Skift Take

European travel booking volumes are not the only thing staging a comeback. Deals marketer Travelzoo is enjoying a renaissance, too. But, as with Europe, the verdict is still on whether the company has worked through the problems that have beset it since the financial crisis.

Travelzoo saw its earnings and revenue soar in the first quarter. The company’s stock price soared 27 percent to $9.85 at the close of trading on Wednesday.

The news Wednesday suggested that the email-newsletter-focused, daily deals travel platform could continue to grow its advertising business even as it responded to the capital-intensive challenge of developing new products and services to diversify its model.

The company’s first quarter 2018 revenue grew to $30.9 million, up 9 percent, year-over-year, with growth in all of its major regions.

“We want to at least double the size of the company in the next few years,” said CEO Holger Bartel, who is the brother of Travelzoo founder Ralph Bartel. “This will require some investments, which we will do the smart way, while maintaining or even increasing profit margins.”

But does that report, following a similarly positive one last quarter, represent the purr of a kitten or the roar of a tiger?

One of the rare research analysts who has followed the company is Daniel Kurnos, managing director at The Benchmark Company. In an interview, Kurnos commented: “I would simply say that management turned [its operational performance in] Asia around faster than expected and really accelerated overall top-line growth.”

Kurnos referred to the company’s turnaround from late last year, when its Asia-Pacific operations reported a 31 percent year-over-year decrease in revenue — despite two years of work in attempting to tune it up.

“One quarter does not a trend make,” added Jurnos. “But bullish comments from CEO Holger Bartel regarding accelerating second-half 2018, currency-neutral revenue growth is certainly encouraging.”

Through direct share ownership and through Ralph Bartel’s investment vehicle Azzurro Capital, the family owns a lion’s share of the company.

A tantalizing question is where the brothers Bartel might hope to get the investment to rev up the company’s metabolism and scale up its growth once again. Might a partnership with an Asia-based company, or a similar larger player in a growth market, be part of the plan?

Bartel said, “I have a vision for this company to be a very large, global, highly profitable travel membership organization. We can build scale, we can build visibility, we are expanding our products. I cannot comment, of course, on all the strategic initiatives that we have. But yes, we are very keen on making Travelzoo a much, much bigger company in the future.”

For now, it seems like Travelzoo was wise to shut down its hotel search business and sell its Fly.com domain name about a year ago.

But the verdict is still out on the company.

The other analyst to follow Travelzoo intensively over the years is Edward Woo, a senior research analyst at Ascendiant Capital Markets.

In an interview, Woo said: “I would like to see more sustained positive reports before I turn positive in my opinion given how long — over many years — they have been struggling and shrinking.”

“Overall, Travelzoo has a niche with the large email member list,” added Woo. “This was great for a while, but competition from other travel companies and the daily deals companies took its toll. Again, this was a good quarter for them, but they need to repeat this to show that they really turned the corner before I really become positive.”

smartphone

The Daily Newsletter

Our daily coverage of the global travel industry. Written by editors and analysts from across Skift’s brands.

Have a confidential tip for Skift? Get in touch

Tags: earnings, Travelzoo

Photo credit: CEO Holger Bartel, center, poses for a photo with the other board members of his company, Travelzoo — the only U.S.-listed company to have 80 percent of its board of director seats held by women. Travelzoo

Up Next

Loading next stories