as managing editor and lead financial writer, he was also
responsible for equity research and managing a team of seasoned
professional financial writers, researchers and market commentators.
Paul's previous experience
includes a position at Robert W. Baird & Co.'s full-service
brokerage operations as well as economic research work on a Money and
Banking project funded by the National Bureau of Economic Research. He
has also spent time doing outside consulting and research for the
University of Virginia, has appeared as a guest expert on several
prominent financial radio shows, and has been a featured speaker at
various investment conferences across the U.S.
Paul graduated with a B.S.
in Finance and Management from the McIntire School of Commerce at the
University of Virginia.
|
|
Investing Doesn't Get Any Easier Than This |
Stock picker Amy
Calistri's strategy is as simple as investing gets -- just one idea
a month designed to make money in today's market. Invest this way
and you don't have to worry about oil prices, automaker bailouts, or
what the Fed is up to -- because every "bad" economic development
actually helps some investment or another.Your investing life can
get a lot simpler -- starting today.
Go here to learn about Amy's simple investing strategy.
|
|
|
Special
Deal for Our Web Site Visitors
