Good afternoon, everyone and welcome to the Travelzoo first quarter 2008 financial results conference call. (Operator Instructions) It is now my pleasure to turn the floor over to your host, Ralph Bartel, Travelzoo's Chairman and Chief Executive Officer. Sir, you may begin.

Thank you, Operator. Good afternoon and thank you all for joining us today for Travelzoo's first quarter 2008 financial results conference call. I am Ralph Bartel, Chairman and Chief Executive Officer. With me today is Wayne Lee, the company’s Chief Financial Officer; C. J. Kettler, President, North America; and Chris Loughlin, Executive Vice President Europe.

Hello, everyone. Welcome to our conference call.

Good afternoon, everyone.

Welcome, everyone.

Before we begin, Wayne will walk you through today’s format.

First, we will discuss the company’s first quarter 2008 financial results. Then we will provide additional information on the company’s growth in subscribers and growth strategy. We will then conclude with a question-and-answer session. Before we discuss the company’s financial results released earlier today, I would like to remind you that all statements made during this conference call that are not statements of historical fact constitute forward-looking statements and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could vary materially from those contained in the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements are described in our forms 10-K and 10-Q and other periodic filings with the SEC. An archived recording of this conference call will be available on the Travelzoo investor relations website at www.travelzoo.com/ir, beginning approximately 90 minutes after the conclusion of this call. I will now turn to Ralph for an overview of the company’s Q1 2008 results.

Today Travelzoo announced its results for the first quarter of 2008. Diluted loss per share for Q1 2008 was $0.07, down from diluted earnings per share of $0.25 in the prior year period. Our financial results were impacted by non-tax deductible losses from our foreign operations in Asia-Pacific and Europe, resulting in an effective income tax rate for Travelzoo of 164%. Our revenue increased to $20.9 million in Q1 2008, an increase of 6% over revenue of $19.7 million in the same period last year. Quarterly sequential revenue increased 10% from Q1 2008 to Q1 2008. The publications and products that contributed to our revenue are the Travelzoo websites in Australia, Canada, France, Germany, Hong Kong, Japan, the U.K., and the U.S.; the Travelzoo network in the U.S.; the top 20 newsletters in Canada, France, Germany, Hong Kong, Japan, the U.K. and the U.S.; the Newsflash alert services in Canada, the U.K. and the U.S.; and Super Search in the U.K. and in the U.S. The Travelzoo websites in Taiwan and China did not generate any revenue in Q1 2008. Our publications and products provide latest and reliable information on the very best travel offers from hundreds of travel companies. Super Search is a travel search tool that leverages more than 2.7 million ratings from Travelzoo users and makes it very easy for users to find the websites from suppliers that offer the best prices and connections for specific dates. The Travelzoo Network is a network of third-party websites that lists travel deals published by Travelzoo. I will turn now to Wayne to discuss additional information for the group and for our three business segments, North America, Asia-Pacific, and Europe, including headcount, expenses, and operating income.

Thank you, Ralph. Our North America business segment revenue in Q1 2008 was $18.9 million, an increase of 2% year over year. Our Europe business segment revenue in Q1 2008 was $2 million, an increase of 59% year over year. Our new Asia-Pacific business segment generated $20,000 of revenue in Q1 2008. In terms of revenue concentration, Travelzoo had one group of advertisers under common control that accounted for 12% of revenue in Q1 2008. No other group of advertisers accounted for 10% or more of revenue. Travelzoo's operating income in Q1 2008 was $1.3 million, a decrease of 83% compared to Q1 2007 operating income of $7.5 million. Operating margin in Q1 2008 was 6.1%, down from 37.9% in Q1 2007. Travelzoo's net loss in Q1 2008 was $1 million, down from Q1 2007 net income of $4.1 million. Reported net income was negatively impacted by an increase in our effective income tax rate. Travelzoo's effective income tax rate in Q1 2008 was 164.2% compared to 98.3% in Q4 2007 and 48.2% in Q1 2007. The increase in our effective tax rate compared to Q4 2007 and Q1 2007 was due primarily to the increase in the losses from our Asia-Pacific and Europe business segments. For financial reporting purposes, the $4.8 million in losses from our Asia-Pacific and Europe business segments were treated as having no recognizable tax benefit. Cash provided by operations in Q1 2008 was $3.6 million. DSOs, that’s days sales outstanding, as of March 31, 2008 was 49 days, unchanged from December 31, 2007. Total cash and cash equivalents as of March 31, 2008 increased to $24.4 million from $22.6 million as of December 31, 2007. In terms of headcount, Travelzoo had 178 employees as of March 31, 2008, up from 94 employees as of March…

