Travelzoo reported a decrease in operating profit to $818,000 in the fourth quarter of 2019 from $2.8 million in the prior-year period, which was driven by a $2.1 million loss in Asia Pacific.
The company attributed the loss to one-time restructuring costs in its Japan and Asia Pacific headquarters.
Operating profit in its core business in North America and Europe totaled $2.9 million.
Travelzoo hopes to reverse its financial performance with its $12 million acquisition of subscription service Jack’s Flight Club.
In a call to discuss earnings, global CEO Holger Bartel says the acquisition will “have a big positive impact on Travelzoo’s consolidated financial results in 2020 and beyond.”
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“The existing Jack's Flight Club business alone is projected to contribute an additional 5% revenue growth,” says Bartel.
More than 100,000 travel members in the United Kingdom have already enrolled in the service, and Travelzoo plans to roll it out to its 30 million global members in 2020.
Revenue increased from $111.3 million in 2018 to $111.4 million in 2019 but declined in the fourth quarter to $26.9 million from $27.9 million last year.
Analysts expected the company to report revenue of $29.1 million in the quarter.
In Asia Pacific, revenue decreased 12% year-over-year to $1.6 million due to a reduction of local deals in unprofitable markets.
The Europe segment posted a 2% year-over-year increase to $9.1 million in the quarter due to its new vacation product.
In North America, revenue slumped in the quarter by 1% to $16.2 million because of lower voucher sales.
Regarding the impact of the COVID-19 coronavirus in travel, Bartel says that Travelzoo does better and gets more deals when there are lower occupancy rates on airplanes and hotels.
“While we see certainly an impact in Q1, we believe that over the rest of the year this will benefit our company and allow us to grow."