Travelzoo says its Local Deals business is thriving, but it is not seeking to become a Groupon or LivingSocial clone.
"Every man and his dog" can publish $5 coupons or teeth-whitening deals, says Travelzoo CEO Chris Loughlin.
Instead, Travelzoo intends to publish high-quality deals -- hotel restaurant and spa deals, for instance -- which appeal to the company's subscriber base.
"The other guys can do what they want to do and I hope they are successful," Loughlin says.
Meanwhile, Travelzoo doesn't pay much attention to these "hundreds and hundreds" of local deal publishers and will continue to focus on its own strategy, he adds.
Loughlin points to a recent Local Deal, now sold out, at the five-star Rosewood Crescent Hotel in Dallas, as the kind of quality that Travelzoo can deliver.
Actually, the deal wasn't for the hotel itself, but offered a four-course dinner for two with valet parking for $59 at The Crescent Club, a private club whose members include Ross Perot, the founder of Electronic Data Systems and former U.S. presidential candidate.
Loughlin notes that Travelzoo doesn't have to vie with local deals sellers such as Groupon and Living Social for these sorts of deals, which often leverage Travelzoo's existing hotel relationships.
"They are two different value propositions," Loughlin says.
Loughlin says Travelzoo benefits in Local Deals from its existing hotel relationships because "previously we had one point of conversation, one point of contact, now we have three or four."
He added that Travelzoo's hotel advertising salespeople don't handle Local Deals from the hotel restaurant or spa. "There is a handoff" to the Local Deals salespeople, Loughlin says.
The backdrop for the Local Deals discussion was Travelzoo's earnings report on the first quarter of 2011.
The company reported record revenue -- $37 million -- and record adjusted operating income, but recorded a net loss of $14 million, largely attributed to a one-time $20 million cash payment to the State of Delaware regarding an unclaimed property settlement.
During the quarter, which ended March 31, Travelzoo expanded its Local Deals business to 48 markets in six countries and plans to launch about 15 new markets per year.
Travelzoo's strategy is to increase revenue per subscriber by expansion of Local Deals and Fly.com metasearch. Loughlin says Travelzoo doesn't view Fly.com as "a pure play metasearch business," but as complementary to the overall business.
Average annual revenue per subscriber in the U.S. increased to $7.80, up from $6.70 in the fourth quarter, and Loughlin said that increase is being driven by Local Deals and Fly.com.
Other highlights included revenue growth in North America at the fastest clip in more than four years and the first operating profit from Europe at $741,000.