Online Travel agents
Use the potential of Online Travel Agents in risk adjusted structures
The role of Online Travel Agencies (OTA's) has become increasingly important within the hotel industry, because they provide an easy way for customers to compare hotels and to book them over the internet, from the comfort of their own home, or on the go with their smartphones. An online travel agency is a website or online service, which sells travel related products to customers. These products can include hotels, flights, travel packages, activities and car rentals. In city hotels the share of procured rooms by OTA's is now at around 70%. The market is booming but at the same time hallmarked by a takeover wave. Only the strongest survive. Since the market is characterized by Econonomies of Scale the best ones become even more powerful. We present you 3 interesting companies which stick out due to the market position, inovativeness or uniqueness.
Booking Holdings Inc: Through several takeovers the company runs and owns by now the search engines and comparison portals Booking , Priceline, Agoda, Kayak, Momondo, Cheapflights und Open Table. Booking Holdings is the biggest and most succesfull player in this area. In 2019 they reached a revenue of more than 15 billion USD and an EBIT of about 5 billion USD.
Expedia Group Inc: Expedia can assert itself as the clear number two. Due to the clever acquisition of Home Away and Orbitz as well as a revenue of more than 11 billion USD a real institution in this area. The significant price slump from november 2019 makes the shares additionally attractive.
TRIPADVISOR INC: Much smaller than the seemingly overwhelming competitors from Booking and Expedia, Tripadvisor maintains itself with a revenue of only 1.65 billion. Through effective restructuring efforts as well as the cult status of the experience report platform the enterprise can prevail over the competition. As in the case of Expedia the massive price decline from november 2019 increase the attractiveness.
Of course, due to high price levels of the market and an impending economic slowdown the presented companies cannot be viewed without the risks. Stagnating incomes and anti-trust disputes in case of booking emphasize the necessity of a useful risk adjustment. Therefore we generated the structure of a Barrier Reverse Convertible with a Maturity of 12 months and a European Barrier optionally with 59% or 69%.
The high guaranteed Coupons exceed the average expected dividend yields from Booking (no dividend), Expedia (1.22%) und Tripadvisor (no dividend) significant.
12M Barrier Reverse Convertible in CHF/EUR/USD
| Currency | CHF | EUR | USD |
| Denomination | CHF 1'000.-- | EUR 1'000 | USD 1'000 |
| Maturity | 12 months (early redemption possible) | ||
| Underlying (Worst Of) | Booking Holdings Inc (BKNG US) TRIPADVISOR INC (TRIP US) Expedia Group Inc (EXPE US) |
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| Coupon guaranteed with EU Barrier 59% |
7.56% p.a. | 7.84% p.a. | 10.00% p.a. |
| Coupon guaranteed with EU Barrier 69% |
11.80% p.a. | 12.30% p.a. | 14.25% p.a. |
| Autocall | Q1: 100% Q2: 98% Q3: 96% Q4: 94% |
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| Observation | Quarterly | ||
| Indication | 21.01.2020 | ||
| Size | [CCY] 1'000'000;-- | ||
| Issuer | Rating A- minimum | ||
| Issue Price | 100% | ||
We are happy to customize the relevant components exactly to your personal preferences. Please imagine that the indications can change day by day.
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Text und analysis by Florian Franz
Partner at Carat Solutions AG
The chart provides you the development of the relevant underlyings during the last 12 months:
