Online travel stocks soaring

Travelzoo leads the pack with a gain of more than 10% at midday.

By Kim Peterson Aug 29, 2011 2:52PM
Updated 6 p.m. ET 

Travelzoo (TZOO) is starting to recover from a month-long beating that took shares down more than 60%.

The stock closed up 10% to $36.93 Monday in a surge that carried along other online travel companies as well. HomeAway (AWAY) also saw a 10% gain, and Expedia (EXPE) closed up 4%.

No one seems to be sure why the sector is seeing renewed interest Monday. Perhaps all the Labor Day travel deals after Hurricane Irene is one culprit. Or maybe it's because Travelzoo has been mentioned as a good acquisition target for a rival like Expedia.

Travelzoo's chief executive talked with Jim Cramer recently. Check out his comments in the following video.

Post continues below video:
Travelzoo shareholders could be pleased by Facebook's decision to exit the daily deals business after four months of testing. Facebook had been offering deals in five cities, using a small sales team to contact local merchants.

But competing with the likes of Groupon and LivingSocial requires a huge investment in a local sales force, and Facebook may not have wanted to spend the money.

Facebook's departure is a clear win for everyone else in the business. Travelzoo launched its daily deals site about a year ago, and did so well with it that the stock soared from $20 to more than $90 in April. But shares have been on a huge slide since then, falling to around $33 last week.

Tags: travel
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