Thank you, Wayne. During Q1 2008, Travelzoo added a total of 1.1 million new subscribers to its e-mail publications. In North America, we acquired 297,000 subscribers at an average cost of $4.97 per subscriber in Q1 2008, compared to 280,000 subscribers at an average cost of $3.78 in Q4 2007. In North America, Travelzoo's Top 20 Newsletter and Newsflash e-mail alert service had a net unduplicated total of 11 million subscribers as of March 31, 2008. This represents an increase of 4% versus the same time last year, while revenues increased 2% year over year. In Asia-Pacific, we acquired 393,000 subscribers at an average cost of $3.12 in Q1 2008, compared to 180,000 subscribers at an average cost of $2.90 per subscriber in Q4 2007. Travelzoo's Top 20 Newsletter and Newsflash e-mail alert service had a net unduplicated total of 582,000 subscribers as of March 31, 2008. In Europe, we acquired 362,000 subscribers at an average cost of $3.90 per subscriber in Q1 2008, compared to 166,000 subscribers at an average cost of $5.85 in Q4 2007. In Europe, Travelzoo's Top 20 Newsletter and Newsflash e-mail alert service had a net unduplicated total of 1.7 million subscribers as of March 31, 2008, an increase of 117% versus the same time last year. The costs of our subscriber acquisition in North America, Asia-Pacific, and Europe are expensed as incurred. In 2005, Travelzoo began its growth strategy of expanding into selected international markets. With the launch of the Travelzoo brand in several markets in Asia-Pacific and in France in 2007, we are executing this strategy according to our plan. The strategy consumes significant financial and management resources. However, we believe that going global represents an effective opportunity to increase shareholder value in the long-term. Markets in Asia-Pacific and Europe are new revenue…

(Operator Instructions) Our first question will come from Marianne Wolk with Susquehanna.

Hi, this is [Melandie] for Marianne. A couple of questions; first, your CapEx increase was substantially higher than we had expected. I was just wondering to what we can attribute this. Also, is there anything you can share about the functionality of that next generation SuperSearch? And then lastly, I know you have a lot of local experts on the ground in different markets. Is there anything you can tell us in terms of trends that they are seeing out there -- any major differences in terms of U.S. versus Europe or Asia? Thanks.

C.J. will take your questions regarding SuperSearch and then Wayne will comment on the capital expenditures. C.J.

Thanks so much. In terms of SuperSearch, we are looking to expand it. Obviously for competitive reasons we couldn’t possibly get into much detail on that but we do look to our user base to inform our process and really look to understand what the usability function is currently and how the user is utilizing these kinds of search functions out in the marketplace to inform our developments on that product in the future.

With regard to our capital expenditure spending in Q1, the increase is primarily due to new offices that we -- we moved headquarters in our New York office and also moved offices in Chicago and as a result, we have significant expenditures on both leasehold improvements and office furniture and equipment.

Thanks.

Thank you. Our next question will come from Ed Woo with Wedbush.

Yeah, I had a question -- you know, obviously everybody is talking about the [weak economic environment] in the U.S. and you’ve seen some airlines consolidate. Do you have any views on how that is going to impact your business?

Hello, Ed. Welcome to our call. C.J. will take your question.

Hi, Ed. Thanks so much for the question. You know, the recent airline merger for Northwest and Delta we think is actually a very positive thing. Mergers are good for the travel sector because overall they are going to help the airlines cope with the high cost of oil versus obviously filing for bankruptcy. So our view is without these mergers, airlines are likely to sell off these subsidiaries and redeploy regional airlines or sell off regional airlines, and potentially even pare down routes and shrink capacity. So our view is mergers are good for the travel sector in general.

Great and the other question I have is have you seen any changes in trends on subscriber acquisition costs, particularly trying to get ad placement and what not?

You know, I think again subscriber acquisition will always fluctuate by quarter. As you see in our numbers in Q1 we tested some new channels for acquisition that were more costly but of higher quality. We also moved to double confirmation in Q3 so whether or not it’s a true macro trend or in response to our own movement towards double confirmation, I don’t think we can truly answer that. That said, we are quite proud of the fact that we have over 13 million total unduplicated subscribers worldwide and over 11 million in North America.

Ed, we can also ask Chris Loughlin, who manages our European business, and ask him what trends he sees for subscriber acquisition in Europe.

Hi, Ed. Actually, if you look at the numbers from Europe, CPA is just about exactly the same as Q1 of last year, so we are not seeing any significant changes in terms of what we expected this quarter. Typically if you go back now three years, you can see that Q1 is stronger than Q4. The one thing to point out in that CPA though is maybe we did improve a little bit because the exchange actually worked against our favor, so maybe we pulled our CPA down slightly further this quarter versus last year.

Great. Thanks a lot.

Thank you. It does appear we have no further questions at this time. Mr. Bartel, I would like to turn the call back over to you for any further comments or closing remarks.

Ladies and gentlemen, we thank you for your support. We look forward to speaking with you again next quarter. Have a nice day.

Thank you. Ladies and gentlemen, that does conclude today’s Travelzoo Incorporated conference call. We would like to thank everyone for their participation in today’s call. Have a great rest of your day.