Good morning everyone and welcome to the Travelzoo fourth Quarter 2011 Financial Results Conference Call. At this time, all participants have been placed in 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, Chris Loughlin, Travelzoo’s Chief Executive Officer. Sir, you may begin.

Thank you operator and good morning everybody. Thank you for joining us today for Travelzoo’s fourth quarter 2011 financial results conference call. I am Chris Loughlin, Chief Executive Officer. With me today is Glen Ceremony, the Company’s Chief Financial Officer. Glen will walk you through today’s format.

Thank you Chris and good morning, everyone. Before we begin our presentation, we would 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. 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. Please note that this call is being webcast from our Investor Relations’ website at www.travelzoo.com/earnings. Please refer to our website for important information, including our earnings 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 Investors’ website at www.travelzoo.com/ir, beginning approximately 90 minutes after the conclusion of this call. For today’s format of the call I will review our fourth quarter and full-year 2011 financial results, and then Chris will provide an update on our strategy. Thereafter we will conclude with a question-and-answer session. Now, if you will please open our management presentation, which is available at www.travelzoo.com/earnings. Turning to slide four, this slide provides you the key financial highlights for the quarter. We achieved revenues of $35.2 million this quarter which is up 23 percent the same period last year. This represents our fastest year-over-year revenue growth rate for our fourth quarter in four years. We also achieved earnings per share of $0.40 which is up 75 percent from $0.23 for the same period last year. In addition, we maintained steady growth in new subscribers. On slide five, we look…

Thank you very much Glen. If anyone likes to turn to slide 20 we summarized our growth strategy which we continue to execute against. Along the X-axis, we are growing the number of subscribers to engage with the Travelzoo brand. We continuously attract new subscribers through word of mouth and through advertising. We are also reaching new subscribers through new medium such us our new iPhone app and the Travelzoo network. On the Y-axis; we are growing our revenue per subscriber. Local deals and Getaway’s have becomes a substantial driver of revenue per subscriber growth. Our return on new markets; become more productive in existing markets and extend the product offering. We see significant incremental revenue subscriber gains. Other important drivers of revenue per subscriber along the Y-axis include wait increases when our subscriber levels reach earnings in particular markets, search related products and sales team optimization Turning to slide 21, you can see we now reach 21.5 million subscribers in Europe and North America. We are excited to see that we continue to attract new subscribers as we introduce new content types particularly in Europe Turning to slide 22; I would like to talk a little bit about our subscribers. We have stressed for many years, we have attracted high quality subscribers. In Q4; we had the opportunity to take 50,000 records of local deals purchases, so that’s my [ph] credit card information and we ask experience to tells us a little bit more about the subscribers. Experience confirmed that our subscribers are wealthier and older and you can see on the left, these 50,000 subscribers index much higher in the $125,000 to $200,000 household income bracket. On the right, you can see that 80 percent of our subscribers in this simple set are over the age of 35.…

(Operator instructions) Our first question comes from Eric Martinuzzi of Craig Hallum, your line is open. Eric Martinuzzi – Craig Hallum: Thanks for taking my question. I know you are not interested in giving guidance, however, you did talk about the seasonality of your business. If we go back a year, there was a significant step-up from the end of Q4 of 2010 to Q1 of 2011. Could you talk about how this year would be similar or different as far as both sides of the business, well I guess there is three segments to the business now as well as the geographic?

Hi, Eric. So this is rather looking back on what happened in the last ten years than what will happen in the next three months because, of course, I can’t predict the future. But classically what happens in Travel in Europe it’s typically – Q1 would be typically stronger, two would also be typically stronger, three – two and three would be rather more consistent you get to a lot of vacation in two, and so you see that sort of fluctuation, and four is obviously the worst quarter for Travel demand, and then in North America – and obviously that would apply to Travel and Search. In North America, you see that towards the back of Q1, it starts – you start to see very high Search volumes for Travel demand is strong. That carries into two and three is reasonably strong. You have the sort of contrary issue with the cities versus the country in the summer, and also in the spring, so when people are in the city it’s busy, and then in the summer they are in the country, and then Q4 is a mixed bag, really. In local it’s still too early for us to say. We start to think that there may be some seasonality given that we are focused on leisure pursuits it seems to make sense, but it’s really too early for us to say what would happen there. Eric Martinuzzi – Craig Hallum: Okay.

