Jun 25 2008
Travelzoo Troubles
While Travelzoo announced yesterday that it reaches over 22 million unique visitors each month, the news there is far from rosy.
First, their advertised deals are not always the best buy. We reported on June 12 that we found better savings to Hawaii using Travelocity’s flexible date search.
Now the President of Travelzoo, C.J. Kettler, has resigned following only 7 months in the position. Shares of Travelzoo (TZOO) have plunged from $30 to $10 over the past year.
What are the issues facing this once popular travel deal newsletter?
1. The fundamental ways in which travel deals are marketed has changed.
Travelzoo’s Top 20 newsletter deals have been their stock in trade. From its inception, these offerings were unique and often exceptional. Through word of mouth as well as excellent marketing, a huge number of travelers subscribed to their newsletter.
The very nature of today’s travel deals, and how they are promoted, has escaped Travelzoo’s previously successful business model.
Travel providers (hotels, car rentals and airlines), are finding it more effective and less expensive to promote their own offerings, including last minute deals, through their branded sites rather than with consolidators.
The very best offers that used to find themselves on Travelzoo are now often only available for a number of hours, instead of days.
2. Consolidation and contraction in the travel industry has reduced Travelzoo’s advertisers.
The major travel sites like Priceline, Expedia and Orbitz are now well focused on fast-changing and last minute deals, and are further squeezing Travelzoo.
Travelzoo is trying some new things, including providing geographically targeted deals through their partners, AOL, FareCast and Wcities. Even here Travelzoo is not unique with this industry trend.
3. Questionable management.
It was recently reported that Travelzoo has signed an extraordinarily expensive 10-year lease for offices at 590 Madison Avenue. The rent alone is equivalent to 15% of their annual profits.
If you have any recent experience with Travelzoo, be sure to add your comments.
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I have been notified of some good deals in a timely manner (very important) by TravelZoo.
I booked Houston to Honolulu a few weeks ago on United for $297 RT/PP.
Mike B.