Travelzoo Asia Pacific, an independently owned licensee of Travelzoo Inc. (NASDAQ:TZOO), recently released findings of its subscriber survey focusing on leisure travel spending habits. The results revealed that 70 percent of Travelzoo’s subscribers would spend more on travel rather than luxury goods, indicating a major shift in consumer spending habits. While this may speak of robust travel trends in the region, it also reflects the quality of audience base at Travelzoo. Jason Yap, CEO, Travelzoo Asia Pacific says, “Our commitment to publish only high quality deals of true value is a key stimulus for incremental travel in the region.”
Below we discuss the drivers of Asia travel trends and the dynamics of Travelzoo’s audience.
We have a Trefis price estimate of $30.38 for Travelzoo, which represents about 20% premium to the market price.
The survey was based on interviewing 6,500 Travelzoo subscribers in the Asia Pacific region between October and November, and the findings showed that Travelzoo subscribers are upbeat about their travel prospects in 2012.
In all markets across Asia Pacific, at least 65 percent expect to spend more on travel in 2012 than they did in 2011. Australian subscribers plan to spend the most at an average of US$2,456 per person for a leisure trip. In addition, Hong Kong subscribers plan to travel most frequently at an average of five leisure trips per year while 94% of Japanese subscribers intend to increase travel spending in 2012.
Recovering Japan and Thailand Aiding Travel Deals Momentum in Asia
Japan is hungry for tourism as it recovers from the devastating tsunami of 2011. Deal Experts from Travelzoo’s Tokyo office say upscale properties are reducing rates by as much as 50%. Travelers can stay at 5-star hotels in notoriously expensive Tokyo for less than $200 per night and Japan Airlines is adding non-stop service from Boston in 2012, creating greater accessibility from the East Coast. Like Japan, Thailand is recovering from the floods, and as the waters recede, the government and hoteliers are advertising incredible deals to attract tourists. Five-star hotels are promoting packages for $100 per night, including massages and meals. Vacation packagers are also promoting attractive deals such as an eight-night, four-city package with air, meals and transfers for $999 per person, a savings of more than 35% on current rates.
Travelzoo Charges Higher Prices with Older Customer Demographics
Travelzoo has a large and affluent base of customers that are frequent leisure travelers. According to company, the average household income of Travelzoo’s US subscribers is $85,771, where +33% earned over $100,000 and 77% took over three leisure trips in the past year.
While primary local deals competitor Groupon (NASDAQ:GRPN) says 68% of its audience is between the ages 18 and 34, 81% of Travelzoo’s audience is more than 35 years old. Due to the nature of demographics catered to by Travelzoo, its deals tend to be at higher price points than competitors like Groupon, which has seen a decreasing Average Groupon Price as the chances of a deal being profitable for merchants might be higher if deal sizes are small. Travelzoo, however, differentiates itself by staying focused on high-quality establishments and experiences.
While Groupon may offer teeth-whitening services or $10 worth of desserts for $5 at Maggie Moo’s Ice Cream and Treatery in Ridgewood, N.J., a recent Travelzoo Local Deal at Casa Del Mar Hotel in Santa Monica, Calif., touted a 5-course dinner for two people at $89 (supposedly a $256 value). This augurs favorably for Travelzoo’s Average Revenue per Deal.