Travelzoo Is Gearing Up For Its Much Needed Growth And Is Hopeful About 2018

January 22nd, 2018 by Trefis Team
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Downside
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Market
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TZOO
Travelzoo

Travelzoo‘s performance over the first nine months of 2017, was not a promising one. The company has been struggling with its performance for almost three years now. Travelzoo’s introduction of a hotel booking platform in 2014, and subsequently attempting to make it the focus of its business, while gradually reducing the stress on the local deals and search segments, seems to have still not worked well enough for the company. However, the company is currently undertaking several initiatives to turn things around. It aims to witness revenue growth by Q1 2018 and improve even further as the year progresses. We have a $7 price estimate for Travelzoo’s stock, which is in line with the current market price.

Travelzoo’s Setback Was Evident In All Its Markets In 2017

Both in Europe and in North America, Travelzoo experienced a setback in the last year. Currently, the company is focusing on its European market to mark an improvement in its future performance.

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Travelzoo had earlier reacquired its Asia Pacific business and put a special focus on China, whose tourism industry is one of the most lucrative in the world today. It took measures like hiring region specific managers, launching new mobile applications in China, expanding offerings, giving better member perks etc. However, even with these measures there has been a 31% y-o-y decline in its Asia Pacific revenues to $1.8 million and a $1.7 million operating loss in the region in Q3 2017. Though its performance in Asia Pacific was weaker than expected, the company is gearing up for significant improvement and a considerable chunk of revenue coming from that region in the future. It has recently appointed General Managers for each of its Australia and Hong Kong businesses. We can only hope that the growth measures reap benefits with time.

 

Travelzoo’s Current Focus Areas 

The company is working on technology that will better help gauge the member usage behavior. It will work more aggressively toward more member acquisition once this technology is in place over the first few months of 2018. It has also increased focus on the areas of hotel bookings and vacation packaged bookings. The company is also looking for acquisition targets to strengthen its offerings in the packaged booking segment. Finally, the Getaways deals contribution to the business has declined and gradually it will be replaced by offerings from the hotel booking platform.

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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