Holger Bartel – CEO Wayne Lee – CFO Chris Loughlin – EVP, Europe

Ed Woo – Wedbush Noah Steinberg [ph] – G2 Investment Partners

Good morning everyone and welcome to the Travelzoo first quarter 2010 financial results conference call. At this time all participants have been placed on a listen-only mode and the floor will be open for questions following the presentation. Today’s call is being recorded. It is now my pleasure to turn the floor over to your host, Holger Bartel, Travelzoo’s Chief Executive Officer. Sir, you may begin.

Thank you, operator. Good morning and thank you all for joining us today for Travelzoo’s first quarter 2010 financial results conference call. I am Holger Bartel, Chief Executive Officer, and with me today are Wayne Lee, the company’s chief financial officer; and Chris Loughlin, Executive Vice President, Europe.

Hello everyone, welcome to our conference call.

Good morning everybody.

I would first like to remind you that all statements made during this conference call and presented in our slides that are not statements of historical facts 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. Factor 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. Please note that this call is being webcast from our Investor Relations Web site at www.travelzoo.com/earnings. Please refer to our Web site for important information including our earnings press release issued earlier this morning, along with the slides that accompany today’s prepared remarks. An archived recording of this conference call will be available on the Travelzoo Investor Relations Web site at www.travelzoo.com/ir, beginning approximately 90 minutes after the conclusion of this call. For the format of today’s call, Holger will review management’s prepared presentation, and we will then conclude with a question-and-answer session. If you will please now open our management’s presentation, which is available at www.travelzoo.com/earnings, I will now turn the call over to Holger.

Our presentation will fall into two parts. First, I will talk about financial performance, highlights of our financial performance, and then second I will provide an update on our growth strategy. Let us all turn to slide 4. I just want to highlight key performance metrics for Q1 2010. We are quite excited, our revenues grew by 24% to $28.5 million that is a new record for our company. Subscribers grew to 17.8 million, and our earnings per share are up from $0.13 to $0.15 year over year. This is a 15% increase. On the next slide, I am providing more detail on the operating income. As you have heard, operating income for the company in Q1 2010 was $5.2 million that consists of operating income of $6.2 million in North America. In Europe, our operating loss decreased from $1.3 million to $1.0 million. We then had $200,000, which is primarily a foreign currency loss, taxes of $2.5 million, and our net income from continuing operations was $2.5 million. Our effective tax rate is slightly down from 53% to 50%. On slide 6 let us look at revenues first. Revenues continued to grow in North America, year-over-year growth is 12%, very similar to previous quarters. In Europe, we are quite excited that even though the base grows, we can still maintain the pace of doubling revenues year over year. In Q1 again, our revenues doubled versus the previous year, in fact they increased 107% in US dollars, in local currency they increased 91%. Slide 7, I already mentioned in our press release that we continued to invest in subscriber acquisition as well as in Fly.com. If you compare Q1 2010 versus the previous year, we actually spent over $1 million, exactly $1.1 million on subscriber acquisition in 2010 compared to…

Thank you. (Operator instructions) And our first question comes from the line of Ed Woo from Wedbush. Ed Woo – Wedbush: Great quarter guys. The question I had is, first of all, have you noticed any change in the competitive landscape either for your newsletter business or possibly with Fly.com. And second of all, how will you characterize the overall environment in the travel industry either with travel providers or for online travel advertising? Thank you.

Hi Ed, I would like to give this to Chris.

Hi Ed, thanks for your question. I do not think much has changed in the – you (inaudible) Fly.com, right, so I do not think much has changed in terms of the competitive landscape. You have got a couple of large players in the market, you compete in that space on the technology product, we think we have got a great product on pricing. So, the price of the flights you can offer, we have got some outstanding prices, and I am not sure if you are still that new, so we now still have the OpEx prices in the Fly.com engine in the US. And speed, recently we ran some tests in Europe where we now feel that we are in fact the fastest amongst the four incumbents. So, on competition I think we are doing a pretty good job and we do not see anyone new. Sorry, what was your second question? Ed Woo – Wedbush: Yes, how do you characterize the overall environment for travel right now in the industry either for travel providers or for online travel advertising?

I think you are seeing strong demand across the board in the western market at this time. Obviously the ash cloud had an impact on all travel companies over the last ten days or so, and I think you can see that there has been an awful lot of disruption. So, probably who will benefit from that it is the domestic providers. We recently, actually on Friday we went out to our UK audience and asked what was the impact on our subscribers. Say 25% of subscribers say that they were in fact impacted by the ash cloud, but they continued to plan to travel, 80% say it is not going to have any negative effect on their summer plans, and a lot of people who were going to book during that period booked domestic travel. I was at a conference last week here in London. The outlook certainly seems to be a lot stronger than last year. Ed Woo – Wedbush: Great, thanks and good luck.

Thank you.

(Operator instructions) Our next question comes from Noah Steinberg [ph] with G2 Investment Partners. Noah Steinberg – G2 Investment Partners: Hi guys, great quarter. Just a quick one on pricing outlook stronger than last year in terms of overall travel spend [ph] advertising spend by our customers. Are you seeing any opportunity to raise price?

Well Noah, there are two answers to that really. First of all, I think pricing, our ability to price and increased prices really depends on the economy overall, and in particular the travel industry as well as competition. On the one hand, we definitely see that the travel industry although is improving is still in a very bad shape, particularly in the hotel business, as we work with so many hotel partners all across the world, their RevPAR revenues per average room are down, and we just do not feel it is the right time right now to significantly increase prices. We still provide a lot of great returns for them in this difficult time but we also have to take into account that the rates just overall are lower. This does not mean though that our revenues will not increase because I am not sure everybody understands how we are actually pricing. As our audience continues to grow, it means that for example, let us say we increase the audience in North America from 10 million to 12 million, very few of our advertisers actually purchase the entire audience. So a lot of our advertisers purchase increments of that audience. So let us say for example 2 million, now what that means is that we can actually send in the newsletter, to the 12 million people, we can send 6 offers, to 10 million we could only have sent 5 offers. So even if the price, the rate for this 2 million is the same, it still allows us to increase our revenues and that is why we continue to invest into growing our audience. Noah Steinberg – G2 Investment Partners: Got it. Then also just one on entertainment, how many cities do you offer entertainment? How many cities would you sell, you know, in New York you would sell Broadway show, but are you offering that in Europe as well?

In the US, we actually do offer it in all US cities. We of course are stronger in some cities than in others, but Europe, Chris, do you want to comment?

I know – actually, we have a team based in London who are building out that business, so it is predominantly UK based that does include London, Edinburgh, Manchester, even Belfast and one of the greater successes we had in the first quarter was in fact in the Manchester area. I think we had over 4,000 tickets sold for (inaudible). We are also running it in Germany and France we are staying but not to such a great extent, not something of course we would do over time. Noah Steinberg – G2 Investment Partners: Great, great quarter guys. Keep it up.

Thank you.

Thanks. There are no further questions in the queue.

Ladies – yes Wayne.

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. This concludes today’s teleconference. You may disconnect your line at this time. Have a nice day.