Travelzoo 2013 Annual Report Download - page 55

20
Intense competition may adversely affect our ability to achieve or maintain market share and operate profitably.
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 businesses. 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 metasearch 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, 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 Getaway products. Google has introduced its hotel search product which negatively impacted our ability to
efficiently purchase Google hotel search traffic to drive our Search product revenues. To the extent that Google, or other
leading search or metasearch engines that have a significant presence in our key markets, offer comprehensive travel planning
or shopping capabilities, or refer those leads to suppliers directly, or to other favored partners, there could be an adverse impact
on our business and financial performance. 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:
• 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.