Travelzoo CEO Discusses Q3 2010 Results - Earnings Call Transcript

Travelzoo CEO Discusses Q3 2010 Results - Earnings Call Transcript
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Travelzoo Inc. (

TZOO

)

Q3 2010 Earnings Call Transcript

October 21, 2010 11:00 am ET

Executives

Chris Loughlin – CEO

Wayne Lee – CFO

Analysts

Ed Woo – Wedbush

Presentation

Operator

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Good morning everyone, and welcome to the Travelzoo third quarter 2010 financial results conference call. At this time all participants have been placed in a listen-only mode and the floor will be open for questions following the presentation. Today’s call is being recorded.

It is now my pleasure to turn the floor over to your host, Chris Loughlin, Travelzoo’s Chief Executive Officer. Sir, you may begin.

Chris Loughlin

Thank you, operator. Good morning and thank you all for joining us today for Travelzoo’s third quarter 2010 financial results conference call. I am Chris Loughlin, Chief Executive Officer. With me today is Wayne Lee, the company’s Chief Financial Officer.

Wayne Lee

Good morning everyone, welcome to our conference call.

Chris Loughlin

Before we begin, Wayne will walk you through today’s format.

Wayne Lee

I would like to first remind you that all statements made during this conference call and presented in our slides that are not statements of historical facts constitute forward-looking statements, and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could vary materially from those contained in the forward-looking statements.

Factors that could cause actual results to differ materially from those in the forward-looking statements are described in our Forms 10-K and 10-Q, and other periodic filings with the SEC. Please note that this call is being webcast from our Investor Relations Web site at www.travelzoo.com/earnings.

Please refer to our Web site for important information including our earnings press release issued earlier this morning, along with the slides that accompany today’s prepared remarks. An archived recording of this conference call will be available on the Travelzoo Investor Relations Web site at www.travelzoo.com/ir, beginning approximately 90 minutes after the conclusion of this call.

For the format of today’s call, Chris will review management’s prepared presentation, and we will then conclude with a question-and-answer session. If you will now please now open our management’s presentation, which is available at www.travelzoo.com/earnings, I will now turn the call over to Chris.

Chris Loughlin

Thank you Wayne. Our presentation will fall into three parts because I anticipate that we have many new participants on this call who are not familiar with Travelzoo, I would like to quickly provide an overview of our business. So let us start on slide 5.

First, I want to clarify that Travelzoo is not a travel agent. We are a leading global media business. As you can see here on the left, many financial journalists often lump us even with publicly traded online travel agencies or OTAs such as Orbitz and Priceline. We do not sell travel nor do we take travel bookings. Rather, we recommend travel and entertainment fields on our Web site and in our newsletters. With a weekly audience of over 21 million subscribers worldwide, we are a global leader in travel and entertainment information. And you can see here on the right just how large we are compared to other leading traditional publications.

On slide 6 you can see that Travelzoo is indeed a global brand. Just five years ago, principally all of our subscribers were guided in the US, and we only published deals in English within the 50 states. Today, 38% of our 21 million subscribers live outside the US, and we publish in 11 languages. As we have scaled, we have maintained a strong focus on quality. On the right, you can see our demographics within the US, and the picture is generally the same across the world. Travelzoo subscribers earn well above the average, and they love to travel.

On slide 7 I want to illustrate the key input into our business. Our team of over 100 deal experts, research and review offers from thousands of travel and entertainment and local businesses. If those deals are indeed outstanding, we recommend them to our subscribers, and we charge an advertising fee for doing so. The great thing about travel and entertainment deals is that the deals themselves serve as exciting content, and high quality companies offer outstanding deals. Because we have enormous group buying power with our 21 million subscribers, we are often able to negotiate even better deals making Travelzoo’s deals extra special.

Throughout this process, staff in our test booking centres in Chicago and Munich are checking the deals that we publish to ensure that they continue to be available and easy to book long after the deals are published. On the right are some of the deals that we have recently published, and as you can see, Travelzoo is not about low quality, last-minute deals. We publish deals to surprise and delight our audience, and put the unobtainable within reach. You can also see that we are not just about travel deals, we have excellent coverage of theatre, sports and life style as well.

Turning to slide 8, this is really the slide that excites me, because it brings out relationship with our subscribers to life. Look at this lady on the left, she says on Twitter that Travelzoo makes her want to quit her job, sell everything she owns, and go and travel. On the right, this Facebook user says that he took a trip to Iceland, a place he never thought he would go because Travelzoo inspired him. But whenever you speak with a Travelzoo subscriber, the story is generally the same, they love what we do and have been loyal for years. This relationship is only possible because we have stuck by our rigorous and consistently high-quality standards for more than a decade. The quality and consistency of what we do is loved by millions.

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