Zacks Investment Research | May 23, 2017 11:06PM ET
Expedia, Inc. (NASDAQ:EXPE) announced that it has started to offer online booking of hotel rooms in Cuba for both U.S. and non-U.S. travelers through Expedia.com, Travelocity, Hotels.com, Orbitz and CheapTickets.
For U.S. travelers, the company is offering its services under a general license right for all travel service providers. For non-U.S. travelers, it’s functioning under a specific license issued by the U.S. Treasury's Office of Foreign Assets Control (OFAC) in Dec 2016.
Expedia is the latest to join the list of U.S. airlines and cruise operators who have started operating in Cuba since President Obama’s Dec 17, 2014, announcement of restoring diplomatic ties.
The company is working with 25 of its partner hotels including Blue Diamon, Barcelo, Sercotels, Warwick, Valentin and Blau.
Investors will keep an eye on whether international expansions such as this could boost Expedia shares, which have underperformed the Zacks Internet - Commerce industry over the last one year. The company has returned 26% compared with the industry’s gain of 46.7%.
Notably, Expedia’s closest peer Priceline (NASDAQ:PCLN) is the first U.S. online travel company to collaborate with Cuba. It inked a deal last year per which hotel rooms in the country were made available to U.S. customers through its subsidiary Booking.com.
Easing Bilateral Ties Boost Travel
Improvement in diplomatic relations between the two nations has boosted the travel and tourism sector of Cuba. In 2016, Cuba recorded 4 million visits, up 13% from 2015, with U.S. visits surging 74%. U.S. visits alone could increase seven-fold to 2 million by 2025, per a recent survey.
Officially, travel to Cuba is still illegal under the U.S. trade embargo. However, U.S. travelers are permitted by the OFAC under ‘general licenses’ that allow traveling on family, sports, religious and cultural grounds.
OFAC declared last year that the rule to visit Cuba only in groups has been relaxed, thereby enabling individual travel under specified categories. Expedia stated that it will ask travelers to certify that they fit one of the twelve permitted categories.
Expedia, Inc. Net Income (TTM)
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