Travelzoo 2005 Annual Report Download - page 34

We may lose business if we fail to keep pace with rapidly changing technologies and clients needs.
Our success is dependent on our ability to develop new and enhanced software, services and related
products to meet rapidly evolving technological requirements for online advertising. Our current technology
may not meet the future technical requirements of travel companies. Trends that could have a critical impact
on our success include:
‚ rapidly changing technology in online advertising;
‚ evolving industry standards, including both formal and de facto standards relating to online advertising;
‚ developments and changes relating to the Internet;
‚ competing products and services that oÅer increased functionality; and
‚ changes in travel company and Internet user requirements.
If we are unable to timely and successfully develop and introduce new products and enhancements to
existing products in response to our industry's changing technological requirements, our business could be
materially adversely aÅected.
Our business and growth will suÅer 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, diÇculty in hiring and retaining highly skilled employees with appropriate
qualiÑcations. If we are unable to hire and retain skilled personnel, our growth may be restricted, which could
adversely aÅect our future success.
We may not be able to eÅectively 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 signiÑcantly. As of December 31, 2005, we had
70 employees. 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 signiÑcant strain on
our management, systems and resources. We expect that we will need to continue to improve our Ñnancial 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, and Ñnance departments. We may
not succeed in these eÅorts. Our inability to expand our operations in an eÇcient 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 eÅect on our business.
Our international operations are subject to increased risks which could harm our business, operating
results and Ñnancial condition.
In May 2005, we began operations in the U.K. Our plan is to expand into other European countries in
2006. In addition to uncertainty about our ability to generate net income from our foreign operations and
expand our international market position, there are certain risks inherent in doing business internationally,
including:
‚ trade barriers and changes in trade regulations;
‚ diÇculties in developing, staÇng and simultaneously managing foreign operations as a result of
distance, language and cultural diÅerences;
‚ stringent local labor laws and regulations;
‚ currency exchange rate Öuctuations;
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