What changed in this filing

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Item 1. Business

2023-03-31 compared with 2022-03-31 · 128 added, 185 removed, 117 unchanged (73% of the section changed)

Travelzoo® is a global Internet media company.

We provide o ur 30.3 million members in sider deals and one-of-a-kind experiences personally reviewed by one of our deal experts around the globe.

Travelzoo (including its subsidiaries and affiliates, the “Company” or “we”) is a global Internet media company.

Travelzoo ® provides its 30 million members with exclusive offers and one-of-a-kind experiences personally reviewed by our deal experts around the globe.

We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences.

For over 20 years we have worked in partnership with more tha n 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible deals.

Travelzoo (the “Company” or "we") attracts a high-quality audience of travel enthusiasts across multiple digital platforms, including email, web, social media and mobile applications.

Our insider deals and email newsletters are published by Travelzoo and its licensees worldwide.

We work in partnership with more tha n 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible offers.

Travelzoo attracts a high-quality audience of travel enthusiasts across multiple digital platforms, including email, websites, social media and mobile applications.

The Travelzoo website is visited by 5.4 million to 6.6 million unique visitors each month.

We also reach an audience of millions of Internet users each month via the Travelzoo Network , a network of websites that syndicate our deal content including The Los Angeles Times and The Chicago Tribune.

We have over 4.5 million followers on Facebook, Instagram, and Twitter.

Our Apple and Android mobile applications have been downloaded 7.4 million times.

Our publications and products include the Travelzoo website (travelzoo.com), the Travelzoo iPhone and Android apps, the Travelzoo Top 20® email newsletter, the Newsflash email alert service, and the Travelzoo Network .

Our Travelzoo website includes Local Deals and Getaways listings that allow our members to purchase vouchers for deals from local businesses such as spas, hotels and restaurants.

We also license the use of these products and our intellectual property in various countries in Asia Pacific, including but not limited to Australia, Japan and Southeast Asia.

We are also the majority shareholder of JFC Travel Group Co.

(“Jack’s Flight Club”), which operates Jack’s Flight Club, a subscription service that provides members with information about exceptional airfares.

Our most important products and services are the Travelzoo website (travelzoo.com), the Travelzoo iPhone and Android apps, the Top 20® email newsletter, the Travelzoo Network , and Jack's Flight Club ® .

Our Travelzoo website and newsletters include Local Deals and Getaways listings that allow our members to purchase vouchers for offers from local businesses such as spas, hotels and restaurants.

Jack's Flight Club is a subscription service that provides members with information about exceptional airfares.

We also license Travelzoo products and our intellectual property to licensees in various countries in Asia Pacific, including but not limited to Australia, Japan and Southeast Asia.

In March 2022, we announced the development of Travelzoo META, a subscription service that intends to provide members with exclusive access to innovative, high quality Metaverse travel experiences.

On December 30, 2022, we acquired Metaverse Travel Experiences, Inc., now Metaverse Travel Experiences, LLC (“MTE”), a Metaverse experience scouting business to support Travelzoo META.

As of December 31, 2022, we had 30.4 million members worldwide.

In Europe, the unduplicated number of Travelzoo members was 8.4 million as of December 31, 2021, down 4% from December 31, 2020.

In North America, the unduplicated number of Travelzoo members was 16.9 million as of December 31, 2021, up 4% from December 31, 2020.

On March 15, 2021, Travelzoo added more than 2 million new members in the U.S.

from a direct competitor from Europe exiting the U.S.

In North America, the unduplicated number of Travelzoo members was 16.3 million as of December 31, 2022, down 4% from December 31, 2021.

In Europe, the unduplicated number of Travelzoo members was 9.0 million as of December 31, 2022, up 8% from December 31, 2021.

Jack’s Flight Club had 1.9 million subscribers as of December 31, 2022, up 8% from December 31, 2021.

More th an 5,000 companies use o ur services, including Air France, Air New Zealand, Air Tahiti Nui, Alaska Airlines, Cathay Pacific Airways, Club Med, Emirates, Etihad, Exoticca, Fairmont Hotels and Resorts, Gate 1 Travel, Hawaiian Airlines, Hilton Hotels & Resorts, Hyatt Corporation, Icelandair, InterContinental Hotels Group, Lion World Travel, Myrtle Beach Area Conventions & Visitors Bureau, Princess Cruises, Royal Caribbean, Singapore Airlines, Starwood Hotels & Resorts and United Airlines.

More th an 5,000 travel and local providers use o ur advertising and marketing services, including Air France, Air New Zealand, Air Tahiti Nui, Alaska Airlines, Cathay Pacific Airways, Club Med, Emirates, Etihad, Exoticca, Fairmont Hotels and Resorts, Fiji Airways, Gate 1 Travel, Hilton Hotels & Resorts, Hyatt Corporation, Icelandair, InterContinental Hotels Group, Lion World Travel, Myrtle Beach Area Conventions & Visitors Bureau, Princess Cruises, Royal Caribbean, Singapore Airlines, Starwood Hotels & Resorts and United Airlines.

Revenues from the Travelzoo brand and business are generated primarily from advertising fees from two categories of revenue:

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For Getaways vouchers, we recognize a percentage of the face value of the vouchers upon the sale of the vouchers.

The "Local" category consists of publishing revenue for negotiated high-quality deals from local businesses, such as restaurants, spas, shows, and other activities and includes Local Deals vouchers and entertainment offers.

The "Local" category consists of publishing revenue for negotiated high quality offers from local businesses, such as restaurants, spas, shows, and other activities and includes Local Deals vouchers and entertainment offers.

