Travelzoo 2012 Annual Report Download - page 75

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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, hotels and
restaurants. We expect to face increased competition from other Internet and technology-
based businesses such as Google and Microsoft, each of
which has launched initiatives which are directly competitive to our Local Deals and G etaway products. Google has introduced their hotel
search product which negatively impacted our ability to efficiently purchase Google hotel search traffic to drive our Search product revenues.
We also have seen that some competitors will accept lower margins, or negative margins, to attract attention and acquire new subscribers. If
competitors engage in group buying initiatives in which merchants receive a higher percentage of the face value than we currently offer, we may
be forced to pay a higher percentage of the face value than we currently offer, which may reduce our revenue. 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.
We may not be able to access third party technology upon which we depend.
We use technology and software products from third parties including Microsoft and ITA Software. Technology from our current or other
vendors may not continue to be available to us on commercially reasonable terms, or at all. Our business will suffer if we are unable to access
this technology, to gain access to additional products or to integrate new technology with our existing systems. This could cause delays in our
development and introduction of new services and related products or enhancements of existing products until equivalent or replacement
technology can be accessed, if available, or developed internally, if feasible. If we experience these delays, our business could be materially
adversely affected.
Acquisitions, investments and joint ventures could result in operating difficulties, dilution, and other harmful consequences that may
adversely impact our business and results of operations.
We may evaluate and consider a wide array of potential strategic transactions as part of our overall business strategy, including business
combinations, acquisitions and dispositions of businesses, technologies, services, and other assets, as well as strategic investments and joint
ventures. At any given time we may be engaged in discussions or negotiations with respect to one or more of these types of transactions. Any of
these transactions could be material to our financial condition and results of operations.
These transactions involve significant challenges and risks. Some of the areas where we may face risks or difficulties include:
18
•
Diversion of management time and focus from operating our business to acquisition integration challenges.
•
Implementation or remediation of controls, procedures, and policies at the acquired company.
• Integration of the acquired company's accounting, human resources, and other administrative systems, and coordination of product,
engineering, and sales and marketing functions.
•
Transition of operations, users, and customers onto our existing platforms.