NEW YORK ( TheStreet) -- Priceline ( PCLN), Orbitz Worldwide ( OWW), Expedia ( EXPE), Travelzoo ( TZOO) and MakeMyTrip ( MMYT) are online travel stock picks, based on company fundamentals, analysts' ratings and performance metrics.

Statistics from PhoCusWright, a travel industry research firm, show that the travel market expanded by 10%, while online travel spending soared 12% in November 2010, with a 9% increase in hotel occupancy rates and a 3% rise in room rates. Benchmark Capital's forecast expects online travel to grow by 8% to $92 billion year-over-year in 2011.

Analysts at JPMorgan expect U.S. online travel spending to accelerate during 2011, driven largely by a recovery in average daily rates and travel volumes. Overall, U.S. gross bookings are likely to grow by 5% to $269 billion and online leisure/unmanaged business bookings are pegged at 11% to $108 billion. Furthermore, online gross bookings are likely to account for almost 40% of total travel spending in 2011.

Priceline ( PCLN) is an online travel company offering a range of travel services including hotel bookings, car rentals, airline tickets, vacation packages, cruises and destination services. Customers can book hotel room reservations in over 100 countries. Of the 21 analysts covering the stock, 76% recommended buying, while the remaining advise holding. On an average, analysts estimate a 12.3% upside from current levels.

ThinkEquity believes that Priceline is well positioned for gaining international market share as 69% of its gross bookings are from the international circuit. The research firm forecasts Priceline's international business to increase by 40% in 2011. For the third quarter ended September 2010, the company's international bookings soared 78% year-over-year. Meanwhile, the supplier-friendly model for hotels with affordable commission rates and attractive offerings for consumers creates the right mix for high-growth rates.

An analyst at RBC Capital Markets said that despite accumulating huge gains in 2010, the company has a vast unrealized potential through its booking.com site, which analysts regard as the leading global hotel booking site. Furthermore, analyst adds that most of the hotels in Europe are small and single-owner operated and rely on booking.com for advertising.

JP Morgan has assigned an overweight rating on the stock, based on the estimated growth in domestic and international markets the company will likely enjoy. Analysts believe that under penetration in the hotel space provides additional room for growth, offering companies like Priceline an added advantage. In addition, rapid growth in emerging markets and an opportunity to foray there will also benefit the company.

Domestic gross bookings are seen increasing 7% year-over-year during 2011, given the continuous development of booking.com in the U.S. hotel market industry. During the past two quarters, the company's gross profit growth has outpaced advertising expenditure, as indicated by improved efficiency. Therefore, higher brand awareness will lead to expanding growth rates. JP Morgan estimates operating margin at 31% for 2011, compared to 28% in 2010.

Looking ahead, Priceline is better positioned in terms of growth due to its exposure to the international markets, relative to peers Expedia and Orbitz.

Orbitz Worldwide ( OWW), a global online travel company, enables both leisure and business travelers to search and book a range of travel products and services. Of the 14 analysts covering the stock, 7% recommended buying and 78.6% holding. On an average, analysts polled by Bloomberg estimate a 24.7% upside from current levels.

The company has shifted focus from the U.S. travel market and lower-margin air ticket sales to the hotel business, a strategy that will benefit Orbitz in the upcoming months. As per Benchmark analysts, Orbitz will capture business from traditional travel agents, as indicated by growing transaction volumes and gross bookings.

International gross bookings zoomed 29% year-over-year during the first nine months of 2010, due to a major contribution from e-bookers. JP Morgan foresees e-booking business boosting in 2011, thereby pushing Orbitz's growth. Meanwhile, the company's ongoing and expected focus on its hotel business--HotelClub--will generate attractive results.

JP Morgan believes that the company's growth is contingent on its cash balance and leverage ratios. For 2011, cash and cash equivalents are seen at $155 million, as compared to the 2010 estimate of $155 million. Total debt is seen declining to $484 million in 2011 from $556 million in 2010.

Supporting this upbeat outlook is capital infusion by PAR Investment Partners and Blackstone. Together, these two firms invested almost $100 million in early 2010, with Blackstone owning 55% of common stock through Travelport and PAR accounting for 25% of common stock.

Expedia ( EXPE), the world's largest online travel agent (OTA) in terms of gross bookings, offers travel products and services. Of the 20 analysts covering the stock, 40% recommended buying, while the remaining advise holding. On an average, analysts polled by Bloomberg expect a 35.2% upside from current levels.

The company estimates its advertising and media business, including TripAdvisor Media Network, at $1 billion and its operating income before amortization (OIBA) to exceed 50%. Media business, which accounts for 12% of global revenue, is seen expanding in the upcoming months. Expedia estimates online advertising to grow by 10%, 11% and 15% in North America, Europe and Asia, respectively.