Jack’s Flight Club revenue is generated from paid subscriptions by members.

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The Company also has licensing arrangements with licensees in (a) Australia, New Zealand, and Southeast Asia and (b) Japan and South Korea, in each case, where the Company is entitled to a quarterly royalty payment based on a percentage of net revenue.

The Company records royalties on a one-quarter lag basis and recognized $12,000 in royalties in 2021.

Under the licensing agreements, Travelzoo's existing members in the applicable territories will continue to be owned by Travelzoo as the licensor.

On April 24, 2020 and May 5, 2020, the Company received $3.1 million and $535,000, respectively, pursuant to loans under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the Small Business Association.

In 202 1, the principal and the interest of the $3.1 million PPP loan and $429,000 of the $535,000 PPP loan were forgiven and a gain was recorded in “Other income (loss), net”.

The Company paid off the remaining outstanding principal balance and the interest of $111,000 for the $535,000 PPP loan.

The Company records royalties on a one-quarter lag basis and recognized $25,000 and $12,000 in royalties in 2022 and 2021, respectively.

Under the licensing agreements, Travelzoo's existing members in the applicable territories will continue to be owned by the Company as the licensor.

In connection with the development of Travelzoo META, the Company acquired MTE, a wholly owned subsidiary of Azzurro Capital Inc.

("Azzurro"), and also completed a private placement of newly issued shares.

Ralph Bartel, who founded the Company, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro.

Azzurro was the Company’s largest shareholder as of the time of this transaction and Azzurro and Ralph Bartel owned as of December 31, 2022 approximately 50.3% the Company's outstanding shares.

On December 28, 2022, the stockholders of Travelzoo approved the issuance and sale of 3.4 million shares of common stock (the “Shares”) of Travelzoo to Azzurro, in exchange for certain consideration, and on December 30, 2022 (the “Closing Date”), the transaction was consummated.

The closing price of Travelzoo’s common stock on December 30, 2022 was $4.45 per share, resulting in an aggregate fair value $15.2 million.

The Purchase Price was paid as follows:

(a) $1.0 million in cash paid on the Closing Date;

(b) $4.8 million paid in the form of a promissory note issued on the Closing Date and payable by June 30, 2023 with accrued interest of 12%;

and (c) the transfer to the Company of all outstanding capital stock of Metaverse Travel Experiences, Inc.

(“MTE”), which transfer was effected pursuant to a merger of MTE with a wholly-owned subsidiary of the Company on the Closing Date.

The Company recorded the $4.8 million promissory note as Note receivable from shareholder in the stockholders' equity section on the consolidated balance sheet as of December 31, 2022.

In January 2022 and July 2022, the Com pany’s German branch of Travelzoo (Europe) Limited, a wholly-owned subsidiary of the Company (“Travelzoo Germany”), received the notification and payment of approximately $1.2 million and $494,000, respectively, from the German Federal Government Bridging Aid III plan and Bridging Aid III+.

This program was for companies that suffered a pandemic-related decrease in sales of at least 30% in one month compared to the reference month in 2019.

Travelzoo Germany applied for the funding in 2021 and 2022, respectively, and was approved by the German government in January 2022 and July of 2022.

The Company has to submit a final declaration in connection with this grant by June 30, 2023.

The Company believes it was eligible to participate in the plan and is entitled to the payment and does not expect significant changes to the amount already received from the final submission.

The Company recorded $1.2 million and $494,000 gains in Other income, net in the first and third quarters of 2022.

In April 2020 and May 2020, the Company received $3.1 million and $535,000 , respectively, pursuant to loans under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the Small Business Association.

In 2021, the principal and the interest of the $3.1 million PPP loan were forgiven and a gain was recorded, the Company also settled the $535,000 PPP loan, $429,000 was forgiven which was recorded as a gain and the remaining outstanding balance of the loan and interest of $111,000 was paid off in 2021.

Historically, the Company managed its business geographically and operated in three reportable segments including Asia Pacific, Europe and North America.

In 2020, the Company classified the results of its Asia Pacific segment as discontinued operations in its consolidated financial statements for all periods presented.

On January 13, 2020, Travelzoo agreed to the Stock Purchase Agreement with the sellers of Jack’s Flight Club to purchase 60% of the outstanding shares of Jack’s Flight Club.

On January 13, 2020, Travelzoo purchased 60% of the outstanding shares of JFC Travel Group Co.

( “ Jack’s Flight Club ” ).

Upon acquisition, the Company reviewed and evaluated Jack's Flight Club as a separate segment.

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Travelzoo North America consists of the Company’s operations in Canada and the U.S.

Travelzoo Europe consists of the Company’s operations in France, Germany, Spain, and the U.K.

Travelzoo Europe consists of the Company’s operations in France, Germany, Spain, and the UK.

Jack’s Flight Club consists of subscription revenue from premium members to access and receive flight deals from Jack’s Flight Club via email or via Android or Apple mobile applications.

For the year ended December 31, 2022, Travelzoo North America operations were 67% of revenues, Travelzoo Europe operations were 28% of revenues and Jack’s Flight Club operations were 5% of revenues.

Financial information with respect t o our business segments and certain financial information about geographic areas appears in Note 12 to the accompanying consolidated financial statements.

Financial information with respect t o our business segments and certain financial information about geographic areas appea rs in Note 12 to th e accompanying consolidated financial statements.

Our principal business office is located at 590 Madison Avenue, 35th Floor, New York, New York 10022.

