The economic troubles in Europe are beginning to take a toll on online travel companies in the U.S.
Shares of some of the biggest online travel websites dropped Wednesday, led by Priceline.com Inc. and Orbitz Worldwide Inc. The two companies generate a big chunk of revenue from international travel sales.
The declines were in part triggered by sliding revenue forecasts by Priceline and Orbitz for the rest of the year. The travel sites said this week that Europeans, whose economy has been sideswiped by a recession, aren't booking as many tickets.
"The company believes that concerns related to sovereign debt and the viability of the euro have negatively impacted historical operating results and are likely to impact future results," Priceline reported in its second-quarter earnings report.
Priceline shares dropped 17.28%, or $117 per share, to $562 on Wednesday, while Orbitz fell 25.54% to $3.47 a share and Expedia slid nearly 4.64% to $56. Shares of TripAdvisor Inc., which spun off from Expedia in December, dropped 4.89% to $36.77.
Investors became cautious after Priceline issued a disappointing forecast for the rest of the year. The company expects revenues this year to increase 9% to 15%, well below the 20% increase reported during the second quarter.
Priceline's estimates indicate 2012 revenue between $1.58 billion and $1.67 billion, which is below analysts' projections for $1.8 billion.
The slumping forecast caught some Wall Street analysts by surprise because until this week the economic problems in Europe had yet to affect hotel bookings and airline ticket sales.
"It was dramatic, coming from this company, to say things are getting worse in the third quarter," said Scott Kessler, a technology analysts with Standard and Poor's.
The gloomy forecast by Priceline may have helped push down shares of several competitors.
"I think today Priceline pulled down the whole sector" said Aaron Kessler, an analyst for Raymond James & Associates in San Francisco.
Orbitz, meanwhile, reported on Wednesday a lackluster second quarter, with net income sliding 48% to $4.6 million and revenue nearly flat at $200.1 million. The company warned about "the deterioration in economic conditions in Europe" as well as weaker air bookings online and uncooperative foreign exchange rates.
Europe's economic woes may have hit Priceline particularly hard because about 60% of the travel website's revenue comes from international travel sales. International travel generates about 40% of revenue for Expedia and 30% for Orbitz, Scott Kessler said.