Online Travel Industry Tries to Adjust to Maturity

When online companies feel compelled to point out that they are still growing faster than their offline counterparts.

Some online travel executives and a few of the remaining bullish securities analysts resorted to this line of reasoning recently, pointing out that Internet travel bookings in the first three months of this year grew about 20 percent across the world from a year earlier, compared with about 4 percent for travel bookings over all.

A few weeks ago, Priceline.com reported a jump in first-quarter bookings that doubled the online industry´s average, yet its share price dropped about 10 percent, to roughly $24.

After the earnings announcement, Aaron Kessler, an analyst with Piper Jaffray, lowered his rating on Priceline.com from outperform to market perform.

“I´m concerned about what´s happening in the U.S. market,” Mr. Kessler said. “Suppliers are figuring out ways to squeeze their travel agencies; online advertising costs are rising; and this is just becoming more of a mature market.”

To stave off a day of reckoning, Expedia, Travelocity and Orbitz, among others, are putting more emphasis on selling to corporations and expanding aggressively in foreign markets. Expedia´s European Web sites, for instance, attract by far the most travel shoppers on the Continent, according to comScore Networks, an Internet consultant.