Expedia Enters Into Strategic Alliance With G6 Hospitality

Expedia, Inc. (NASDAQ:EXPE) announced on Wednesday, a strategic technology and marketing partnership with G6 Hospitality, owner and operator of economy lodging locations under Motel 6 and Studio 6 brands in the United States and Canada.

The partnership is aimed at providing Motel 6 and Studio 6 access to Expedia’s marketing, technology and data insight solutions while boosting Expedia owned sites and Expedia Media Solutions, the advertising sales unit of Expedia.

Melissa Maher, Senior Vice President, global partner group, Expedia stated, “Our focus in recent years has been to offer market-leading services and solutions customized for our partners that positively impact their bottom line, and we’re excited to work alongside G6 Hospitality to drive this further for the brand.”

We observe that Expedia shares have gained 5.2% year to date, significantly underperforming the industry’s rally of 55.2%.

Deal Details

As part of the deal, Expedia Powered Technology will be available to Motel 6 and Studio 6. G6 Hospitality will offer loyalty enrollment and pricing to its My6 Members via Expedia-owned sites, corporate-level Expedia Media Solutions advertising program and Expedia’s Members Only Deals. The duo also has plans to explore an enhanced Rev+ solution and label Expedia technologies for G6 Hospitality properties.

Expedia, Inc. Revenue (TTM)

Expedia, Inc. Revenue (TTM) | Expedia, Inc. Quote

On the marketing front, Expedia market management will collaborate with G6 Hospitality to offer business intelligence and market insights to increase demand on Expedia sites. The offerings include partner education through Expedia Powered Technology; property, market and region-specific data-driven insights and assistance in price and value maximization.

Our Take

We believe that the partnership is part of Expedia’s increased focus and investments in technology and performance-based marketing. It is expected to boost Expedia’s lodging revenues, which include hotel and HomeAway revenues and currently constitute 71% of total revenues.

While these investments are expected to impact margins in the near term, the company will gain from technology, sales, and marketing investments made in the past years. Product enhancement is also expected to have a positive impact on margins, going forward.

Zacks Rank and Stocks to Consider

Expedia has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader technology sector include Activision Blizzard (NASDAQ:ATVI) , Red Hat (NYSE:RHT) and Five9 (NASDAQ:FIVN) , each carrying a Zacks Rank #2 (Buy).

Long-term earnings per share growth rate for Activision, Red Hat and Five9 is projected to be 13.8%, 15.8% and 20%, respectively.

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