Local Deals Boost Travelzoo's Bottom Line (TZOO)

Travelzoo TZOO has been doing quite well today following its impressive Q1 results. The company attributes some of the success to its Local Deals feature, which currently serves 48 markets (up from just 12 markets in Q3 2010). In its First Quarter 2011 Performance and Growth Strategy Overview, Travelzoo noted that from Q3 to Q1 2011, the company grew from $17,000 in gross revenue per deal to $34,000 in gross revenue per deal. Currently, Travelzoo publishes less than one deal per week (the Q1 2011 average is 0.76 deals per week). But the company believes that when it reaches 100 markets, it will average two deals per week with an annual opportunity of $312 million. After reaching 200 markets and 30 million subscribers, Travelzoo foresees an annual opportunity of $780 million. Just a few months ago, Wall Street valued Travelzoo's “Groupon clone” at $400 million. Coincidentally, that's the same amount of money that LivingSoical raised earlier this month. Clearly, consumers love a great deal. Right now, Travelzoo is offering New York diners the opportunity to save $105 on a three-course dinner for two at Nino's Tuscany near Central Park. Los Angeles shoppers can save $71 on a facial and massage. And if you're in Vegas, you can save $211 on a five-course dinner. Travelzoo isn't the only company banking on daily deals. 1SaleADay.com may have taken a different approach to the concept, but with more than 350,000 daily visitors, the company has proven to be more than a niche. Will the daily deal trend continue? As long as consumers are intrigued by the idea of saving money, these sites are likely to thrive.