How Is Travelzoo’s Travel Related Business Expected To Grow In The Next 5 Years?
Travelzoo’s travel business accounts for ~70% of its revenues. The hotel booking platform is the main revenue generator for this segment. Travelzoo marked a change in its existing business model by introducing the hotel booking platform in 2014. The platform enables users to book hotels directly via Travelzoo’s website or through mobile products, thus also allowing suppliers to promote deals in a more flexible manner. Also earlier, Travelzoo offered a platform to book discounted travel and entertainment deals. Hence, there was no flexibility to book according to the customers’ preferences. From the perspective of hotels, only off-season deals could be published on the website (as peak-season deals are seldom discounted). We expect the hotel booking platform to be the main driver in bolstering Travelzoo’s travel related business revenue which is expected to rise by about 15% over the next 5 years. Below, we outline the reasons for this.
Growth In Subscriber Base
- The higher number of product features and continuous innovation in its product portfolio is expected to help Travelzoo further expand its subscriber base.
- Travelzoo launched an iPhone application to address its subscribers’ immediate needs with on-the-go deals. With the growing adoption of smartphones amongst users, the mobile platform offers Travelzoo an opportunity to widen its subscriber base for core travel products.
- Travelzoo is working to lift consumer engagement levels by focusing on product development that will simplify ease of use and create better visual presentations. This was the primary motive behind building the hotel booking platform.
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Decline In Revenue Per Subscriber
- The competition for online advertisements has intensified over the years. Travelzoo has to fight for ad dollars with large tech companies, such as Google, MSN, Yahoo, and Facebook. Travelzoo also competes with other travel deal publishers as well as meta-search engine providers such as Kayak and Trivago.
- The advertising business is highly sensitive to economic downturns and the demand for online advertising is linked to the level of economic activity and employment in the U.S. and abroad. Travelzoo’s business model is dependent on online advertisements by travel, entertainment, and other small businesses. Since consumer spending on discretionary items is highly influenced by the state of the economy, future economic headwinds may impact the revenue earned per subscriber.
Have more questions about Travelzoo? See the links below.
- What Is Travelzoo’s Fundamental Value On The Basis Of Its Forecasted 2015 Results?
- How Has Travelzoo’s Revenue And EBITDA Composition Changed Over 2012-2016E?
- Travelzoo: Year 2015 In Review
- How Has Travelzoo’s Stock Performed In The Last Five Years?
- What Drove Travelzoo’s Revenue Growth And Led To Its EBITDA Decline Over The Last Five Years?
- How Have Travelzoo’s Different Segments Performed Over The Last 5 Years?
- Travelzoo Q1 2016 Earnings Results
- Travelzoo’s Expected Revenue And EBITDA For 2016: Trefis Estimate
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