Market Overview

Morgan Stanley Debunks 3 Bear Myths Haunting The Online Travel Space

Share:
Morgan Stanley Debunks 3 Bear Myths Haunting The Online Travel Space
Related EXPE
Data Is Creating A Faster, Smarter And Safer Class Of Retail Investor—And They're Turning To Real Estate
10 Stocks To Watch For October 26, 2018

The online travel agency sector is structurally challenged, and the competitive threat from Airbnb poses a major challenge both now and over the long-term, according to many bears. But this isn't the case at all, a Morgan Stanley analyst said this week. 

The Analyst

Earlier this week, Morgan Stanley's Brian Nowak upgraded Expedia Inc (NASDAQ: EXPE)'s stock from Equal-weight to Overweight with a price target lowered from $170 to $160.

Myth: Structurally Challenged Industry

The OTA sector isn't structurally challenged and still has room for growth, Nowak said in an industrywide report. (See the analyst's track record here.) 

Online travel penetration stood at 48 percent in the U.S. and 44 percent in Europe in 2017, and online penetration is projected to experience a "healthy" growth rate of 225 to 300 basis points in 2018, By 2019 the penetration rate should grow to 53 percent in the U.S. and 50 percent in Europe, Nowak said. 

Myth: Consumers Don't Like The OTA Model

Younger consumers, especially millennials, are more likely to use an OTA as opposed to booking directly from a brand's website, the analyst said. Among the 18-to-34 age group, 37 percent of survey respondents use an OTA platform versus 13 percent using meta search and 19 percent using a supplier website.

The OTA space will likely continue gaining share as the platform offers a broader choice and selection, more reviews, more offerings and superior mobile apps, according to Morgan Stanley. 

Myth: Airbnb Will Take Over

Airbnb is viewed as a game-changer for the online travel agency sector, but this isn't proving to be the case, Nowak said. For instance, the analyst's latest Airbnb survey found that adoption is actually slowing in developed markets and the OTA channel continues to grow.

"If anything, OTAs are becoming larger threats to Airbnb as potential online travel one-stop shops," Nowak said. "Over the long-term, we see the sites that offer consumers the most selection across hotel and alternative accommodations as likely being well positioned for repeat traffic and strong brand equity."

Related Links:

The Reward Outweighs The Risk In Expedia, Analyst Says

Trip Canceled: MKM Partners Downgrades Priceline On Near-Term Concerns

Latest Ratings for EXPE

DateFirmActionFromTo
Nov 2018Telsey Advisory GroupInitiates Coverage OnMarket Perform
Oct 2018BarclaysMaintainsOverweightOverweight
Oct 2018Credit SuisseMaintainsOutperformOutperform

View More Analyst Ratings for EXPE
View the Latest Analyst Ratings

Posted-In: Airbnb Brian Nowak Online Travel Agency OTAAnalyst Color Travel Analyst Ratings General Best of Benzinga

 

Related Articles (EXPE + PCLN)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
DLTRBernsteinUpgrades0.0
CNPUBSUpgrades34.0
UGIUBSDowngrades63.0
ATOUBSDowngrades106.0
CSCONomuraDowngrades50.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

The Strength In Emerging Markets Has Some On Wall Street Very Excited

Here Are The 5 Most Bought And Sold Stocks Of TD Ameritrade Clients In 2017