TRAVELZOO

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We may be sensitive to recessions or other macroeconomic circumstances or events affecting the travel industry generally.

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The demand for online advertising may be linked to the level of economic activity and employment in the U.S. and abroad. Specifically, our business is primarily dependent on the demand for online advertising from travel and entertainment companies. Events like war, political instability, international trade disputes or other conflicts (including the war in Ukraine and the Israel-Hamas war), terrorist attacks, mass shooting incidents, strikes, natural disasters and extreme weather situations (e.g., hurricanes, fires, droughts and floods), plane crashes, major public health events and logistical challenges such as widespread travel disruptions may have a negative impact on the travel industry and affect travelers’ behavior by limiting their ability or willingness to visit certain locations. In addition, advertisers may choose to limit advertising spend, which can adversely impact our business. Macroeconomic factors and uncertainties such as the implementation of tariffs (by the United States or other governments), rising interest rates, persistently high inflation and/or recession fears may have a negative impact on consumer behavior by reducing consumers’ ability or willingness to engage in discretionary spending on travel (e.g., we have seen some reluctance from our Canadian members to travel to the United States). In turn, that could have a negative impact on demand for our services. Since the majority of our revenue is derived from members and advertisers within the United States, economic conditions in the United States have a greater impact on us. We are not in a position to evaluate the net effect of these circumstances as many of these events cannot be reliably forecasted. In the longer term, our business might be negatively affected by financial pressures on or changes to the travel industry and the economy overall.

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The pre-purchasing of vouchers and hotel inventory could create additional risks or liabilities for our business.

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We sometimes pre-purchase vouchers or hotel inventory (in the form of credit amounts,vouchers or gift cards) in bulk from clients and partners (e.g., hotel or spa partners). In those scenarios, we are not acting as the agent of the client, but rather as the principal, meaning the risk of selling the inventory is on the Company. The pre-purchased vouchers are considered “inventory” in our books until sold to and purchased by Travelzoo members. The vouchers are usually only redeemable with the client during a specified period and the Company does allow refunds in accordance with our policies. If we are unable to sell all of these pre-purchased vouchers, we may be required to impair that inventory and our operating results could be adversely affected. A significant impairment would have an adverse effect on our business, financial condition and results of operations.