Travelzoo has reported a 2.2% increase in revenue to $25.5 million for the third quarter of 2019 but missed analyst revenue expectations due to its lagging Asia Pacific operations.
Profit from the core business reached $3.3 million, thanks to its North America business segment operating profit of $2.5 million and $940,000 for Europe.
However, a $2.1 million operating loss in Asia Pacific knocked the global operating profit down to $1.2 million.
In the prior year period, the operating loss in Asia Pacific was $1.6 million.
The company attributed the decline to the cost of working with a top management consulting firm in China, which was retained in mid-September to drive Travelzoo’s presence on social media and mobile channels.
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Revenue in the Asia Pacific segment for the third quarter decreased 16% year-over-year to $1.7 million.
Since reacquiring its Asia Pacific operations in 2015, Travelzoo has struggled to grow the business.
To combat the losses, Travelzoo is pledging to achieve profitability in the region by 2020 and is entrusting Scott Wang, the newly hired head of strategy in Asia Pacific and general manager of Greater China, to lead the way.
Despite the third quarter setback, Travelzoo says it does “not see this as a trend” and expects revenue from China to grow in the fourth quarter of 2019.
Holger Bartell, global CEO of Travelzoo, says: “After rigorous review of the market, our business model and Travelzoo's current position in the market, the third-party research and review confirmed an immediate, concrete opportunity to grow revenue from China very substantially.
“China has the biggest social media community in the world and has the highest mobile penetration, which makes it also ideal for us as a global company to develop capabilities in these areas.”
Revenue in North America rose 3% year-over-year to $15.3 million, which the company attributes to its increase in marketing and creation of vacation offers.
The Europe business segment revenue increased 1% year-over-year to $8.5 million thanks to package offerings that combine hotel deals with flights.
Global net income for the third quarter was $306,000.
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