The other answer – the other answer – and I think something we have always said, Eric, is when the economy is firmly on the way up or firmly on the way down it’s an okay time for us. It’s good. When you’ve got uncertainty and middle managers don’t know whether they’re going to have jobs tomorrow because of the economy then the uncertainty can clog things up. So, if Europe gets a lot worse around uncertainty that’s obviously a problem for us, but if it clears up, that’s positive for us. Eric Martinuzzi – Craig Hallum: Okay. Thanks. The expense side. Speaking specifically to slide 12, this is your headcount slide, you talk about, it was down in Europe. It was relatively flat in North America. Your headcount being flat for three straight quarters in North America and then down sequentially in Europe doesn’t for me – doesn’t give me a lot of confidence that we’re investing for future growth. Could you talk to me about the coming year on what we can expect from headcount, may be not quarter-by-quarter, but just on an annual basis?

Well, no, we can’t – we’re not really talking about what we’ll do in the future. But I may comment on what happened in the past. We hired a lot of people very, very quickly, and, of course, hiring people itself doesn’t mean that you generate revenues. You got to train and develop those people. We manage very tightly using a cohort analysis to look at productivity. And as we see our productivity improving in certain areas then we hire. So, actually in the UK this week we hired three hotel salespeople. And I was personally involved in that. Why? Because we see the Getaways product and the hotel direct product in the UK has a tremendous growth opportunity. So, that’s really how we look at it. We do have hiring quotas in the budget. And what you see is we would also pull back from our plan if we see that we’re not getting productivity out of the people we’ve already hired. Also, let’s not forget 2011 was a year where it was really the major startup year for Local. That business was started by Mike Stitt in the middle of 2010. We had our first group coming in, in really Q4 of 2010, 2011, it got into Europe. I mean think about the growth for the overall business, and, of course, you can have some people that don’t really fit. You are learning about people and managers and so forth. But we’re really – I think we’ve got a very solid structure now in North America and in Europe. We’ve great leaders in Mike and Melanie, and we also now have Mark Webb joining the team. So, I am pretty confident. And our strategy is a bit different, Eric, to the others. The other guys are satisfied to get $8,000 on a local deal. We rather get $25,000 on a local deal. And – so we probably in the end have to hire people who are may be from most likely more classical advertising background who may manage larger accounts or travel accounts and so forth, not so much Yellow Page people.

Yes, Eric, maybe one thing to add on. This is Glen. We did say that the second half wasn’t going to be a period of time where we aggressively hire and remember the context, right, debt crisis in Greece, debt ceiling in the U.S. We just – based on all of those factors, I think wanted to just focus on getting people that we do have as productive as possible. Eric Martinuzzi – Craig Hallum: Yes. And I wasn’t looking for a specific quarter-by-quarter. But you added 100 people last year. You went from 255 to 350. It’s a growth market. Something – just any kind of color, just when do we put our foot back on the accelerator, and then I’ll drop it.

Well, I’m putting my foot on the accelerator in the UK right now. I mean, you saw the press release, which just arrived to say, you know, that’s a tremendous hire for this organization. You may not be familiar with the Telegraph Media Group in the U.S., but it’s probably one of the most respected media groups here in the UK and Richard is very well-known Executive. Mark is joining also. That announcement we just made. I mean that already points to some serious high-quality people coming into this organization. And you’ve got to get it at the top. You know, it’s a little bit like saying Mike and Melanie are the people who started this business (inaudible) and now I’m bringing in seasoned executives to help support the business. And I think that is the right thing. If we were a venture capital group, probably that’s what we would also think to do. And we still have people who came into the organization in the last three months who we would like to get more productive. So, headcount itself isn’t an necessarily indicator of productivity. I have some salespeople in this organization who generate $5 million, $10 million for the organization from a single seat. So, I wouldn’t necessarily equate success and growth to simply to headcount in this case. Eric Martinuzzi – Craig Hallum: Thank you.

To be clear, Eric. We’re definitely expecting to continue to hire when we – we think it makes sense, right to go after the opportunity.