Ralph Bartel, who founded Travelzoo and who is the Chairman of the Board of Directors of the Company, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro Capital Inc.

As of December 31, 2021, Azzurro is the Company's largest stockholder, holding approximately 41% of the Company's outstanding shares.

Ralph Bartel, who founded Travelzoo, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro.

Azzurro is the Company’s largest shareholder, and as of December 31, 2022 together with Ralph Bartel, in his individual capacity (together, the “Azzurro Parties"), holds approximately 50.3% of the Company’s outstanding shares.

As of December 31, 2022, there wer e 15,704,063 sh ares of common stock outstanding.

Travelzoo is listed on the NASDAQ Global Select Market under the symbol “TZOO.”

The global outbreak of coronavirus (COVID-19) in 2020 had unprecedented impact on the global travel and hospitality industries, including severely restricting travel, dining and activities (through border closures, quarantine and stay-at-home requirements, travel restrictions, limited operations of restaurants, spas, hotels, airlines and travel agencies), as well as the level of economic activity around the globe.

According to the World Trade & Tourism Council (WTTC), the global Travel & Tourism industry produced $4.7 trillion in value for the total global economy in 2020 compared to $9.2 trillion in 2019.

However, the global economy from travel and tourism in 2021 is expected to increase by $1.4 trillion based on WTTC's October 2021 report.

As the Company and many of our advertisers are part of the global travel and hospitality industries, the measures implemented to contain COVID-19 have had, and are expected to continue to have, a significant negative effect on our business.

Many of the Company's advertising partners paused, canceled, and/or stopped advertising with the Company.

Additionally, there has been a significant level of cancellations for the Company's hotel partners and travel package partners as well as refund requests for our vouchers with the Company’s hotel, restaurant and spa partners.

However, we are starting to see that these trends are subsiding, as international travel begins to open up and travel in general is starting to return to pre-pandemic levels.

Additionally, in response to the pandemic, the Company modified its policies, particularly with our vouchers, to extend expiration dates and to allow for full refundability and have received positive feedback from our members.

The Company will continue to adopt new policies as the situation evolves.

Our mission is to provide our audience with the highest quality information about the best travel, entertainment and local deals.

Our revenues are generated from advertising fees.

According to Zenith Media's forecast in December 2021, global advertising expenditure will continue its recovery from pandemic in 2020 with 9.1% growth in 2022, after 15.6% growth in 2021.

Zenith estimates that global ad spend may reach $705 billion in 2021 and will rise to $873 billion by 2024.

We believe there is a sizable travel and entertainment industry in which we participate in that provides an opportunity to find high quality deals for our members.

Based upon this outlook for the travel industry, we believe that we are well positioned with our operations in Europe and North America to capture high quality deals for our members.

Digital advertising, a notable market, has been growing continuously.

The outbreak of coronavirus (COVID-19) in 2020 had a material impact on the global travel and hospitality industries, including severe restrictions on travel, dining and in-person activities (through border closures, quarantine and stay-at-home requirements, travel restrictions, limited operations of restaurants, spas, hotels, airlines and travel agencies, etc.), as well as on the level of economic activity around the globe.

As the Company and many of our advertisers are part of the global travel and hospitality industries, the measures implemented to contain COVID-19 had a significant negative effect on our business.

Many of the Company's advertising partners paused, canceled, and/or stopped advertising.

Additionally, there were significant levels of cancellations for the Company's hotel partners and travel package partners and refund requests for our vouchers.

As airlines were unable to complete or cancelled flights and routes, and people were significantly restricted from traveling, the need for flight alert services was greatly reduced, and consequently the premium membership of Jack’s Flight Club declined.

However, in 2021, we saw many of the effects of the pandemic start to subside, as countries began to accept tourists, travel opened up again and travel demand in general started to return to pre-pandemic levels.

Advertising clients who had previously paused or cancelled placements with us began to return and ramp up spending again.

Airlines began adding flights and routes back, increasing inventory, and with the returning demand for travel, the need for flight alert services returned.

Consumer demand in many ways outpaced the readiness of airlines, hotels and restaurants, who had drastically cut staff to save costs in response to the pandemic.

This, in some cases, resulted in an under-supply, causing airline and hotel room prices to increase.

In 2021, we also started to see the way that the pandemic impacted the economies of various countries, resulting in many cases in significant inflation and decreases in discretionary spending by consumers

While some of these trends continued into 2022, as airlines, hotels and restaurants returned to normal operations, we have seen an increase in supply, resulting in many of our partners working with us again to provide exclusive offers for our members.

According to the World Trade & Tourism Council (WTTC), the global Travel & Tourism industry produ ced $5.8 trillion in value for the total global economy in 2021 c ompared to $4.7 trillion in 2020.

The global economy from travel and tourism is set to grow on average by 5.8% annually between 2022 and 2032 based on WTTC's August 2022 report.

In 2022, however, we also continued to see increases in the airfare prices, which according to the Bureau of Labor Statistics’ Consumer Price Index data, hit an all-time high in May 2022.

Our mission is to provide our audience with the highest quality information about the best travel, entertainment and local offers.

Our revenues are generated from advertising and subscription fees.

According to Zenith Media's forecast in June 2022, global advertising expenditure will continue its recovery from the 2020 pandemic with 8% growth in 2022, after 15.6% growth in 2021.

Zenith forecasted that global ad spend will increased by $58 billion to $781 billion in 2022 from $723 billion in 2021.

Based upon this outlook for the travel industry, we believe that we are well positioned with our operations in Europe and North America to capture high quality travel and entertainment offers for our members.

