Travelzoo 2010 Annual Report Download - page 42

Our business and growth will suffer if we are unable to hire and retain highly skilled personnel.
Our future success depends on our ability to attract, train, motivate and retain highly skilled employees. We
may be unable to retain our skilled employees, or attract, assimilate and retain other highly skilled employees in the
future. We have from time to time in the past experienced, and we expect to continue to experience in the future,
difficulty in hiring and retaining highly skilled employees with appropriate qualifications. If we are unable to hire
and retain skilled personnel, our growth may be restricted, which could adversely affect our future success.
We may not be able to effectively manage our expanding operations.
Since the commencement of our operations, we have experienced a period of rapid growth. In order to execute
our business plan, we must continue to grow significantly. As of December 31, 2010, we had 255 employees, up
from 193 employees as of December 31, 2009. We expect that the number of our employees will continue to
increase for the foreseeable future. This growth has placed, and our anticipated future growth will continue to place,
a significant strain on our management, systems and resources. We expect that we will need to continue to improve
our financial and managerial controls and reporting systems and procedures. We will also need to continue to
expand and maintain close coordination among our sales, production, marketing, IT, human resource and finance
departments. We may not succeed in these efforts. Our inability to expand our operations in an efficient manner
could cause our expenses to grow disproportionately to revenues, our revenues to decline or grow more slowly than
expected and could otherwise have a material adverse effect on our business.
Our operations may be adversely affected by changes in our senior management.
Effective July 1, 2010, Christopher Loughlin became the Company’s Chief Executive Officer replacing Holger
Bartel. Mr. Loughlin served as the Company’s Vice President of Business Development from 2001 to 2005 and
served as the Company’s Senior Vice President and General Manager, Travelzoo U.K. from 2005 to 2006. From
2006 to June 30, 2010, Mr. Loughlin served as the Company’s Executive Vice President, Europe. Mr. Loughlin has
extensive familiarity with the business and operations of the Company. However, there can be no assurances that
these changes in the senior management of the Company will not have an adverse effect on the business of the
Company, temporarily or otherwise.
Intense competition may adversely affect our ability to achieve or maintain market share and operate
profitably.
We face intense competition. We compete for advertising dollars with large Internet portal sites, such as MSN
and Yahoo! that offer listings or other advertising opportunities to travel, entertainment and local companies. These
companies have significantly greater financial, technical, marketing and other resources and larger advertiser bases.
We compete with search engines like Google and Bing that offer pay-per-click listings. We compete with travel
meta-search engines like Kayak and online travel and entertainment deal publishers. We compete with large online
travel agencies like Expedia and Priceline that also offer advertising placements and capture consumer interest. We
compete with companies like Groupon and LivingSocial that sell vouchers for deals from local businesses such as
spas and restaurants. In addition, we compete with newspapers, magazines and other traditional media companies
that operate websites which provide online advertising opportunities. We expect to face additional competition as
other established and emerging companies, including print media companies, enter the online advertising market.
Competition could result in reduced margins on our services, loss of market share or less use of Travelzoo by
advertisers and consumers. If we are not able to compete effectively with current or future competitors as a result of
these and other factors, our business could be materially adversely affected.
Loss of any of our key management personnel could negatively impact our business.
Our future success depends to a significant extent on the continued service and coordination of our management
team, particularly Christopher Loughlin, our Chief Executive Officer. The loss or departure of any of our officers or key
employees could materially adversely affect our ability to implement our business plan. We do not maintain key person
life insurance for any member of our management team. In addition, we expect new members to join our management
team in the future. These individuals will not previously have worked together and will be required to become integrated
into our management team. If our key management personnel are not able to work together effectively or successfully,
our business could be materially adversely affected.
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