The leisure market was already experiencing substantial changes due to the growth in online reservation activities. Traditional operators are in the process of exiting the point-to-point market, which is better and more efficiently handled by online platform operators who can scale-up on volume and prices. Yet, single product platforms will have difficulty in retaining customers compared with multi-product platforms which appear to be emerging more and more. The online travel market should expand by about 9.5% annually (the traditional travel market by about 5%), or expressed differently, by about 2017 the online market share should be about 40% of the total sales achieved.
| Company | Ticker | Sector | Upside Potential | Sharpe (FY01) |
| Expedia | EXPE | Travel & Tourism | -3% | 2.09 |
| Investment case: Expedia is the largest US online travel agency by bookings. It offers customers airline tickets, hotels, rental cars, and vacation packages worldwide. Increasing online travel purchasing will be driven largely by markets such as China and Latin America given their present relatively low level of online penetration. | ||||
| Company | Ticker | Sector | Upside Potential | Sharpe (FY01) |
| CTrip | CRTP | Travel & Tourism | -11% | 1.79 |
| Investment case: Ctrip is the largest consolidator of hotel rooms and airline tickets in China. It’s likely the company will be the key beneficiary of the growth in online travel services in China as it has substantial leverage over the competition. In 2013, less than 22.5% of Chinese internet users made online travel arrangements. The combination of ever higher internet utilization and higher levels of income bodes well for the company’s balance sheets. | ||||
| Company | Ticker | Sector | Upside Potential | Sharpe (FY01) |
| Priceline.com | PCLN |
Travel & Tourism | 19% | 4.58 |
| Investment case: Priceline recently announced it will acquire OpenTable, an online restaurant reservation system. It is expected to pursue a rather aggressive expansion strategy, both locally and abroad, with the aim of providing clients with the ability to completely organize online bookings for leisure activities, board and lodging. | ||||