Slowly but surely, Travelzoo (Nasdaq: TZOO ) is hopping on the Groupon bandwagon.
Shareholders have been enjoying the ride since the travel deals publisher introduced Local Deals this summer. The stock has nearly tripled since the initiative was announced four months ago.
Travelzoo typically relies on its weekly Top 20 emails of sponsor-backed getaway deals to bring home the bacon. It has certainly proven to be a juicy model for Travelzoo. It had 18.7 million willing recipients as of the end of September.
However, the Groupon model -- where it could generate as much as half of the money it rings up in discounted voucher sales -- offers it the opportunity to widen its margins on incremental sales.
As one of the 18.7 million free subscribers, I wasn't receiving a whole lot of Local Deals initially. However, the deals in the Miami area have started to heat up. Over the past two weeks alone, I've received three marked-down voucher offers from Travelzoo:
- Three spa treatments with pool access at the swanky Shore Club for $99, a deal which presumably retails for $254.
- A $75 Biscayne Bay sunset cruise with food and drinks for just $35.
- This morning's offer was $89 for a four-course meal for two with a pair of mojitos at the trendy Asia de Cuba. That may seem like a lot, but eyeing the upscale South Beach eatery's menu shows that the deal is roughly half off the a la carte pricing.
Spas, touristy outings, and restaurant deals? This seems a lot like Groupon. This is obviously more than just the hotel and flight deals that one would expect from Travelzoo.
Travelzoo was just one of the many dot-com darlings to introduce Groupon-esque initiatives. OpenTable (Nasdaq: OPEN ) , The Knot (Nasdaq: KNOT ) , and Yelp also jumped on the bandwagon. AOL (NYSE: AOL ) is populating its Wow.com domain name with localized bargains. Amazon.com (Nasdaq: AMZN ) paid $175 million for a piece of LivingSocial. Google (Nasdaq: GOOG ) reportedly failed in nabbing Groupon itself in a $6 billion deal that fizzled out.
However, Travelzoo is probably the one that is best situated strategically to take on Groupon. Its millions of subscribers are already on the lookout for deals hitting their inboxes. Can the deals intensify? Travelzoo's Rolodex is awfully thick with travel-related companies that are preconditioned to paying to promote discounted offers. Right now, only a few of its sponsors appear to be playing along. Two of the three deals that I have been offered over the past two weeks -- the Shore Club spa treatments and dinner at Mondrian's Asia de Cuba -- are in Morgans Hotel Group (Nasdaq: MHGC ) properties.
However, Travelzoo earned twice as much as Wall Street was expecting a quarter ago. If pumping up the volume on Local Deals creates even greater disparities, Travelzoo's heady stock gains will continue.
Have you ever used Groupon or a Groupon-esque site for a deal? Share your thoughts in the comment box below.