How Priceline and Expedia Beat Marriott And InterContinental Hotels On Wall Street

Popular hotel booking sites like Priceline.com and Expedia.com have been big winners on Wall Street in recent years--beating traditional hotel chains by a big margin. Expedia.com has gained close to 30.79 percent in the last two years, while Priceline.com has gained a whopping 54.43 percent.

Meanwhile, Marriott International, Inc. has gained 7.53 percent and InterContinental Hotels Group lost 2.14 percent.

For years, growing industry consolidation and a limited supply of rooms allowed major hotel chains to enjoy a great deal of pricing power and strong revenue growth.

Then came online sites like Expedia.com and Priceline.com, which helped consumers pit one hotel chain against another -- limiting the power pricing of the hotel industry, while taking a good chunk of revenues from the industry in the form of commissions.

That’s how the two sites ended up beating the two hotel chains in total revenues.

Priceline and Expedia’s revenues are 3 to 4 times higher than Marriott’s, though the two sites don’t have any physical assets.

That could, perhaps, explain the sluggish growth in hotel industry revenues, though margins continue to remain hefty.

In the meantime, both Expedia.com and Priceline.com have experienced exponential revenue growth, bypassing those of Marriott and InterContinental, enticing momentum investors.

And things are expected to get worse for the traditional hotel chains, as established sharing economy platforms like Airbnb, HomeAway (now part of Expedia.com), and newcomers like Roomorama and Housli have been expanding the supply of available rooms, and further limiting the pricing power of the hotel industry.

That’s why investors should be skeptical of a recent comeback in the stocks of the two hotel chains.

Source: Yahoo. Finance 2/12/207

Source: Yahoo. Finance 10/5/2015