Holger Bartel: No large changes, Ed, versus what we have seen last year. If anything, I can probably report that what we are hearing from travel partners is that while last year was the year where, in particular, Americans wanted to venture out, wanted to travel more internationally, wanted to go to more exotic destinations. They are now seeing increased demand for staying closer to home. So, in general, more interest in vacations in the US, less interest in exotic vacations. And also, we are hearing that generally people are looking for vacations and trips where they can just relax and recover. So, I would say 2023 seemed to have been the year of activity, and now, 2024, maybe one where we are seeing more trend back to the vacations being trips that are just really allowing people to recover, relax and come back home refreshed.
One thing we are seeing, by the way, with our paid membership, and this is, of course, one of the reasons why we moved to a club model is now that we are indeed what the industry is calling a closed user group, which means not everyone is a Travelzoo member. Only those who are joining, who are paying are Travelzoo members. Offers of Travelzoo are not open to the public any longer. It’s not sufficient to just enter an e-mail address and purchase that offer. Now that we’re in that state, we are seeing that we can source better offers. We can source offers from companies that we didn’t work with before. Why is that? Since you know quite a bit about the travel industry, as you probably know that price parity is a very important issue, particularly for hotels, particularly for cruise lines.
So, hotels don’t want to show a different price, a lower price, a better offer to the public. Now, however, that Travelzoo is a club and only those who are in can see these offers, we are obtaining better offers and that in return is making the Travelzoo membership more valuable, more attractive, and that’s going to be the component of what’s going to drive the growth in membership and paid memberships going forward.
Ed Woo: Great. Just going a little bit further into the summer travel season. Have you noticed any changes in people spending, whether they’re spending less, traveling fewer amount of days, any macro issues? Are you seeing any of that either in US or Europe?
Holger Bartel: No, we have not. That seems to be pretty similar to 2023, both in North America as well [as Europe] (ph).
Operator: Your next question comes from Michael Kupinski from Noble Capital Markets. Please go ahead.
Michael Kupinski: Yeah. Just a couple of quick follow-up questions here. I was just wondering in terms of what your experience has been so far in terms of the conversion over to the membership fees of your registered members. Are you seeing any variance from what you had seen before? And, at this juncture, do you have an estimate of how much of those registered members will convert to membership subscription fee?
Holger Bartel: So, all is going according to plan and according to our expectations. New members — since January 1, 2024, new members that join have to pay the advertising fee — sorry, the membership fee, and we see members coming in at a rate that’s actually what we expected. And the ones that joined before January 1, 2024, as we said, don’t have to pay in 2024. We have a plan for how we are converting them or at least a portion of them from this status into paying members. We certainly don’t want to give up our entire advertising business. So, we have a plan for that. We will see at the end of the year what we’re going to do. And then, we also, as you saw in today’s presentation, we are now breaking out revenues into advertising, membership fees and other, because we want to give you the analysts as well as investors an opportunity to track the progress in how our paid membership is growing.
And then, as I said, responding to Ed, we are now creating offers that are stronger. We need to communicate and we are communicating to our existing members, the legacy members that the offering is getting stronger because that’s going to be an important component to turn them into paying members next year.
Michael Kupinski: And Holger, to that end, it was a little surprising to see sales and marketing expenses down in the quarter. I was just wondering if that was an anomaly. Or if you can just give us your thoughts of what affected that in the first quarter, or if that is a good run rate that we should be using for 2024? That’s all I have. Thank you.
Holger Bartel: Very good observation. Indeed, yes, we didn’t spend as much on marketing and member acquisition in Q1 versus previous quarters. We expect this to change and go up in subsequent quarters.
Michael Kupinski: Okay. Thank you.
Operator: Your next question comes from James Goss from Barrington Research. Please go ahead.
James Goss: Hi, thank you. I had a follow-up as well. In terms of reaching new potential paying subscribers, I wonder if you might talk a little bit about the marketing plans you have underway. Like, how you’re doing it? What tools you’re trying to use? If you might provide a little color along those lines?
Holger Bartel: Well, it’s a very wide range of marketing activities, mostly focused on online, but I really cannot go into all the details, Jim, because we lose quite a few tactics. Some of it is around specific offers, some of it around communicating to non-members what the benefits are of joining. So, all of it is really focused on communicating to those who are not yet part of the club that once you join the club of travel enthusiasts, you can expect to obtain extraordinary offers and benefits and it’s the worth investment.
James Goss: Okay. And the other one, and I think you might have alluded to this a little with Michael’s question, but you do have plans underway to try to address the current individuals who are getting your e-mails but choose not to subscribe. You’ll be rolling or providing us with more information later in the year. Is that what you’re suggesting?
