Key upside/downside risks include the following:
• Acquisitions – We are not factoring in the potential benefit from an acquisition. Currently, WEB has ample liquidity to make a sizeable acquisition.
• Product mix shift – Traditionally, bedbanks provide hotels with long lead time bookings with low cancellation rates. These types of booking are out of favour. However, a successful shift in customer type could create upside risk to our expectations.
• Delay in travel recovery – Our estimates are based on the assumption that domestic and international activity continues to recover. Any further delays would put downward pressure on our forecasts.
• Increased competition – In recent times, traditional bricks-and-mortar retailers have developed their online offerings. We expect any increase in competition could pose downside risk.
• Hotel consolidation – Recent trends by hotels have been to consolidate and attempt to increase the number of direct bookings. This bypasses bedbanks and poses a risk.
If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely have difficulty achieving our target price. However, should they be less than anticipated, the stock could trade above our target price.
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