Our next question comes from Naved Khan of Jefferies. Your line is open. Naved Khan – Jefferies: Yes. Thanks. It’s Naved Khan from Jefferies. Chris, in the prior quarter you’ve spoken about some switching happening from the publishing side of the business to Getaways. Is it fair to assume that that might have accelerated in the fourth quarter or can you give us some color on that?

I’ll let Glen answer this question.

Yes, I think with the new grouping we put, we think that makes sense to put both the Getaways and our existing business in one bucket, right? On the Getaways, like I had mentioned in our remarks, a couple of things. One, the majority of the Getaways are new customers, right? And two, the ones that were existing customers on an overall basis, we think the revenues are a upside for us. So, we’re excited about that. As far as further breaking out, I think that’s part of what happened earlier this year. I mean this is really an attempt to show you how we view the business. So, if we’re focused on one piece within these buckets, it gets a little hard, especially if you’re just asking a Getaway specific question versus our overall Travel business. So, you can see the growth in Travel and we feel good about – confident in the rollout so far of Getaways. Naved Khan – Jefferies: And as far as the margins go on the Getaways, has there been any change in that in terms of margins coming down? Or can you talk about it?

No significant changes. There’s a range that we trade in, right? So I’d say on an overall basis no significant changes. We can say what we’re seeing out in the market is a lot of these other companies have dropped their margins fairly significantly. But like Chris and I have said in the past, our focus on high quality, if we’re walking into an organization and we’re talking only on commissions, we’re – there’s probably not a match. They are not understanding our value that we’re going to bring to the table.

I think, Naved, the other thing is we really think about – we’re a media business, I mean every press release we ever put out, this is a global media business. And we think about the revenue that we generate that we send and that’s what we want to maximize. So, yes, you’re right. There’s no significant change. But it wouldn’t even worry me. What would worry me is, are we sending out emails that are generating the appropriate profitable revenue per email. Then, if we are, then I’m very, very happy. It’s interesting that our approach, because we do focus on equality content, it allows us to publish deals that are of higher price point. And so you can see, I think, one of the Las Vegas properties we put out, I think, it had roughly 6,000 vouchers sold at a lower price point, but that could’ve made just as much as the (inaudible) deal that we put out of $299. And then, so how do you think about the margin around that? So, yes, it’s a question to your model, but I just want to be clear we’re thinking about as an attractive revenue per email proposition. Naved Khan – Jeffries: Okay. And then, on the local side, this is the first time (inaudible) launched the business and frequently the deal has been down. And obviously you continue to expand in deal markets. And then, just sort of a function the denominator or the number of markets launched sort of running ahead, and then you expect catch up, which means the newer markets where you might have launched more recently, actually, a tick up in terms of number of deals per week. Is that the right way to think about it? Or is there...

It’s certainly our plan. And I said on the call that we moved one of our top managers. And this guy runs the public business for us. Actually, he was in the UK. Two years ago, he moved in. He helped Mike start the business in Southern California, and you all know that that was a very successful territory. He built a fantastic team and he trained a fantastic manager. And then we moved him to the East Coast and he’s taken up the range there. And, well, the other thing that happened during that time when he moved, we then (inaudible) back in California. So that’s honestly what happened during that period. And the second thing is we pushed very hard in September. Actually look at those external reports to see that September was a bump full month for us. And then October our pipe was really worn out and we have to rebuild. So, this all came together. It was very unfortunate. But our plan is obviously to grow. I like that we have great – we’ve got this sort of network effect with the likes of the Four Seasons (inaudible). We’re trying to leverage these and other such relationships as we continue to grow. But we’re certainly not planning to slow down at all. Naved Khan – Jeffries: And can you sort of give a sense of what kind of trends you’re seeing in January? And are you starting to see a pickup again? Just have some color on that.

Glen, would you like to answer that question? Glen?

Could you repeat the question? Naved Khan – Jeffries: Yeah. No. The question was about January trends. And can you sort of talk about what you’re seeing to date for the month?

