Travelzoo Seems To Be Picking Up On Market Cues And Progressing In The Right Direction

-34.09%
Downside
10.35
Market
6.82
Trefis
TZOO: Travelzoo logo
TZOO
Travelzoo

Travelzoo (NASDAQ: TZOO), the global internet media company, is slated to release its Q4 2015 earnings on February 11th. In 2015, the company had been gradually recovering from its weak performance due to major changes in offerings. For the first nine months of 2015, its revenues declined by  about 8%  year-over-year to ~$110 million. Though the year-over-year performance of the company is still lagging behind, its recovery has been evident over successive months for the last twelve months (in constant currency terms).  Also, the company’s member base increased to 28 million (from ~27 million) after the acquisition of the Asia Pacific business in August 2015. Some of the major events that impacted the company in 2015 included changing most of its offerings to a pull-based structure (instead of the earlier push-based services), gaining traction in its hotel booking platform which was launched in 2014, some key management changes, and reacquiring its Asia Pacific (APAC) business. Travelzoo is still on the path of transition and hence the decline in revenues is expected to continue in the fourth quarter as well.

We will update our price estimate of $8.24 for Travelzoo after its earnings release.

See our full analysis of Travelzoo

Focus On The Hotel Booking Platform Yielded Positive Results

Relevant Articles
  1. Why Did Travelzoo’s Stock Grow Despite Only Modest Revenue Growth?
  2. Could Travelzoo’s Stock Rise By 50% Post COVID-19 Crisis?
  3. How Does Travelzoo Make Money?
  4. Why Has Travelzoo’s Stock Price See-Sawed So Much Since Early 2018?
  5. Can Travelzoo End Fiscal 2018 On a Strong Note?
  6. What Is TripAdvisor’s Revenue And EBITDA Breakdown?

Travelzoo is currently trying to phase out the voucher format for local deals and is trying to promote more demand-based live deals. Also, after the launch of its hotel booking platform in Q1 2014, the company tried repositioning itself from a deal publishing platform to a hotel booking platform, reflecting some of the properties of a regular OTA. The platform offering more flexibility to both its users and hotel suppliers didn’t receive a warm welcome initially, however, it started gaining traction from the beginning of last year after its relaunch in February 2015. Taking cues from the pickup of demand, and a significant growth of hotel and deal searches on the platform, Travelzoo has currently planned on its global roll out.

 

 

Travelzoo Reacquired Its Asia Pacific Business To Focus On Global Expansion

The main reason for Travelzoo reacquiring its APAC business in Q3 2015 was to get a slice of the fast growing Chinese outbound travel market. Chinese travelers are presently considered to be the top contributors to global tourism spending. According to a report by China Tourism Research Institute, in Q1 2015, travel agencies in China organized travel for around 9 million visitors to foreign countries, witnessing a 21.4% growth over the same period in 2014. [1] According to a report by China Luxury Advisors, the overseas spending by Chinese outbound tourists is expected to have reached around $230 billion by the end of 2015, reflecting a 23% year-on-year growth. By 2020, the spending is expected to almost double to reach $422 billion. [2]

Other than China, which boasts of over 1.1 million members and over 2 million users, Travelzoo’s APAC subscribers are spread over  regions like Australia (~700,000 members), Hong Kong (~440,000 members), Japan (~1.1 million members), and Taiwan (~220,000 members).

Management Changes

The company announced a few crucial changes in its management in 2015. Travelzoo’s Chairman Holger Bartel assumed the position of its global CEO since January 1, 2016. Mike Stitt was announced to be the President of North America effective October 2015, and Vivian Hong assumed the role of the President of Travelzoo Asia Pacific, effective January 2016.

Travelzoo’s Region-wise Performance

Travelzoo is striving towards adapting itself to the changing market demands and that seems to be working well for the company. Hence, even after increasing expenses of product development or subscriber acquisition, the company witnessed improved performance. In Q3 2015, Asia, Europe, and Canada witnessed constant currency revenue growth. The driving forces were increased travel revenue driven by a growth in demand for airlines and vacation package revenue. However, the U.S. – Travelzoo’s biggest market – is yet to recover on account of certain product changes that are taking place in the region.

View Interactive Institutional Research (Powered by Trefis):

Global Large CapU.S. Mid & Small CapEuropean Large & Mid Cap
More Trefis Research

Notes:
  1. China Outbound Tourism in 2015, Travel China Guide []
  2. New CLA Report: Chinese Tourist Spending to Double by 2020, China Luxury Advisors, September 28, 2015 []