Thursday, 12 April 2012

Groupon's Little Brother Might Get Adopted



By Matthew Giacobbe

While the buzz coming out of the social media sector this week is Facebook’s acquisition of Instagram, investors should keep an eye on the recent news out of Travelzoo (TZOO). Travelzoo, which is the so-called Groupon (GRPN) of travel, has announced that it is putting itself up for sale this week. Travelzoo offers its users exclusive deals to destinations around the world. However, Travelzoo is more sophisticated than Groupon’s daily burger deals; it offers deals to stay at destinations like the world-renowned Ritz-Carlton hotels. What has sparked a flurry of interest around this company is that Amazon (AMZN) and Google (GOOG) have been rumored to be actively pursuing acquisitions to strengthen their own daily deal businesses. Travelzoo is especially appealing to Google, which recently acquired the restaurant review company, Zagat. Combining Zagat’s ability to recommend high-quality restaurants and Travelzoo’s ability to provide luxury deals related to travel and food would appeal to a similar demographic. Although Amazon’s deal business has been largely related to clothing it could easily expand their offerings and user base through such an acquisition. Additionally, LivingSocial could also be in the hunt in order to strengthen its deal portfolio and differentiate itself against its main competitor, Groupon. One thing is for sure though; the battle for Travelzoo will be fierce, as competitors vie for dominance in the daily deals marketplace.

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