Deal-publisher Travelzoo, which is adding hotel booking to its repertoire of getaways and local restaurant and spa deals, is finding the transition to becoming a hotel booking site much tougher than expected and the company called in the reinforcements in the form of co-founder Holger Bartel.
Holger Bartel, the brother of Travelzoo founder and director Ralph Bartel, is a former Travelzoo CEO and was the company’s chairman until September 11, 2014.
But on September 12, 2014, Holger Bartel became Travelzoo’s executive chairman, signifying that he will play a day to day role in trying to accelerate the slow pace of moving into the hotel booking arena. Travelzoo has traditionally offered deals and getaways; much of them are booked on the supplier or online travel agency site, not on Travelzoo.
On the same day that Holger Bartel became executive chairman, Shirley Tafoya, who had been president of Travelzoo’s North America unit since July 2008, left the company. Her duties were taken on by Chris Loughlin as an add-on to his CEO tasks.
In Travelzoo’s third quarter results, reported October 16, the company’s North America revenue fell 14% year-over-year to $22.6 million. Revenue for the entire company, which operates in North America and Europe, was down 10% to $33.5 million.
CFO Glen Ceremony attributed the drop in North America revenue to reduced marketing spend for its SuperSearch product, and weakness in travel and voucher sales.
The other executive change announced September 12 was that Ralph Bartel, who as of last year owned 48.2% of Travelzoo’s outstanding shares through his Azzurro Capital business, became Travelzoo’s “chief talent officer” in addition to his board member duties.
Ralph Bartel’s Azzurro Capital also owns Travelzoo Asia Pacific, which was acquired from Travelzoo in 2009.
In Travelzoo’s third quarter earnings call last week, Holger Bartel explained why he is stepping in.
“It’s just not going as fast as we had hoped,” Bartel said. “We launched the hotel booking platform a few months ago. We utilize it for some deals and to parts of our audience but the content is still not where we want it. Some functionality is not exactly where it is.”
With the local deals market and voucher sales losing their luster at Travelzoo and other sites that offer flash sales, Travelzoo embarked on a new strategy, one that would leverage its large newsletter subscriber base, which stood at 24.2 million people at the end of the third quarter.
“So in a nutshell, yes, the [hotel booking] strategy doesn’t really change but we sincerely hope that this augmented team [of Holger Bartel, CEO Loughlin and CFO Glen Ceremony] will be able to execute the strategy more quickly than in the past,” Holger Bartel said.
Holger Bartel described some of the challenges in trying to turn Travelzoo into a hotel booking site. The initial goal was to offer 20 or 30 hotels per city, but he said that’s insufficient when half of them may be sold out during a peak period.
“But hotel booking platform is quite an undertaking,” Holger Bartel said “You have to connect to various systems. I was quite surprised a few years ago when I learned about how complex the area of hotel distribution is. So we have made quite a good progress on the backend. But not all hotels that we want can yet connect with us in a very efficient manner.”
Travelzoo, founded in 1998, has traditionally been a media company. Holger Bartel and his team are finding out that turning the company’s attention into becoming a hotel tech company and trying to scale that business is a very daunting task.