With increasing air fares, we believe that our Jack’s Flight Club subscription flight alert service will be more relevant than ever.

Digital Advertising

Digital advertising, a notable market in which we operate, has been growing continuously.

According to Zenith Media, digital advertising is expected to account for 62% of global advertising spending in 2022 and 65% by 2024.

In addition, according to the Kelsey Group's (BIA/Kelsey) new U.S.

Local Media Forecast in December 2021, BIA/Kelsey estimates total local advertising spending to be $173 billion in 2022, indicating a 11.4% increase over 2021.

We believe that traditional media outlets such as newspapers, television and radio continue to be another medium for travel, entertainment and local businesses to advertise their offers, though the percentage spent on advertising in these traditional media outlets is decreasing.

In addition, the continued rise in smart phones has changed the business rules for online marketing, with the consumption of online advertising rapidly moving to mobile devices.

We believe that several factors are causing and will continue to cause travel, entertainment and local businesses to increase their spending on Internet and mobile advertising of offers:

Local Media Forecast in November 2022, BIA/Kelsey estimates total local advertising spending to be $166 billion in 2023, indicating a 4.8% increase over year-over-year.

Although traditional media outlets such as newspapers, television and radio continue to be another medium for travel, entertainment and local businesses to advertise offers, the percentage spent on advertising in these traditional media outlets has been decreasing.

We believe that several factors are causing and will continue to cause travel, entertainment and local businesses to focus a majority of their spending on the digital advertising of offers:

The Internet Is Consumers' Preferred Information Source .

Market research shows that the Internet has become consumers' preferred information source for travel.

Market research shows that the Internet is consumers' preferred information source for travel.

Benefits of Internet Advertising vs.

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These advantages include real-time listings, real-time updates, and performance tracking.

See “Benefits to Travel, Entertainment and Local Businesses” below.

New Advertising Opportunities.

The Internet allows advertisers to advertise their sales and specials in a fast, flexible, and cost-effective manner that has not been possible before.

The Internet also allows advertisers to advertise their sales and specials in a fast, flexible, and cost-effective manner.

Suppliers Selling Directly.

We believe that many travel suppliers prefer to sell directly to consumers through suppliers' websites versus selling through travel agents.

Internet advertising attracts consumers to suppliers' websites.

Growth of Mobile Advertising.

Mobile advertising extends our products and services by providing mobile-specific features to mobile device users.

As advertisers continue to shift budgets to mobile advertising, we continue to focus on developing easy-to-use mobile applications to help advertisers extend their reach, help create revenue opportunities for our advertisers, and deliver relevant and useful ads to users on the go.

We continue to invest in improving users' access to our services through such devices.

Challenges Travel, Entertainment and Local Businesses Face and Limitations of Newspaper, TV and Radio Advertising

Reach to Consumers.

With a majority of consumers transacting on their computers, tablets and phones on a daily basis, we believe digital advertising is the best way for businesses to quickly provide relevant information and enter into a consumer’s decision set.

We believe that travel, entertainment and local businesses often face the challenge of being able to effectively and quickly market and sell their excess inventory (i.e.

airline seats, hotel rooms, cruise cabins, theater seats, spa appointments or restaurant seats that are likely to be unfilled).

The success of marketing excess inventory can have a substantial impact on a company's profitability.

Almost all costs of these services are fixed.

That is, the costs do not vary significantly with sales.

A relatively small amount of unsold inventory can have a significant impact on the profitability of a company.

We believe that travel, entertainment and local businesses need a fast, flexible, and cost-effective solution for marketing excess inventory.

The solution must be fast, because services are a quickly expiring commodity.

The period between the time when a company realizes that there is excess inventory and the time when the service has become worthless is very short.

airline seats, hotel rooms, cruise cabins, theater seats, spa appointments or restaurant seats that are likely to be unfilled) and therefore need a fast, flexible, and cost-effective solution for marketing excess inventory.

The solution must be fast, because such travel-related services are a quickly expiring commodity.

The solution must be flexible, because the demand for excess inventory is difficult to forecast.

It is difficult for travel, entertainment and local businesses to price excess inventory and to forecast the marketing effort needed to sell excess inventory.

The marketing must be cost-effective, because excess inventory is often sold at highly discounted prices, which lowers margins.

We believe that newspaper, TV and radio advertising, with respect to advertising excess inventory, suffers from a number of limitations which do not apply to the Internet:

It is also integral that advertisements for excess inventory and travel offers be timely and able to convey information (such as mistake fares or rates, flash sales, etc.) to a large number of consumers quickly.

We believe that newspaper, TV and radio advertising, with respect to advertising excess inventory, suffers from a number of limitations which do not apply to digital advertising and media:

• typically, ads must be submitted 2 to 5 days prior to the publication or airing date, which makes it difficult to advertise last-minute inventory;

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• creative content can be very expensive to develop;

• delivery of traditional media can be slow, with limited touchpoints to a consumer.

We believe the core Travelzoo business is well positioned to continue to assist travel partners with advertising their excess inventory, in a way that traditional newspaper, TV and radio advertising cannot, particularly as the demand for travel readjusts to normal levels post-pandemic.

Subscription Services and the Metaverse

Since its inception, Travelzoo has provided free subscription services to its members.

With free subscription services to consumers, revenue is generated from advertising fees and commissions.

Upon the acquisition of Jack’s Flight Club, we entered the market for paid subscription services and added an additional revenue stream to our business.

According to Juniper Research, which collects data from 27 countries, the collected global subscription economy in 2021 was at $224 billion dollars and was expected to grow to $275 billion in 2022.

