Travelzoo’s Management Promises To Turn Things Around In The Backdrop Of Yet Another Disappointing Quarter

by Trefis Team
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Travelzoo
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Travelzoo’s travails seem to be far from over. Even after three years since the time it launched its hotel booking platform and started revamping its offerings, the company is yet to see a growth in revenues. The second quarter once again was no exception. Its Global CEO, Holger Bartel, expressed disappointment over the company’s weak performance. Though positive trends continued in North America, the y-o-y revenue growth still remains elusive for the company. The overall company revenue declined by 11% y-o-y to $26.4 million in Q2 2017 and its earnings per share from continued operations declined by ~ 62% to $0.05. The number of subscribed members on its platform increased slightly to 29.3 million from 28.9 million in the same quarter last year. Travelzoo is taking region specific measures such as hiring managers in Asia Pacific markets, introducing new mobile applications in China, as well as global measures such as expanded offerings, better member perks etc. to recover from the slump. It is also looking out for acquisition options to help it grow further. The management has chalked out a growth path that, it says, might show some recovery over the next six to twelve months. We believe it is high time something positive happens to Travelzoo before a bigger player decides to take it over.

Lukewarm Performance Across Markets With Asia Pacific Being The Worst Performer

Revenues in Asia Pacific were down by 16% in constant currency terms due to understaffed offices in the region. The new general managers hired in Australia and Hong Kong are expected to turn around the situation in Asia. Revenues in North America and Europe declined by 7% and 9% y-o-y on a constant currency terms, respectively. While the former suffered from flat travel revenues, the latter was impacted by seasonal sluggishness and a lack of traction for packaged deals.

Initiatives Expected To Improve Performance Over The Next Six To Twelve Months

  • The expanded offerings and the added exclusive perks to memberships are some of the measures that the company has planned on taking to improve traction on its platform.
  • Though the booking from the hotel and search platforms are currently on the rise, an accelerated growth rate is what the company is aiming for right now. New features, such as members being able to book deals from around the world and global hotel suppliers adding deals on the platform more easily, will help both the demand and the supply side.
  • The packaged vacation offerings are also being expanded.
  • Though the company has been trying these measures, the rate of growth is still far from satisfactory. It might be because of that reason that it is now looking out for acquisition targets.
  • There is also a updated mobile application that will be initially launched in the China market.

 

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such 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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