Web travel agencies feel pinch of weaker demand
By Kyle Peterson
CHICAGO (Reuters) - Online travel agencies are a traveler's best friend when budgets are tight, but the current economic crisis is so bad it has squelched a lot trips and clouded the outlook for companies that sell bookings.
The top three publicly traded online travel agencies (OTAs) -- Expedia Inc, Priceline.com and Orbitz Worldwide -- delivered mixed results for the third quarter. But they were unanimous in their caution amid economic challenges not seen in 80 years.
"That's not a tide that we can swim against at the rate we did in Q3," Orbitz Chief Executive Steve Barnhart told Reuters in an interview.
Since the beginning of the third quarter, Expedia and Priceline shares have lost more than 50 percent each. Orbitz shares are down 40 percent for the same period.
Barnhart noted that OTAs have the means to generate travel demand even during down economic times.
"We are somewhat counter-cyclical," he said. "We can be a force in stimulating travel demand."
Orbitz, which posted a quarterly net loss due to an impairment charge on Monday, said it would cut its workforce by 10 percent to generate savings. The company said the weakening fourth-quarter economic outlook made the job cuts necessary.
Expedia Inc, the largest online travel agency, reported a decline in quarterly net profit last month and acknowledged that economic turmoil caused a "broad pullback" in travel spending in September and October. Continued...