Meanwhile, online share consumer travel spending is seen expanding by 54%, 37% and 21% in North America, Europe and Asia, respectively. Based on a strong product portfolio, sizeable growth opportunities across different products and geographies, and a robust cash flow of $500 million or more annually, Jefferies believes that Expedia has a strong growth potential.

Beginning 2011, Expedia acquired Michigan-based Mobiata, a maker of mobile travel applications like FlightTrack, FareCompare and HotelPal. The same company is the architect of several iPhone travel apps. In a scenario where an increasing number of travelers are using smartphones and other portable devices for their travel needs, Expedia's competitive strategy will likely prove profitable in the future.

Benchmark Capital believes that the company's revenue margin is likely to experience modest expansion, supported by escalating average daily rate recovery and moderating airfare increases, as capacity veers to the right track. Further international expansion, mainly in Europe and the Asia-Pacific region, may push the company's total bookings to grow by 12% year-over-year, revenue by 15%, OIBA growth by 19% and earnings per share by $2 in 2011. Almost 40% of the company's revenue is generated from outside the U.S.

Travelzoo ( TZOO) is a global Internet media company operating in North America and Europe. The company enables airlines, hotels, cruise lines, vacation packagers, and other travel and entertainment companies to reach out to millions of consumers. Of the 4 analysts covering the stock, 75% recommended buying, while the remaining advise holding. On an average, analysts estimate a 36.8% upside from current levels.

As per analysts at Investment U, Travelzoo is among the three companies that could benefit from merger and acquisition deals in 2011. The analysis is based on Google's ( GOOG) $6 billion offer to Groupon, a company that releases daily travel offers. Google is aspiring to capture the 15 million subscribers Groupon has on its mailing list. However, after Groupon declined, the offer is open to Travelzoo, which operates on similar business lines and has almost 21 million subscribers. Also, much below the inflated valuation for Groupon, Travelzoo can be acquired for $700 million.

Meanwhile, a company executive revealed that in 2011, the trend will be a growing demand for planned attractive travel destination deals at affordable prices. Looking ahead, Travelzoo is likely to benefit from the strong growth in the travel industry in the upcoming months.

After unveiling its Local Deals business in the U.S. in mid-2010, Travelzoo launched its European operations in mid-December 2010. The Local Deals business is purely an extension of the existing entertainment deals service, however, with a wider product range providing users direct booking through Travelzoo. The new division was launched initially in the U.K. for subscribers in London with the facility to mail area-specific deals for subscribers.

As per Travelzoo's U.K. managing director, of the 2.1 million Travelzoo subscribers in the U.K, almost 95% include their postcode in their profile in order to receive Local Deals emails. This business model, also adopted by Groupon, is considered to be one of the fastest growing web businesses.

With a huge base of 4.5 million subscribers in Europe, the company plans to launch the Local Deals business in and around major European populated areas. Moreover, after only four months of launch in the U.S., the business has attracted 100,000 deals and accounted for almost $3 million in gross revenue.

MakeMyTrip ( MMYT) is an India-based online travel company providing customers access to major domestic full-service and low-cost airlines, hotels, Indian railways and major Indian bus operators. Of the 7 analysts covering the stock, 57% recommended buying, while the remaining advise holding. On an average, analysts estimate a 42.2% upside from current levels.

Notably, MakeMyTrip's initial public offering is the first Indian IPO in the U.S. since 2006 and the third since 1999. The company has a 48% share in India's $1 billion online travel market, while its international business, which is 50% on the online platform, contributes nearly 25% toward total revenue.

Looking ahead, the company expects to earn revenue minus service cost in the range of $58-$61 million. MakeMyTrip believes that it is well positioned for long-term growth, led by India's burgeoning middle class and the expected launch of the broadband spectrum in India, which will drive e-commerce and benefit online travel companies.

The company is seeking potential acquisition targets in hotel bookings, exhibitions and technology enablers. MakeMyTrip's chief executive said the company would focus on acquisitions that improve access to consumers, increase margins and growth. MMYT is looking to spend almost $2-$3 billion on technology upgrade in the upcoming year, aimed at customizing various consumer demands and attracting business.

The company estimates the size of the Indian travel market, which stood at $15.8 billion in 2009, to record $20 billion by 2011. Macroeconomic fundamentals like India's GDP forecast to grow at 8.5%, rising consumer spending on travel and entertainment, and a growing middle class will support MMYT's future growth.

Higher vendor bargaining power in the upcoming months will improve revenue margins in the hotel and tour packages business.
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