Travelzoo 2015 Annual Report Download - page 47

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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 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 twelve months and are not
automatically renewed.
We have three operating segments based on geographic regions: Asia Pacific, Europe and North America. Asia Pacific
consists of our operations in Australia, China, Hong Kong, Japan, Taiwan, and Southeast Asia. Europe consists of our
operations in France, Germany, Spain, and the U.K. North America consists of our operations in Canada and the U.S. For the
year ended December 31, 2015, Asia Pacific operations were 8% of revenues and European operations were 30% 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.
Our principal business office is located at 590 Madison Avenue, 37th Floor, New York, New York 10022.
Ralph Bartel, who founded Travelzoo and who is a Director of the Company, is the sole beneficiary of the Ralph Bartel
2005 Trust, which is the controlling shareholder of Azzurro Capital Inc. ("Azzurro"). As of December 31, 2015, Azzurro is the
Company's largest stockholder, holding approximately 51.2% of the Company's outstanding shares.
As of December 31, 2015, there were 14,518,655 shares of common stock outstanding.
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 is expected to rise by 4.3% per year to $1,027 billion in 2025 and 78% of the domestic trips were taken
for leisure purposes, according to the U.S. Travel Association. Travel & Tourism produced $7.6 trillion in value (10% of global
GDP) for the global economy in 2014. Visitors from emerging economies now represent a 46% share of these international
arrivals (up from 38% in 2000), according to the World Travel & Tourism Council. In addition, we believe that we are well
positioned with our operations in Asia, Europe and North America 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 2016, BIA/Kelsey forecasts total local media revenues to reach $146.6 billion in 2016. Online/digital will grow
to $42.6 billion or 29.1% of total local media revenues in 2016. 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 business rules for online marketing, with the consumption of online advertising rapidly moving
to mobile devices. BIA/Kelsey anticipates that location-targeted mobile advertising revenues will grow from $8.5 billion in
2015 to $11.3 billion in 2016 and local social media revenues will grow from $2.4 billion in 2015 to $3.3 billion in 2016.
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.