Travelzoo 2003 Annual Report Download - page 31

Our operations could be signiÑcantly hindered by the occurrence of a natural disaster or other
catastrophic event.
Our operations are susceptible to outages due to Ñre, Öoods, power loss, telecommunications failures,
break-ins and similar events. In addition, a signiÑcant portion of our network infrastructure is located in
Northern California, an area susceptible to earthquakes. We do not have multiple site capacity in the event of
any such occurrence. Outages could cause signiÑcant interruptions of our service. In addition, despite our
implementation of network security measures, our servers are vulnerable to computer viruses, physical and
electronic break-ins, and similar disruptions from unauthorized tampering with our computer systems. We do
not carry business interruption insurance to compensate us for losses that may occur as a result of any of these
events.
Technological or other assaults on our service could harm our business.
We are vulnerable to coordinated attempts to overload our systems with data, resulting in denial or
reduction of service to some or all of our users for a period of time. We have experienced denial of service
attacks in the past, and may experience such attempts in the future. We do not carry business interruption
insurance to compensate us for losses that may occur as a result of any of these events. Any such event could
reduce our revenue and harm our operating results and Ñnancial condition.
We may face signiÑcant costs with respect to the delivery of paper copies of reports to our stockholders.
The Securities Exchange Act of 1934 requires us to provide paper copies of certain reports to our
stockholders who do not consent to receiving electronic delivery. If a signiÑcant number of our stockholders do
not consent to electronic delivery of stockholder communications or revoke such consent, we may face
signiÑcant costs related to the printing and mailing of such reports.
Risks Related to Our Markets and Strategy
The Internet is not a proven marketing medium.
The future of our business is dependent on the continuing acceptance by travel companies of the Internet
as an eÅective marketing tool, and on the ongoing acceptance by consumers of the Internet as a source for
information on oÅers from travel companies. The adoption of online marketing by travel companies,
particularly among those that have historically relied upon traditional advertising methods, requires the
acceptance of a new way of conducting business, marketing and advertising. Many of our potential clients have
little or no experience using the Internet as a marketing tool, and not all Internet users have experience using
the Internet to book travel. As a result, we cannot be sure that we will be able to eÅectively compete with
traditional advertising methods. If we are unable to compete with traditional advertising methods, our business
and results of operations could be materially adversely aÅected.
We may not be able to develop awareness of our brand name.
We believe that continuing to build awareness of the Travelzoo brand name is critical to achieving
widespread acceptance of our business. Brand recognition is a key diÅerentiating factor among providers of
online advertising opportunities, and we believe it could become more important as competition in our industry
increases. In order to maintain and build brand awareness, we must succeed in our marketing eÅorts. If we fail
to successfully promote and maintain our brand, incur signiÑcant expenses in promoting our brand and fail to
generate a corresponding increase in revenue as a result of our branding eÅorts, or encounter legal obstacles
which prevent our continued use of our brand name, our business could be materially adversely aÅected.
Our business may be sensitive to events aÅecting the travel industry in general.
Events like the war with Iraq in 2003 or the terrorist attacks on the United States in 2001 have a negative
impact on the travel industry. We are not in a position to evaluate the net eÅect of these circumstances on our
business. In the longer term, our business might be negatively aÅected by Ñnancial pressures on the travel
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