Travelzoo 2014 Annual Report Download - page 40

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Although the Company has settled the states unclaimed property claims with all states, the Company may still receive
inquiries from certain potential Netsurfer promotional stockholders that had not provided their state of residence to the
Company by April 25, 2004. Therefore, the Company is continuing its voluntary program under which it makes cash payments
to individuals related to the promotional shares for individuals whose residence was unknown by the Company and who
establish that they satisfied the original conditions required for them to receive shares of Travelzoo.com Corporation, and who
failed to submit requests to convert their shares into shares of Travelzoo Inc. within the required time period. This voluntary
program is not available for individuals whose promotional shares have been escheated to a state by the Company, except those
individuals for which their residence was unknown to the Company. The accompanying consolidated financial statements
include a charge for payments under this voluntary program in general and administrative expenses of $6,000 for the year
ended December 31, 2014.
See Note 1 to the accompanying consolidated financial statements for further information on the unexchanged
promotional shares and related cash program.
Travelzoo is listed on the NASDAQ Global Select Market under the symbol “TZOO.”
Our Industry
Our mission is to provide our audience with the highest quality information about the best travel, entertainment and
local deals. We believe there is a sizable travel and entertainment industry that we participate in that provides an opportunity to
find high quality deals for our members and users. Direct spending on leisure travel in the United States by domestic and
international travelers totaled $621.4 billion in 2013 and 78% of the domestic trips were taken for leisure purposes, according
to the U.S. Travel Association. Direct spending on leisure travel in Europe by domestic and international travelers totaled
$663.7 billion in 2013 and 76% of the spending was for leisure purposes, according to the World Travel & Tourism Council. In
addition, we believe that we are well positioned with our operations in North America and Europe to capture high quality deals
for our members and users.
While our mission is to provide our audience with the highest quality information about the best travel, entertainment and
local deals, our revenues are generated from advertising fees. According to the Kelsey Group's (BIA/Kelsey) new U.S. Local
Media Forecast 2015, BIA/Kelsey forecasts total local media revenues to reach $139.3 billion in 2015. Online/digital will
account for more than one-quarter (25.2 percent) of total local media revenues in 2015. Revenues for online/digital are
expected to grow from $31 billion in 2014 to $35 billion in 2015, representing a 13.1 percent growth rate. We believe that
traditional media outlets such as newspapers, television and radio continue to be another medium for travel, entertainment and
local businesses to advertise their offers, though the percentage spent on advertising in these traditional media outlets is
decreasing. In addition, the continued rise in smart phones has changed the ground rules for online marketing, with the
consumption of online advertising rapidly moving to mobile devices. BIA/Kelsey anticipates that mobile local advertising
revenues will grow from $4.3 billion in 2014 to $6.6 billion in 2015 and local social media revenues will grow from $2.5
billion in 2014 to $3.6 billion in 2015.
We believe that several factors are causing and will continue to cause travel, entertainment and local businesses to
increase their spending on Internet and mobile advertising of offers:
The Internet Is Consumers' Preferred Information Source. Market research shows that the Internet has become
consumers' preferred information source for travel.
Benefits of Internet Advertising vs. Print, TV and Radio Advertising. Internet advertising provides advertisers
advantages compared to traditional advertising. These advantages include real-time listings, real-time updates, and
performance tracking. See “Benefits to Travel, Entertainment and Local Businesses” below.
New Advertising Opportunities. The Internet allows advertisers to advertise their sales and specials in a fast,
flexible, and cost-effective manner that has not been possible before.
Suppliers Selling Directly. We believe that many travel suppliers prefer to sell directly to consumers through
suppliers' websites versus selling through travel agents. Internet advertising attracts consumers to suppliers'
websites.
Mobile advertising extends our products and services by providing mobile-specific features to mobile device users.
Mobile advertising is still in its early stage, though mobile devices are quickly becoming the world's newest
gateway for information. We are focused on developing easy-to-use mobile applications to help advertisers extend
their reach, help create revenue opportunities for our customers, and deliver relevant and useful ads to users on the
go. We continue to invest in improving users' access to our services through such devices.