Travelzoo UK business in the black

The UK division of deals publisher Travelzoo has recorded its first ever operating profit for the first nine months of 2009.

Travelzoo managing director for Europe Chris Loughlin told Travolution that the small profit was “doubly good news, because our European base is in London so the UK figures also take into account a lot of the central costs of the European operations”.

Loughlin acknowledged that the £300,000 operating profit for the year to the end of September was modest, but added that it showed the UK business had reached an ‘inflexion point” where the revenue was growing faster than the costs. Revenue so far this year for the UK is £4.9 million, giving it a year-to-date operating margin of 5%.

During the July to September period, the UK market was boosted by Spanish hoteliers looking to fill room nights. One central Barcelona hotel picked up 2,000 room nights off the back of one advert to the UK market

Travelzoo had 1.5 million UK subscribers at the end of the September. Its European business is active in Germany, France and Spain. Overall, Europe lost $1.3m in the quarter, although it spent $1.9m on subscriber acquisition. It added 542,000 subscribers at an average cost of $3.53 each. At the end of the quarter, it had 700,000 in Germany, 800,000 in France and 400,000 in Spain.

“Media is more expensive in Germany,” Loughlin said, “Germans are more private with their online data. It will take time to build up trust and credibility, but we have to invest because it is Europe’s largest market.”

Travelzoo launched its metasearch product to the UK market recently, with its subscribers alerted to the beta version in early September. Loughlin said that Travelzoo “hasn’t really started to push it yet” but that it was getting around 10,000 visitors a day and that some bookings were being generated through the UK site for its airline partners.

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