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Internet Travel Sellers Hit Hard

Bellevue, Wash.-based Expedia shares, which trade on the Nasdaq Stock Market, dropped $12.25 closing at $24 Monday, the first day of stock trading after the East Coast terrorist strikes. The price fell another $4.36 Tuesday before rising 22 cents to trade at $19.86 this morning.

Despite slowing business, Expedia's staff will stay intact for now, said Christina Kozloff, Expedia marketing manager.

She said there hasn't been any discussion about layoffs as a result of Monday's stock market woes.

Expedia employs 846 people, which includes about 350 who work for Travelscape in the Summerlin area of Las Vegas.

Other online travel companies hit hard by terrorist worries include Priceline and Travelocity.

The declining stock prices reflect a general fear among investors that any companies with ties to air travel could be entering a protracted revenue slump. But online travel agencies carry a particular set of concerns, because they generally cater to leisure travelers, who may be returning to the skies even more warily than business travelers.

Expedia said bookings in the four days after the terrorist attacks were down 60 percent to 65 percent, although on Monday they were just 45 percent below where they had been a week earlier, the day before the attack.

Travelocity reported similar drops.

"It's very difficult for everybody right now," said Tom Underwood, a travel industry analyst with the investment firm Legg Mason.

Tuesday, Morgan Stanley reduced its third-quarter earnings estimate for Expedia, projecting $2 million in operating income, versus $9 million before the attack.

Erik Blachford, senior vice president of Expedia, said that while he was encouraged by the fact that airline bookings had improved slightly this week, company executives were also hoping for a pickup in hotel and rental car bookings, as suppliers drop prices to attract customers.

Hotels cannot shrink their inventory to account for slumping demand, Blachford said. "And to a certain extent, the same is true for rental car companies," he said. As a result, Blachford said lodging and car-rental companies might seek to encourage demand by offering discounts online.

One problem for online airline ticket sales was confusion among travelers. Until this week, travelers who booked flights online could go directly through check-in, and report to the airline gate with only an ID.

But with increased airport security, airlines are asking those customers who book travel online to print out confirmation pages from the website to prove they have a reservation.

According to Jones, many airports are allowing those passengers to go through the security check without having to first get a physical ticket from the airline counter. Still, in some airports, including LAX in Los Angeles, even passengers with a printed confirmation of a ticket they bought online were being redirected to the airline ticket counter.

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