Travelzoo on target in Europe despite losses

Travelzoo‘s UK operations are “delivering to plan”, according to the Nasdaq-listed deals publisher’s executive vice president Europe, Chris Loughlin.


Loughlin talked to Travolution after Travelzoo reported its Q1s to Wall Street last night. Overall, Travelzoo made a net loss of $1 million, explained by costs incurred through its expansion into Asia-Pacific and Europe.


The European division, covering operations in UK, France and Germany, incurred an operating loss of $2.2 million, “primarily attributable to increased spending on subscriber acquisition…and increased expenses associated with the start up of our operations in France”. Revenues came in at $2 million, 59% up on Q1 07.


During the first three months of this year, Travelzoo Europe picked up 362,000 new subscribers to its Top 20 deals newsletter at an average cost of $3.90 per subscriber. In Q4 07 it added 166,000 but at $5.85 per customer.


Travelzoo’s UK operations kicked off in May 05 and now has around 900,000 subscribers. Loughlin revealed that the Top 20 newsletter generates around 400,000 clicks per week.


He suggested that the business was building a critical mass in the UK through its “rigorous” quality control. ‘We’ve seen a few competitors come into the market but they don’t put the editorial resources into the product that we do’.


He added that Travelzoo’s test booking centre in Munich, which also checks the booking path of the deals on its web site, was another advantage.


The UK web site was relaunched in May 07. It attracted 4.4 million visitors who generated 12.8 million page views during Q1 08. 32% of all visitors came directly to Travelzoo.co.uk, 38% of visitors were referred by other sites and 15.5% were referred by search engines.


Analysts were told that Travelzoo Europe’s spent over $300,000 more on search advertising in Q1 08 than it did in Q4 07, with Loughlin admitting that France and Germany took the lion’s share of the increase.


Loughlin added that Travelzoo had now ‘gained the respect’ of UK suppliers, large and small, as well as consumers.


“This wasn’t easy when  you have strong incumbents like travelsupermarket, teletext and cheapflights in the same space,” he added.


“When we launched we were lumped in with price comparison sites and metasearch,” he added. “It’s taken a lot of work to get us established as a deals publisher, and that distinction is starting to pay off.”

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