Although physical goods are estimated to represent 45% of the subscription market, digital services, will be a major revenue stream, representing 39% of the global subscription market.

Additionally, a new and potentially large market in which we are starting to operate is that of the Metaverse and specifically, Metaverse travel experiences.

According to a report published by ReportLinker in February 2022, the U.S.

Metaverse market in 2021 was estimated at approximately $58.5 billion, which accounted for 41% of global market share.

In 2022, the Metaverse market size in terms of revenue was estimated to be $61.8 billion and is anticipated to rise to $426.9 billion by 2027.

We believe that our development of a new paid subscription service for Metaverse travel experiences will enable us to be a first-mover in this fast-growing space.

Our acquisition of MTE, a business focused on scouting creators of Metaverse experiences, will allow us to build a collection of high quality, exclusive experiences for members.

Our Products and Services

We provide airlines, hotels, cruise lines, vacation packagers, other travel suppliers, entertainment and local businesses with a fast, flexible, and cost-effective way to reach millions of Internet users.

Our publications include the Travelzoo website, the Travelzoo Top 20 email newsletter, the Newsflash email alert service, the Local Deals and Getaways email alert services and Jack's Flight Club newsletter.

We also operate the Travelzoo Network , a network of third-party websites that list deals published by Travelzoo.

While our products provide advertising opportunities for travel, entertainment and local businesses, they also provide Internet users with a free source of information on current sales and specials from thousands of travel, entertainment and local businesses.

As travel, entertainment and local businesses increasingly utilize the Internet to promote their offers, we believe that our products will enable them to take advantage of the lower cost and real-time communication enabled by the Internet.

Our listing management software allows our advertisers to add, update, and delete special offer listings on a real-time basis.

Our software also provides our advertisers with real-time performance tracking, enabling them to optimize their marketing campaigns.

Mobile advertising extends our products and services by providing mobile-specific features to mobile device users.

We are focused on developing easy-to-use mobile applications to help advertisers extend their reach, help create revenue opportunities for our customers, and deliver relevant and useful ads to users on the go.

We continue to invest in improving users' access to our services through such devices.

In addition, we continue to develop our hotel booking platform, which enables our users to more easily book hotel stays using our hotel deals presented on our website and mobile devices.

The following table presents an overview of our products:

The following table presents an overview of our products and services:

Advertiser Benefits

Consumer Benefits

Travelzoo website Website available in the U.S., Canada, France, Germany, Spain, and the U.K., as well as via licensees in Australia, China, Hong Kong and Japan, listing thousands of outstanding sales and specials from more than 5,000 travel, entertainment and local businesses

24/7 3.4 million to 6.1 million unique visitors per month Broad reach, sustained exposure, targeted placements by destination and travel segment 24/7 access to deals, ability to search and browse by destination or keyword

Travelzoo Top 20 Popular email newsletter listing 20 of the week's most outstanding deals Weekly 26.5 million members Mass “push” advertising vehicle to quickly stimulate incremental travel and entertainment purchases Weekly access to 20 outstanding, handpicked deals chosen by our deal experts from among thousands

Newsflash Regionally-targeted email alert service with a single time-sensitive and newsworthy travel and entertainment offer Within two

identified 25.5 million members Regional targeting, 100% share of voice for advertiser, flexible publication schedule Breaking news offers delivered just-in-time

Local Deals and Getaways Locally-targeted email alert service with a single time-sensitive and newsworthy offer, including vouchers from local merchants such as spas, hotels and restaurants Twice per

markets 167 local markets Local targeting by zip code,100% share of voice for the local businesses, flexible publication schedule Breaking news offers delivered just-in-time

Travelzoo Network A network of third-party websites that list outstanding deals published by Travelzoo 24/7 Over 400 third-party websites Drives qualified users with substantial distribution beyond the Travelzoo audience Contextually relevant travel deals that have been handpicked and professionally reviewed by our deal experts

Travelzoo mobile applications iPhone and Android applications that allow users to discover the best travel, entertainment and local deals.

On-demand 6.9 million downloads Allows travel, entertainment and local deals advertisers to reach our audience that is on the go.

24/7 access to travel, entertainment and local deals for consumers that are on the go.

Jack's Flight Club website Website available in the U.S, U.K, Germany, Netherlands, Luxemburg, Norway, Sweden, Denmark, Belgium, listing up to date cheap flight deals to paying members.

24/7 136,000 visitors per month N/A 24/7 access to deals, travel advice and guides.

Travelzoo website Website available in the U.S., Canada, France, Germany, Spain, and the U.K., as well as via licensees in Australia and Japan, listing thousands of outstanding offers from more than 5,000 travel, entertainment and local businesses

24/7 5.4 million to 6.6 million unique visitors per month Broad reach, sustained exposure, targeted placements by destination and travel segment 24/7 access to offers, ability to search and browse by destination or keyword

Travelzoo Top 20 Popular email newsletter listing 20 of the week's most outstanding offers Weekly 26.6 million members Mass “push” advertising vehicle to quickly stimulate incremental travel and entertainment purchases Weekly access to 20 outstanding, handpicked offers chosen by our internal deal experts from among thousands

Standalone Travelzoo emails

Regionally targeted email newsletter service, usually with a single newsworthy travel and entertainment offer, which can include Local Deals and Getaways offers As needed 25.7 million members Regional targeting, 100% share of voice for advertiser, flexible publication schedule Breaking news offers delivered just-in-time

Travelzoo Network A network of third-party websites that list outstanding offers published by Travelzoo 24/7 Over 400 third-party websites Drives qualified users with substantial distribution beyond the Travelzoo audience Contextually relevant travel offers that have been handpicked and professionally reviewed by our internal experts

Travelzoo mobile applications iPhone and Android applications that allow users to discover the best travel, entertainment and local offers On-demand 7.4 million downloads Allows travel, entertainment and local offers advertisers to reach our audience that is on the go 24/7 access to travel, entertainment and local offers for consumers that are on the go

Jack's Flight Club website Website available in the U.S, UK, Germany, Netherlands, Luxembourg, Norway, Sweden, Denmark, Belgium, listing up to date cheap airfares to paying members 24/7 316,000 visitors per month N/A 24/7 access to alerts, travel advice and guides.

