Not long ago, investors had high hopes for the likes of Expedia, Travelocity and Orbitz. These Internet upstarts were going to simplify the travel business by drawing traffic from travel agents and reservation phone lines. Profits were going to soar both for the sites and for their airline and hotel industry partners.
But it hasn't worked out that way.
Increasing competition from players ranging from Google to the big airlines themselves are slowing growth at outfits like the Travelocity unit of Sabre Holdings and Orbitz parent Cendant.
"People are overall fairly negative on the whole sector," says Aaron Kessler, an analyst with Piper Jaffray who rates Expedia market-perform and Priceline outperform. "They are most positive on the international side of the market. Domestic is going to remain a challenge."
Like other Web-based services, online travel is no longer a novelty. Competition is intensifying as airlines and hotels expand their efforts to get travelers to buy on their sites. Plus, there's the added problem of specialized search engines, including Kayack and Sidestep. These operations help people find the best deal by comparing prices over multiple sites.
Get the full story at The Street.com
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