Travelzoo’s Disappointing Performance Pushes It To Improve Its Platform And Enhance Member Experiences

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Travelzoo’s Chairman Expressed Disappointment And Revealed Future Revival Plans

Travelzoo released its Q1 2017 results on April 27th. The company’s Chairman and Global CEO Holger Bartel expressed his disappointment in its performance in the first quarter. Despite the positive traction in North America, the company has still not been able to grow its top line, a feat with which it has been struggling since 2014, post the release of its hotel booking platform. In terms of constant currencies, the company registered a 5% y-o-y decline in revenues to $28.4 million.

Bartel discussed the growth plan that they’d chalked out to revive the company’s growth over the next nine to twelve months.

  • The company will invest in expanding the offerings on the Travelzoo platform. The membership will be made more attractive with exclusive perks and benefits and a stronger loyalty program.
  • In order to drive the hotel booking and search growth, there will be more lucrative deals in place.
  • With the globalizing of the hotel platform, members can book deals from around the world without any problem. Also, this feature will facilitate global hotel suppliers to add deals on the platform more easily.
  • Travelzoo is developing a personalized alert service that will inform members about offers that they’re specifically interested in.
  • The packaged vacations segment will be broadened further and towards this end, the company might also acquire another entity or invest in a partnership to expand its offerings.
  • The Travelzoo mobile application is being made more personalized with a special focus on China where mobile adoption is ahead of other nations.
  • Keeping the China focus in mind, the company added Carrie Liqun Liu, the director of  the billion-dollar Fosun China Momentum Fund, to its board of directors recently.

Due to these investments, the management expects the company’s profits to be limited in the short run.

The Selling Of Fly.com Boosted Travelzoo’s Bottom Line

Travelzoo recently sold off its metasearch engine domain Fly.com after years of weak performance by the platform. It received around $2.89 million in cash proceeds from the sale of Fly.com. After the deduction of tax and costs associated with discontinuing operations, the net income from the discounted operations increased Travelzoo’s net income by around $1.84 million. The company bought the domain in 2009 and initially launched a metasearch for flight on it. It later added a hotel search option, with an aim to cross sell its offerings. However, Fly.com, which Travelzoo thought could compete with Kayak in North America and Skyscanner in Europe, didn’t quite manage to impress its parent company. While the other metasearch engines grew stronger (for example, Priceline bought Kayak in 2012 and made it even more influential), Travelzoo failed to strengthen Fly.com’s capabilities and increase traction on the platform. Also, Travelzoo shifted its main focus on the launch of its hotel booking platform since 2014 and had been spending most of its resources in enhancing the platform and marketing it. Travelzoo’s search revenues declined from $23 million in 2013 to $14 million in 2016 and the monthly searches on Fly.com fell by 50% between 2013 to 2016.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Travelzoo

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