So, in January, I mean, we’re not going to get into these future periods after the quarter results. All I can say is that we’re pleased with Q4, with some of the challenges we have. But, yeah, as far as future guidance, no. Naved Khan – Jeffries: On the search side, the sequential decline, I can understand there is something (inaudible) there. But if I go back a couple of years, in Q4, all of those things (inaudible) on your increase? I mean, is this the first time for the decline? So, is that attributable to new products like Google Flight Search and all? Or how do you sort of explain it outside of...

Well, yeah, the majority of it is that we’ve spent last, because we knew it’d be a slower quarter. So there’s kind of a direct relationship there. So we reduced our traffic acquisition spend during the quarter. It’s an attempt just to allocate our resources on what we feel is going to be the best for the company. And seasonally, this quarter has been slower for search. And so that was a conscious effort on our part.

Yeah. A little bit of history on that. By 18 months ago, we were (inaudible) and running TV advertising for search to get awareness and start the initial base. So, we were not doing that in Q4. Obviously, that will have an impact, but it’s not – yeah, the marketing input for these two periods is quite different. Naved Khan – Jeffries: Okay. But if we have to think about the search business and how it might perform in 2012, is this going to be an area that you would look to grow? Or is this again something you would be opportunistic about but not necessarily be pushing hard on? Can you talk about that?

On search, we look to maximize the opportunity both on the top line and the bottom line. And it’s not to get our flight.com to – it’s very useful for our travel subscribers and often we’re announcing sales that we find on flight.com to travel subscribers. So that’s really the position on those two. Naved Khan – Jeffries: Okay. Thank you.

Thank you.

Again, if you have a question, please press star, then 1 on your touchtone phone. Our next question comes from Justin Patterson of Morgan, Keegan. Your line is open. Justin Patterson – Morgan Keegan: Thanks for taking the questions. Just a first housekeeping. One, the short (inaudible) in the prepared remarks, but could you explain the tax rate this quarter? What is pretty favorable versus all of our expectations?

Yeah, on the tax rate, we did have – hi, Justin, this is Glen – we did have a favorable benefit from some positions that got resolved related to prior periods. Like I mentioned, that was $600,000. Justin Patterson – Morgan Keegan: Got it. Thanks for that. Just turning more strategically, taking the local deals, a question from a different route. You faced hirings in, I guess, fairly flattish the last few quarters. And it just seems kind of odd to me given the growth opportunity that you’re talking about to not necessarily be hiring and letting trends be a little softer from seasonality when people are sick. Can you talk about just how you’re kind of viewing the market long terms if there’s anything else kind of structurally different in the market at this point as you’re saying?

No. I mean, there has been hiring, but there’s also been firing. So let’s be clear about that. It’s not like we just stood still. There’s also been people who left voluntarily because they felt that it wasn’t the right thing for us. I mean, we have been building a team. And this is – we rather get to high productivity levels from teams and then continue to hire than have sort of the same as dot-com approach of hire a hundred people and lay everyone off. That’s just how we like to run our business. We are hiring now. I mentioned earlier I was here in the UK. We spent a weekend now with our new commercial director. This week the UK team hired three people. Why? Because it’s a very attractive opportunity. So I mean that’s the reality of what’s going on. And we’re coming off with local deals in particular. We’re really coming out with a back of the startup (inaudible). So, now we hired Mark Webb to oversee and steer (inaudible) to the future. So I think we felt quite solid about what we’ve got and what we’re doing. And we’re quite – yeah, it would be great to find another 10 fantastic people who can go into the Rosewood Mansion and (inaudible). But I can tell you that’s quite difficult to find that person compared to someone that’s going to adopt shuffles and things. It’s just a different type of animal. Justin Patterson – Morgan Keegan: Right. I appreciate that point. And I guess the framework I’m working from here is you talked about sickness being one of the factors in terms of frequency per deal being down this quarter and if you continue adding more and more markets even with more hiring in place it seems like there might be some challenges getting that productivity level or frequency level up to that to deals per market, per week target as you’ve been searching for.

