Travelzoo 2015 Annual Report Download - page 63

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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 Software Corp. and online travel and
entertainment deal publishers. We compete with large online travel agencies like Expedia, TripAdvisor, and Priceline that also
offer advertising placements and hotel booking platforms and capture consumer interest. As a result of our acquisition of
Travelzoo Asia Pacific, we now compete or may compete in the future with large online travel service providers, like Ctrip and
eLong. 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. In addition, we compete for traffic acquisition with many
companies and we are subject to higher prices to acquire this traffic, which drives our Search revenue in particular. We
regularly reduce our traffic acquisition for our Search products if we believe the acquisition costs are too high for us to remain
profitable. When we reduce our traffic acquisition spending it negatively impacts our Search revenue. 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 members. 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.
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. During 2015, there were several changes in
executive management, as further described in previously filed 2015 Form 8-Ks, including the resignation of our CEO, Mr.
Loughlin, who was replaced in January 2016 by Mr. Holger Bartel as Chairman and Global CEO, the resignation of Simon
Talling-Smith who served as President, Products and Emerging Businesses and the promotion of Mr. Stitt to the role of
President, North America.
We may not be able to access third party technology upon which we depend.
We use data 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. Moreover, to
the extent an airline does not provide content to ITA Software or third party data providers, or to us, and we cannot obtain the
content, we may face additional costs (including legal costs) and the financial results of Fly.com could be negatively affected. If
we are unable to continue to display travel data from multiple airline carriers, it would reduce the breadth of our query results
on Fly.com and the number of travelers using our services could decline, resulting in a loss of revenues and a decline in our
operating results. Fly.com depends on access to information related to airline schedules and fares and, to the extent our travel
service providers no longer provide such information, Fly.com’s business and results of operations could be harmed. 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.