However, Travelzoo basically admitted yesterday that it has bungled the strategy guiding its Fly.com metasearch product, which saw its global revenue decline 10.4% in the third quarter year-over year to $6 million.
Travelzoo attributed the Fly.com revenue drop, which actually amounted to a 14% fall in Fly.com’s core North America market, to decreased marketing spend as Travelzoo focuses through its Perfect Escapes acquisition of 2012 to add hotel booking to Travelzoo’s portfolio of businesses.
Travelzoo CEO Chris Loughlin said during the company’s third quarter earnings call October 17 that trouble monetizing Fly.com’s mobile traffic also contributed to the revenue shortfall at Fly.com, which is deal-publisher Travelzoo’s smallest business line.
Diminished returns from mobile when compared with desktop revenue is a problem that many companies, from Google to Facebook and Kayak, are having trouble dealing with.
Loughlin indicated that Fly.com has another problem that will merit some rethinking.
Other travel metasearch companies “acquired a lot of free traffic through SEO,” Loughlin said.
“Fly.com didn’t do a particularly good job of that because we were relying on Travelzoo traffic,” Loughlin said, pointing to hoped-for referral traffic from Travelzoo to Fly.com. “And I think we just have to rethink how we’re going to get awareness onto that product over time.”
Travelzoo’s predicament has its ironies.
Travelzoo is transitioning toward becoming an online travel agency of sorts by developing Perfect Escapes hotel booking, and it is slated to go into a beta test early next year. Travelzoo had $800,000 in expenses for the project in the third quarter.
That is taking place as online travel agency Priceline acquired travel metasearch company Kayak, and Expedia took control of Germany-based hotel metasearch engine Trivago this year.
These online travel agencies see the strategic value in owning a travel metasearch company that they can use to get incremental advertising revenue and also as a marketing tool.
Would-be hotel booking company Travelzoo already owns a travel metasearch company in Fly.com, but it is languishing due to an ineffective strategy, and a lack of interest and resources.
You can’t compare relatively small and flight-oriented Fly.com to Kayak or Trivago, but Travelzoo clearly could have been doing a lot more with this asset.