Ability to change user settings

Jack's Flight Club mobile application App available in the U.S, U.K, Germany, Netherlands, Luxemburg, Norway, Sweden, Denmark, Belgium, listing up to date cheap flight deals to paying members.

1 - 12 per week depending on membership level and region 163,000 sessions a month.

N/A Timely alerts and push notifications of new deals, 24/7 access to deals, ability to change user settings

Jack's Flight Club newsletters Regionally targeted newsletter alerting of outstanding cheap flight deals and including articles about travel destinations and other newsworthy travel content.

Newsletter includes paid and unpaid subscribers.

1 - 12 per week depending on membership level and region 3 million emails a week to 1.7 million subscribers N/A Breaking news offers and travel advice delivered just-in-time

Jack's Flight Club mobile application App available in the U.S, UK, Germany, Netherlands, Luxembourg, Norway, Sweden, Denmark, Belgium, listing up to date cheap airfares to paying members 1–12 per week depending on membership level and region 155,000 sessions a month.

N/A Timely alerts and push notifications of new alerts, 24/7 access to alerts, ability to change user settings and select departure airport

Jack's Flight Club newsletters Regionally targeted newsletter alerting of outstanding cheap airfares and including articles about travel destinations and other newsworthy travel content.

Newsletter includes paid and unpaid subscribers 1–12 per week depending on membership level and region 3 million emails a week to 1.9 million subscribers N/A Breaking news offers and travel advice

* For the Travelzoo website, reach information is based on data from Google Analytics.

For Top 20, Newsflash, Local Deals and Getaway, Travelzoo Network and Travelzoo mobile applications, reach/usage information is based on internal Travelzoo statistics as of December 31, 2021.

For Jack’s Flight Club , reach/usage information is based on internal Jack’s Flight Club statistics as of December 31, 2021.

For Top 20, standalone Travelzoo e mails, Local Deals and Getaway, Travelzoo Network and Travelzoo mobile applications, reach/usage information is based on internal Travelzoo statistics as of December 31, 2022.

For Jack’s Flight Club , reach/usage information is based on data from Google Analytics and internal Jack’s Flight Club statistics as of December 31, 2022.

We attract a high-quality audience of travel and leisure enthusiasts across multiple digital platforms, including email, web, social media and mobile applications.

We inform our audience about travel, entertainment and local deals available at over 5,000 companies.

Our insider deals and email newsletters are published by Travelzoo and its licensees worldwide.

We inform our audience about travel, entertainment and local offers available at over 5,000 companies.

Our offers and email newsletters are published by Travelzoo and its licensees worldwide.

Travelzoo ’s website is visited by 5 .4 million to 6.6 million unique visitors each month.

We reach an audience of millions of Internet users each month via the Travelzoo Network, a network of websites that syndicate our deal content, including The Los Angeles Times and The Chicago Tribune.

We reach an audience of millions of Internet users each month via the Travelzoo Network, a network of websites that syndicate our deal content, including CNN and The Chicago Tribune.

We have over 4.0 million followers on Facebook and Twitter.

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Due to the nature of our content, we attract an older, wealthier demographic who have a strong interest in travel and leisure.

With Jack's Flight Club, we have started to attract a slightly younger demographic.

Key features of our solution for travel and entertainment companies include:

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As a result, we are able to send Local Deals to members who live or work near the local businesses.

We provide travel and entertainment companies fast access to over 30 million travel shoppers.

• Global Reach.

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Benefits to Consumers

The Travelzoo website, Travelzoo Top 20 , Newsflash, Local Deals, Getaways, and the Travelzoo Network, provide consumers information on current offers at no cost to the consumer.

Key features of our products include:

Travelzoo provides consumers information on current offers at no cost to the consumer.

Key features of our products and services include:

• Aggregation of Special Offers from Many Companies.

The Travelzoo website and our Travelzoo Top 20 email newsletters aggregate information on current offers specially negotiated by our Travelzoo deal experts for Travelzoo members from more than 5,000 travel, entertainment and local businesses.

The Travelzoo website and our Travelzoo Top 20 email newsletters aggregate information on current offers specially negotiated by our Travelzoo experts for Travelzoo members from more than 5,000 travel, entertainment and local businesses.

This saves the consumer time when searching for travel, entertainment and local deals, sales and specials.

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Travelzoo will only run offers and advertisements that meet its high standards for quality.

Jack’s Flight Club has a free subscription tier, which provides members with 1-2 airfare alerts per week.

Jack’s Flight Club premium, which has quarterly, semi-annual and annual tiers, provides members with four times the airfare alerts per week, plus mistake fares and other exclusive travel content.

The Jack’s Flight Club flight alert newsletters are not sponsored by third parties and Jack’s Flight Club does not receive any commissions or payments for any content within the flight alert newsletters.

