Travelzoo 2011 Annual Report Download - page 28

1
Forward-Looking Statements
The information in this Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based upon current
expectations, assumptions, estimates and projections about Travelzoo Inc. and our industry. These forward-looking statements are
subject to the many risks and uncertainties that exist in our operations and business environment that may cause actual results,
performance or achievements of Travelzoo to be different from those expected or anticipated in the forward-looking statements. Any
statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example,
words such as “may”, “will”, “should”, “estimates”, “predicts”, “potential”, “continue”, “strategy”, “believes”, “anticipates”, “plans”,
“expects”, “intends”, and similar expressions are intended to identify forward-looking statements. Travelzoo’s actual results and the
timing of certain events could differ significantly from those anticipated in such forward-looking statements. Factors that might cause
or contribute to such a discrepancy include, but are not limited to, those discussed in this Report in Part I Item 1A and the risks
discussed in our other Securities and Exchange Commission (“SEC”) filings. The forward-looking statements included in this Report
reflect the beliefs of our management on the date of this Report. We undertake no obligation to update publicly any forward-looking
statements for any reason, even if new information becomes available or other events or circumstances occur in the future.
PART I
Item 1. Business
Overview
Travelzoo Inc. (the “Company” or “Travelzoo”) is a global Internet media company. We inform over 24 million subscribers in
North America, Europe and Asia Pacific, as well as millions of website users, about the best travel, entertainment and local deals
available from thousands of companies. Our deal experts source, research and test-book offers, recommending only those that meet
Travelzoo’s rigorous quality standards. We provide travel companies, entertainment companies, and local businesses with a fast,
flexible, and cost effective way to reach millions of consumers. Our revenues are generated primarily from advertising fees. In Asia
Pacific, the Travelzoo business is operated by Travelzoo (Asia) Ltd. and Travelzoo Japan K.K. under a license agreement with
Travelzoo Inc.
Our publications and products include the Travelzoo websites (www.travelzoo.com, www.travelzoo.ca, www.travelzoo.co.uk,
www.travelzoo.de, www.travelzoo.es, www.travelzoo.fr, among others), the Travelzoo Top 20 e-mail newsletter, and the Newsflash e-
mail alert service. We operate SuperSearch, a pay-per-click travel search tool, and the Travelzoo Network, a network of third-party
websites that list deals published by Travelzoo. We also operate Fly.com, a travel search engine that allows users to quickly and easily
find the best prices on flights from hundreds of airlines and online travel agencies. Recently, we launched Local Deals and Getaways,
new services that allow our subscribers to purchase vouchers for deals from local businesses such as spas, hotels and restaurants
through the Travelzoo website. Voucher promotional offers are redeemable at the local businesses during the promotional period. We
receive a percentage of the face value of the voucher from the local businesses.
On October 31, 2009, we completed the sale of our Asia Pacific operating segment to Azzurro Capital Inc. and its wholly-
owned subsidiaries, Travelzoo (Asia) Limited and Travelzoo Japan K.K. The results of operations of the Asia Pacific operating
segment have been classified as discontinued operations for all periods presented. We have not had significant ongoing involvement
with the operations of the Asia Pacific operating segment and have not had material economic interests in the Asia Pacific operating
segment since the completion of the sale. Starting November 1, 2009, the Travelzoo websites in Asia Pacific (cn.travelzoo.com,
www.travelzoo.co.jp, www.travelzoo.com.au, www.travelzoo.com.hk, www.travelzoo.com.tw, among others), the Travelzoo Top 20
e-mail newsletters in Asia Pacific and the Newsflash e-mail alert service in Asia Pacific have been published by Travelzoo (Asia)
Limited and Travelzoo Japan K.K., under a license agreement with the Company. There is a reciprocal revenue-sharing agreement
among the entities operating the Travelzoo business in Asia Pacific and the Company related to cross-selling audiences, channels and
offers. See Note 11 to the accompanying consolidated financial statements.
More than 2,000 companies use our services, including American Airlines, Avis Rent A Car, British Airways, Harrah’s
Entertainment, Expedia, Fairmont Hotels and Resorts, Interstate Hotels & Resorts, Kimpton Hotels, Liberty Travel, Marriott Hotels,
Royal Caribbean, Spirit Airlines, Starwood Hotels & Resorts Worldwide, United Airlines, and Virgin Atlantic.
Our revenues are advertising revenues, consisting primarily of listing fees paid by travel companies, entertainment companies
and local businesses to advertise their offers on Travelzoo’s media properties. Listing fees are based on audience reach, placement,
number of listings, number of impressions, number of click-throughs, number of referrals, or percentage of the face value of vouchers
sold. Insertion orders are typically for periods between one month and twelve months and are not automatically renewed. Merchant
agreements for Local Deals and Getaway advertisers are typically for the voucher redemption period, which normally is between three
months and twelve months and are not automatically renewed. Our revenues have grown on an annual basis since we began operations
in 1998. Our revenues increased from approximately $84,000 for the period from May 21, 1998 (inception) to December 31, 1998, to
approximately $148 million for the year ended December 31, 2011.