Online Travel Shares Rise on Profit Reports

Shares of online travel sites rose sharply Monday after the sites reported better-than-expected financial results and booking activity despite reports of significant contraction in other areas of the travel business.

The year-end earnings reports by Dallas-based Hotel Reservations Network Inc. and Expedia Inc. of Seattle showed that consumer demand for travel remained stronger than expected amid the recession and in the wake of the terrorist attacks. The weakened economy may have driven more consumers to use the Internet to search for travel bargains, industry analysts said.

Hotel Reservations Network, which is being acquired by USA Networks Inc., saw its shares rise $7.99 to $52.25 on Nasdaq. The firm reported that fourth-quarter net income fell to $4.81 million, or 6.8%, compared with the year-ago period. The drop was smaller than expected, and the firm also raised its sales and profit forecast for this year.

Shares of Expedia, which reported its first quarterly profit, rose nearly 10% on Monday, to $50.76 on Nasdaq. The stock continued to rise in after-hours trading after the release of earnings to $52.93 a share.

Expedia posted a profit, excluding merger expenses, of $19 million for its fiscal second quarter ended Dec. 31. The firm had posted a quarterly loss of $2.6 million in the year-ago period.

Shares of another prominent Internet travel company, Travelocity.com Inc., also rose Monday, up $3.86 to $26.60 on Nasdaq.

Although the online business has fared better than expected, the hotel business suffered substantially last year, according to lodging reports released Monday.

Hotel industry room revenue in 2001 dropped nearly 7% or nearly twice as high as previous forecasts, according to Smith Travel Research. And hotel development in California dropped sharply last year, as 77 proposed hotel projects with a total of 13,000 rooms were deferred or abandoned, according to the Atlas Hospitality Group.