The Covid-19 pandemic has hit the travel industry hard, including online travel agencies, or OTAs. Yet these were already facing headwinds going into the crisis, argues Bernstein, meaning that investors should proceed with caution.
Analyst Richard Clarke initiated coverage of OTAs with a cautious long-term view on Tuesday.
The fact that “we, lodging analysts rather than internet analysts, are covering the OTAs is in itself telling,” he wrote. “These are no longer 30%+ growth disrupters, but established parts of the travel landscape, in even competition with their underlying product and themselves being disrupted by tech intrusion, notably from Google (GOOGL).”
This leads him to believe that the OTAs’ core business model of hotel disruption and providing metasearch capabilities is slowing for the three main players—
(TRIP)—and that share gains from competitors could “abate or even