Despite the current recession — or maybe because of it — online travel stocks are hot.

On Thursday we received earnings from online travel booking company Expedia (EXPE), and though the company posted a drop in its second-quarter profit, adjusted earnings blew past consensus estimates.

The company reported adjusted earnings of 38 cents per share in the latest quarter, excluding stock option expenses, restructuring charges and other items. Revenue fell 3% to $769.8 million for the quarter. Wall Street was expecting an adjusted profit of just 31 cents per share on sales of $732 million.

The earnings beat sent the stock soaring in Thursday trade. The gains in Expedia shares also sent buyers running toward other stocks in the online travel space, including Orbitz Worldwide (OWW), Priceline.com (PCLN) and Travelzoo (TZOO).

The Expedia earnings beat comes just three days after another solid earnings report in the space, this one from Travelzoo. The company reported a narrower second-quarter loss Monday, fueled largely by an increase in subscribers and strong business overseas. Travelzoo lost $191,000, or 1 cent per share, compared with a loss of $1.2 million, or 8 cents per share, a year earlier. For the period ended June 30, revenue climbed 12% to $24.3 million from $21.8 million.

The Secret to Online Travel Success

So, why are stocks in the online travel space doing so well, even as the country is struggling to come out of recession?

I suspect the answer can be found in what these sites offer consumers.

According to an article in the July 24 edition of Investor’s Business Daily, many corporate travel managers have been forced to cut the cost of basic travel expenses due to the recession.

Here’s the money quote from the IBD piece: “Firms are telling execs to move their seats from the front to the back of the plane — and to find budget-class hotel rooms.”

Bingo!

In tough economic times, both corporations and consumers look to save every dime, and one way to do this is to book flights and hotels using online travel sites. The beauty of these sites is they let you find the lowest prices out there, and in a recession, low prices are the Holy Grail of bottom-line performance.

I think that we are likely to see another solid quarter for these sites going forward, and that means you should put Expedia, Orbitz, Priceline.com and Travelzoo on your list of stocks to own for the second half of 2009.