The flight alert newsletters provide consumers with the best airfares for their chosen departure airports, found by an expert team of flight finders utilizing technology to search thousands of data points each day.

Jack’s Flight Club will only send flight alerts for cheap airfares that meet certain quality standards.

Jack’s Flight Club’s The Detour newsletter is provided to free and premium members and provides advertisers with the option to sponsor the newsletter for a fee or pay for placement in the sponsorship section of the newsletter.

The Detour provides interesting travel news and content with relevant advertisements from travel partners and advertisers and is an added perk of a Jack’s Flight Club membership.

Growth Strategy

Our growth strategy relies on building a travel and lifestyle brand with a large, high-quality user base and offering our users products that keep pace with consumer preference and technology, such as the trend towards mobile usage by consumers.

Our growth strategy relies on building a travel and lifestyle brand with a large, high-quality user base and offering our users products that keep pace with consumer preferences and technology.

• Building a travel and lifestyle brand with a large, high-quality user base.

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• Offering products that keep pace with consumer preference and technology.

We believe it is important to grow engagement of our user base, by offering products that deliver high-quality deals with exceptional value and expanding our product offering over time to address frequent travel and leisure need.

We believe it is important to grow engagement of our user base, by offering products that deliver high-quality offers with exceptional value and expanding our product offering over time to address frequent travel and leisure need.

This includes the acquisition of Jack's Flight Club and the creation of Travelzoo META.

As of December 31, 2022, our advertiser base included more than 5,000 travel, entertainment and local businesses, including airlines, hotels, cruise lines, vacations packagers, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies.

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Fairmont Mayakoba Silversea Cruises

Gate 1 Travel Stunning Tours

Globus Family of Brands Superchina Holidays

Hawaiian Airlines Tourism Ireland

Fiji Airways Stunning Tours

Gate 1 Travel Superchina Holidays

Globus Family of Brands Tourism Ireland

Holland America Line Travel Discounters

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We have designed our technology to serve a large volume of Web traffic and send a large volume of emails in an efficient and scalable manner.

Travelzoo's production servers are hosted in Microsoft Azure.

(“Azure”), a cloud base computing service operated by Microsoft.

Travelzoo's production servers are hosted by Microsoft Azure, a cloud base computing service operated by Microsoft.

Microsoft Azure's data center facilities and services include robust high availability, reliability and scalability features.

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Because of the design of our websites, our users are not required to download or upload large files from or to our websites, which allows us to continue increasing the number of our visitors and page views without adversely affecting our performance or requiring us to make significant additional capital expenditures.

The markets for the services we offer are intensely competitive, constantly evolving and subject to rapid change, and current and new competitors can launch new services at a relatively low cost.

We compete for advertising dollars with large Internet portal sites, such as Trip Advisor, that offer listings or other advertising opportunities to travel, entertainment and local businesses.

We compete with companies like Groupon that sell vouchers for deals from local businesses such as spas, hotels and restaurants and tour operators for vacation packages.

We compete with search engines like Google that offer pay-per-click listings.

Additionally, certain search engines have increased their focus on acquiring or launching travel products.

For example, Google has continued to add features and functionality to its flight and hotel metasearch products, which have grown rapidly

and has also further integrated its “Book on Google” reservation functionality into its products.

We compete with newspapers, magazines and other traditional media companies that operate websites which provide online advertising opportunities.

We compete with travel metasearch engines like Kayak.com (owned by Booking Holdings) and online travel and entertainment deal publishers (including online restaurant reservation services).

We compete with large online travel agencies like the Expedia Group and Booking Holdings, as well as thousands of individual travel agencies around the world, that also offer advertising placements and hotel booking platforms and capture consumer interest.

There has been substantial consolidation of the global travel industry and we believe this trend will continue.

Some of our competitors are large and have significant resources and substantial international operations.

Such companies have also completed acquisitions to further consolidate the industry.

There has also been a proliferation of new channels and platforms through which accommodation providers can offer reservations.

For example, companies such as Airbnb (which acquired HotelTonight), HomeAway and VRBO (which are both owned by Expedia Group) offer services providing alternative accommodation property owners, particularly individuals, an online place to list their alternative accommodations, which compete with our hotel offers.

Further, meta-search services may lower the cost for new companies to enter the market by providing a distribution channel without the cost of promoting the new entrant's brand to drive consumers directly to its website.

Some competitors offer a variety of online services, such as food delivery, shopping, gaming or search services, many of which are used by consumers more frequently than online travel services.

As a result, a competitor that has established other, more frequent online interactions with consumers may be able to more easily or cost-effectively acquire customers for its travel services than we can.

If any of these platforms are successful in offering services similar to consumers who would otherwise use our platforms or if we are unable to offer our services to consumers within these super-apps, our customer acquisition efforts could be less effective and our customer acquisition costs could increase, either of which would harm our business and results of operations.

We also have seen that some competitors will accept lower margins, or negative margins, to attract attention and acquire new members.

If competitors engage in group buying initiatives in which merchants receive a higher percentage of the face value than we currently offer, we may be forced to pay a higher percentage of the face value than we currently offer, which may reduce our revenue.

We expect to face additional competition as other established and emerging companies, including print media companies, enter the online advertising market.

Competition could result in reduced margins on our services, loss of market share or less use of Travelzoo by advertisers and consumers.

If we are not able to compete effectively with current or future competitors as a result of these and other factors, our business could be materially adversely affected.

Many of our current and potential competitors have longer operating histories, significantly greater financial, technical, marketing and other resources and larger advertiser bases than we do.

