Travelzoo Embarks on Ambitious Regional Expansion

By Martin Kelly, Travel Trends

TRAVELZOO has embarked on an ambitious Asia-Pacific expansion program with the US travel newsletter and meta-search business intent on launching up to eight country-specific websites across the region by the end of March.

“We have a mandate to open seven or eight offices in Asia Pacific by the first quarter of 2008,” Jason Yap, Managing Director, Japan, Australia and India, told Travel Trends in Sydney this week.

The company has just launched in Hong Kong while Japan will follow later this month. “China, South Korea and Taiwan are in the works, while India will also happen next year,” said Yap.

Brad Gurrie is leaving his role as General Manager of Lastminute.com.au to lead Travelzoo Australia and will take up his role on November 14.  Planning for the full-scale Oz site will begin then.

While optimism abounds, Travelzoo’s aggressive expansion strategy has hit the company’s profits, which are significantly down year on year. However the margins, by travel industry standards, remain solid.

Its net income for the June quarter was US$2.8m on revenue of US$20.1m. Over that period it spent US$7.9m on subscriber acquisition and branding, primarily in developing markets such as Germany and the UK. 

In Asia Pacific, Travelzoo – which offers a range of products in the US, including meta-search – will initially focus on its weekly Top 20 newsletter.

The US edition, which started in 1999, is sent to a database of many millions (Travelzoo has 12 million worldwide subscribers) but in Asia Pacific it will basically be starting from scratch.

While most of the Top 20 listings are paid links – generally from suppliers or Online Travel Agents who pay a flat rate depending on volume – Yap said genuinely good travel deals from non-advertisers will also be included, especially in the early days.

“Demand comes first … and it’s very important to ensure we have quality deals that keep the consumers happy,” said Yap. “At the end of the day our content will be the premium drawcard.”

Yap said newsletter open rates in the US were running above 35%, while open rates for the recently-launched Hong Kong edition were around 60%.

He said consumers liked the newsletter format because it cut through the clutter and enabled them to make easy, deal-based decisions.

In terms of the process, consumers click on the newsletter link and are taken through to the relevant Travelzoo site where they are given further details.

An additional link is provided through to the suppler or agency site if they want to take it further.

As for the Aussie operation, Yap commented: “Should we copy everything the US has done? No. The answer is to get a local expert such as Brad on board and develop strategies based around that.”

Travel Trends: November 1, 2007

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