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2013 has been a good year for online travel site
PCLN). Since the first trading session of the year, shares of the firm have climbed more than 30%. That's around twice what the market averages have managed to turn out over the same period. With solid momentum behind its share price, Priceline has been leveraging its capital markets prowess to expand its horizons by buying travel media site Kayak, a move that's distinctly in the right direction. As PCLN continues to carve out a moat, investors should continue to carve out gains.
Priceline's success in the travel market has a lot to do with the reputation it earned back in the early days of online travel sales. Due in large part to the efforts of firms like Priceline, the U.S. travel market is largely commoditized at this point. For instance, it's become standard practice for travel sites to pen "lowest price" guarantees with hotels, a phenomenon that effectively means that it doesn't matter where you buy your next trip; you're probably going to end up paying the same price anyway. Priceline's large market share here at home guarantees it equally large sales volumes, and content-fuelled destinations like Kayak should help to drive new travelers there.
Commoditized travel less the case internationally, where the travel aggregation market is less mature and hotels and airlines are still eager to sell capacity at a discount. Consumers are also eager to buy it. International sales provide the biggest opportunity for margin expansion for PCLN, while legacy sales continue to keep the lights on.