Others have lower overhead and appeal to a different segment of the population.

In addition, current and potential competitors may make strategic acquisitions or establish cooperative relationships to expand their businesses or to offer more comprehensive solutions.

New technologies could increase the competitive pressures that we face.

The development of competing technologies by market participants or the emergence of new industry standards may adversely affect our competitive position.

Competition could result in reduced margins on our services, loss of market share or less use of our products by our advertisers and consumers.

If we are not able to compete effectively with current or future competitors as a result of these and other factors, our business could be materially adversely affected.

Government Regulation and Legal Uncertainties

There are increasing numbers of laws and regulations pertaining to the Internet, including laws and regulations relating to user privacy, liability for information retrieved from or transmitted over the Internet, online content regulation, and domain name registration.

Moreover, the applicability to the Internet of existing laws governing issues such as intellectual property ownership and infringement, copyright, patent, trademark, trade secret, obscenity, libel and personal privacy is uncertain and developing.

Privacy Concerns.

We are subject to a number of privacy and similar laws and regulations in the countries in which we operate and these laws and regulations will likely continue to evolve over time, both through regulatory and legislative action and judicial decisions.

The European Union adopted the General Data Protection Regulation ("GDPR"), which became effective in May 2018 and has resulted in greater compliance burdens for companies, including us, with users in Europe.

Additionally, the California Consumer Privacy Act was passed and creates new data privacy rights for users, which became effective in January 2020.

Additionally, on July 16, 2020, the Court of Justice of the European Union invalidated the EU-US Privacy Shield and required that the transfer of information between the EU and the US be reviewed on a case-by-case basis.

Complying with these varying national and international requirements could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

Violations of privacy-related laws can also result in significant penalties.

We post on our websites our privacy policies and practices concerning the collection, use and disclosure of user data.

Any failure, or perceived failure, by us to comply with our posted privacy policies or with any regulatory requirements or orders or other federal, state or international privacy laws and regulations could result in proceedings or actions against us by governmental entities or others, subject us to penalties and negative publicity, require us to change our business practices, and increase our costs and adversely affect our business.

Anti-Spam Legislation.

The CAN-SPAM Act, a federal anti-spam law, pre-empts various state anti-spam laws and establishes a single standard for email marketing and customer communications.

We believe that this law, on an overall basis, benefits our business as we do not use spam techniques or practices and may benefit now that others are prohibited from doing so.

We are also subject to anti-spam laws in the various jurisdictions that we operate, including Canada’s Anti-Spam Legislation.

We continually review our practices to ensure our continued compliance with these regulations.

Domain Names .

Domain names are the user's Internet “addresses.” The current system for registering, allocating and managing domain names has been the subject of litigation and of proposed regulatory reform.

We have registered travelzoo.com, travelzoo.ca, travelzoo.co.jp, travelzoo.com.au, travelzoo.com.tw, travelzoo.co.uk, travelzoo.de and travelzoo.fr, among other domain names, and have registered “Travelzoo” as a trademark in the United States, Canada, the European Union and certain countries throughout Asia Pacific.

Because of these protections, it is unlikely, yet possible, that third parties may bring claims for infringement against us for the use of our domain name and trademark.

In the event such claims are successful, we could lose the ability to use our domain names.

There can be no assurance that our domain names will not lose their value, or that we will not have to obtain entirely new domain names in addition to or in lieu of our current domain names if changes in overall Internet domain name rules result in a restructuring in the current system of using domain names which include “.com,” “.net,” “.gov,” “.edu” and other extensions.

Jurisdictions.

Due to the global nature of the Internet, it is possible that, although our transmissions over the Internet originate primarily in California, the governments of other states and foreign countries might attempt to regulate our business activities.

In addition, because our service is available over the Internet in multiple states and foreign countries, these jurisdictions may require us to qualify to do business as a foreign corporation in each of these states or foreign countries, which could subject us to additional taxes and other regulations.

Intellectual Property

Our success depends to a significant degree upon the protection of our brand names, including Travelzoo, Top 20 and Jack's Flight Club.

If we were unable to protect the Travelzoo, Top 20 and Jack's Flight Club brand names, our business could be materially adversely affected.

We rely upon a combination of copyright, trade secret and trademark laws to protect our intellectual property rights.

We have registered the Travelzoo and Top 20 trademarks, among others, with the United States Patent and Trademark Office.

We have registered the Travelzoo and Travelzoo Top 20 trademarks with the Office for Harmonization in the Internal Market of the European Community.

We have registered the Travelzoo trademark in Australia, Canada, China, Hong Kong, Japan, South Korea, and Taiwan.

Jack’s Flight Club has registered the Jack’s Flight Club trademark in the United States and the European Union.

The steps we have taken to protect our proprietary rights, however, may not be adequate to deter misappropriation of proprietary information.

We may not be able to detect unauthorized use of our proprietary information or take appropriate steps to enforce our intellectual property rights.

In addition, the validity, enforceability and scope of protection of intellectual property in Internet-related industries are uncertain and still evolving.

The laws of other countries in which we may market our services in the future are uncertain and may afford little or no effective protection of our intellectual property.

As of December 31, 2021, we had 214 employees and all were considered full-time.

As of December 31, 2022, we had 237 employees.

None of our employees are represented under collective bargaining agreements.

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Internet Access to Other Information

We make available free of charge, on or through our website (ir.travelzoo.com), annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

We make available free of charge, on or through our Investor Relations website (ir.travelzoo.com), annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Information included on our website does not constitute part of this report.

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What changed 10-K

Item 1. Business