Travelzoo's Groupon Competitor Already Valued at $400 Million

by: on January 11, 2011
9 Comments

Five months ago, Travelzoo, an old internet 1.0 company, decided to expand their business by launching a Groupon competitor.

In September, Travelzoo Launched a Groupon Competitor

They have always been known for sending a weekly email with travel deals to their 21+ million subscribers. Why not try to send their subscribes some of these local daily deals? They started by offering daily deals to their Des Moines and Minneapolis subscribers.

How did they do?  Really, really well.

travel zoo deal

Four months later, they expanded their daily deals business from 2 markets to 25 markets. Their first New York City deal outsold every deal Groupon has ever run in New York and their current deals are selling extremely well. They have also expanded internationally and their first London deal, a £49 spa deal, sold a shocking 2,142 units.

Wall Street Valuing Travelzoo’s New Daily Deal Segment At $350 million to $450 million

How has Wall Street reacted to Travelzoo’s daily deal expansion?  Their stock, at $45, has tripled from their average trading price of $15 in August.

Travelzoo Stock Up 200% in Last 4 Months

Travelzoo’s core travel business was valued at $250 million back in August before they launched their daily deal segment.  Speaking with several Wall Street analysts, their core travel deal business is now valued between $250 million and $350 million.

Since their market cap is now at $750 million and taking into account the $35 million of cash on their balance sheet, Wall Street is implying a $360 million to $460 million valuation for their new daily deal business.

Not bad for four months of work.

Vinicius Vacanti is a co-founder of Yipit, the leading daily deal aggregator recommending the best daily deals by learning your tastes.

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  • Nicholas Eng

    There are already many sites mushrooming where they follow the exact Groupon model but focused on a particular niche, for instance travel deals or restaurant deals (e.g. Village Vines). This has obvious problems for Groupon since they can never be as focused as a vertical site. Normally, you can cite network effects as a deterrent. But for instance, if I am really a foodie, I can sign up for both Groupon and Village Vines since registration is not mutually exclusive but most of my expenditure will probably go to Village Vines. One can imagine the day is not far that daily deal verticals will appear in any key e-commerce segment. Travelzoo here is another prime example in the travel vertical.

    I discuss other models that additional Groupon competitors will probably take in this quora thread. http://goo.gl/nABgX

  • http://www.dannyd.me/profiles Danny Denhard

    Thats what you get for a good existing online brand and vouchers done very well!
    Travelzoo top 20′s + huge mailing list + mass voucher panic buy = Gold mine

    • SHOEBDO

      travel zoo sucks….big time. STAY AWAY!!!

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  • David

    Hmm, that is an interesting analysis, but I think you forgot to include the simple fact the market overall has been on a tear since August. For example, take a look at Priceline’s (another travel company, but without a daily deal biz) 6 month chart. I’m not disputing the fact that Wall St. has put a large number on Travelzoo’s daily deal business, it just not be as large as your headline suggests when the overall market appreciation is subtracted.

    • http://viniciusvacanti.com Vinicius Vacanti

      That’s fair. The core business was at $250 million, even assuming it doubled in value to $500 million (which would be aggressive), that still ascribes over $200 million to their new daily deal segment.

    • SHOEBDO

      STAY AWAY

  • Phil Strazzulla

    What do you think of TZOO at $100/share? Looks like a potential short squeeze pushed it up last week, but it keeps gaining steam somehow.