Travelzoo 2014 Annual Report Download - page 68

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33
Overview
Travelzoo Inc. (the “Company”, or “Travelzoo”) is a global Internet media company. We inform over 27 million
members in North America, Europe and Asia Pacific, as well as millions of website users, about the best travel and
entertainment 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, entertainment 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) Limited and Travelzoo Japan
K.K. under a License agreement with Travelzoo Inc. and is not owned by the Company.
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. Our Travelzoo websites include
our Local Deals and Getaway listings that allow our members to purchase vouchers for deals from local businesses such as
spas, hotels and restaurants. We receive a percentage of the face value of the voucher from the local businesses. 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.
On October 31, 2009, we sold our Asia Pacific operating segment to Azzurro Capital Inc. and its wholly-owned
subsidiaries, Travelzoo (Asia) Limited and Travelzoo Japan K.K., to Azzurro Capital Inc. 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. In addition, as part of the sale of the Asia Pacific operating segment in 2009, the Company
obtained an option, which expires in June 2020, to repurchase the Asia Pacific business pursuant to the terms of the option
agreement.
More than 2,000 companies use our services, including Air New Zealand, Apple Vacation, British Airways, Harrah’s
Entertainment, Expedia, Fairmont Hotels and Resorts, Hilton Hotels, Interstate Hotels & Resorts, JetBlue Airways, Key Tours
International, Liberty Travel, Marriott Hotels, Royal Caribbean, Spirit Airlines, Starwood Hotels & Resorts Worldwide,
TripAdvisor, United Airlines, and Virgin Atlantic.
We have two operating segments based on geographic regions: North America and Europe. North America consists of our
operations in Canada and the U.S. Europe consists of our operations in France, Germany, Spain, and the U.K. For the year
ended December 31, 2014, European operations were 33% of revenues. Financial information with respect to our business
segments and certain financial information about geographic areas appears in Note 12 to the accompanying consolidated
financial statements.
When evaluating the financial condition and operating performance of the Company, management focuses on financial
and non-financial indicators such as growth in the number of members to the Company’s newsletters, operating margin, growth
in revenues in the absolute and relative to the growth in reach of the Company’s publications measured as revenue per member
and revenue per employee as a measure of productivity.
How We Generate Revenues
Our revenues are advertising revenues, consisting primarily of listing fees paid by travel, entertainment 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 clicks, 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 twelve months and are not automatically
renewed. We have three separate groups of our advertising products: Travel, Search and Local.