I mean, if they get some market too. Well, I mean, (inaudible) some markets that we’re already up to and some markets like (inaudible). We break the market down into four or five markets that we will be onto and others were not. And, yeah, we would like to obviously to be at per week. I think some of those might come through broader relationship rather than having one person calling into a single market, maybe one person is calling to a single account and there are some ways you can get to these goals rather than just hiring 100 another people. So, I think what we want to do is do it profitably and just throw a lot of people and make sure that that’s going to work. Justin Patterson – Morgan Keegan: Okay. Thank you.

Our next question comes from Dan Kurnos of Benchmark Company. You’re line is open. Dan Kurnos – Benchmark Company: Thanks for taking my question. Just first starting on a local deal side. I don’t believe I saw a gross local deals number in the quarter. So it’s tough to gauge since you’ve given the new clarity you have on the local deals numbers from a net respective, but did you guys experience any take rate pressure in Q4 and do you expect that to continue if you did into 2012?

Glen will answer the question.

Yes. And I think the take rate pressure has been out there for a while now, the second half. I think like we had mentioned there’s a lot of companies out there, there’s a lot of competition. Like I said we haven’t shifted those in any significant way. But I think that pressure will continue as the market tries to figure out who’s going to actually deliver the value and we’re confident that we’re going to be able to do that for the high quality deals. Dan Kurnos – Benchmark Company: So, then, looking forward, when you look at your growth opportunity in local deals, do you think that in the near term, you think, it’s more going to come from new markets or productivity increases? And if it’s coming from new markets, where do you see your greatest market opportunity?

I think it’s within the existing markets, I’d say. You can see the productivity gains in the market like Chicago. We weren’t publishing as much. In Texas, we’re still (inaudible) should mention, but there’s plenty of other great opportunities in Texas. So, I mean, there’s just lots of opportunity within the existing markets and that’s what we’re focused on. Once we get through that, then we’ll resume our expansion into new markets. Dan Kurnos – Benchmark Company: Great. And then turning more to the core, or search or travel business, you know we’ve seen some signs that there might be a slowdown in terms of online spending predominantly from Europe. I know that you guy mentioned it in terms of your comments, in your opening comments. Do you see that persisting into next year?

Well, I mean, it’s too difficult to tell on that. It’s really up to what happens in these countries. So, I mean, I think it’s not something we could necessarily predict. Dan Kurnos – Benchmark Company: Have you seen any hesitancy on the part of advertisers to book with you? Are bookings coming in late or anything of that nature?

In Q4, we definitely mentioned that. I mean, we think that and particularly in Europe the economy had an impact on people’s and advertiser’s (inaudible) right? And so, it’s a question that’s going forward. I mean, I don’t know how is Europe going to resolve their issues and how that’s going to play out, right? I think we’ll be aligned with that. Dan Kurnos – Benchmark Company: Okay. And just one more for me. I was just curious if you had some color as to why you’re operating profit was down in North America in the quarter year-over-year. Thanks very much.

On operating profit, I think it’s a slower quarter. So there’s certain test components of our core structure that you know when we hit those seasons we hit below our quarters. We would expect a bit of a drop there. Dan Kurnos – Benchmark Company: That’s great. Thanks again.

Yes.

Our next question comes from the Naved Khan of Jefferies. Your line is open. Naved Khan – Jeffries: Just a follow up. Can you guys give out the gross sales number for the local and database that you have been in the past?

Actually, we’re not going to be doing that going forward. I think it’s caused some confusion. I know a lot of you try to go on our website and count the amount and that’s not been in a very accurate process. So, the way we are disclosing our revenues now in the categories that we’ve chosen as the way we view our business. So hopefully that’s going to help you look at it going forward. Naved Khan – Jeffries: Okay. On slide 24, you do have a table. I think that table for gross having per deal includes three getaways, right? It’s just that if I tried a little amount I think I’m off by couple of millions in the prior periods, mostly the numbers I think (inaudible). But the same information is still there.

It’s just off.

Yes, that’s a per deal metrics just to give you an idea on our average kind of size of the deal. Naved Khan – Jeffries: But it’s approximate. It’s not exact, right?

Correct. Naved Khan – Jeffries: Okay. Okay, thanks.

I’m showing no further questions at this time. I’ll turn back now to Mr. Loughlin.

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

Thank you, ladies and gentlemen. This concludes today’s teleconference. You may disconnect your line at this time and have a nice day.