Chris Loughlin – Chief Executive Officer Glen Ceremony – Chief Financial Officer

Eric Martinuzzi – Craig Hallum Naved Khan – Jeffries Justin Patterson – Morgan Keegan Dan Kurnos – Benchmark Company

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 at revenue by segment. Please note that this is our first full quarter of comparing year-on-year quarterly revenues where our new local deal formats existed in the prior year period. Revenue in North America was $25.6 million representing a year-over-year growth rate of 16 percent which has been accelerating growth rate compared to our last fourth quarter. In Europe; revenue growth was 48 percent year-over-year and we believe was impacted by the economic uncertainty that played out in Europe during this quarter. Turning to slide six; starting this quarter we will provide a further breakout of our revenue by type which is closely in line with the way we do our business. We hope this will provide further insights into our business. The first category of revenue is Travel, as you can see this will include the products our subscribers and advertisers have grown to love over the years that present tested high quality deals coming primarily from our flagship products such as Top 20, Newsflash, website and network. In addition Travel will include our Getaways voucher based format launched earlier this year. This aligns with the way we do manage Getaways and make sense as they include hotel stays which are existing products (inaudible) as well. It probably is worth mentioning here that we are very pleased with the rollout of Getaways today. As a majority of these deals from new hotels and the business that has shifted from our existing products to Getaway; as on an overall basis generated incremental revenue for us. These early signs continue to make us confident in the continue rollout of Getaways even if there is some shifts from our existing products. The second category of revenue is Search. This will include both our search products we have developed over the year’s Fly.com and Supersearch. We continue to believe these two are the great compliments to our business as both provided easy way for our subscribers to compare this and shop for airline, hotels and car rentals. The third category of revenue is Local. This will include both local deals voucher based format which was new to us in the last 15 months and entertainment is included in that which was recently seen to make some vouchers with non voucher deals. We believe these revenues as one category represent our efforts to provide subscribers with high quality local deals whether it is a whether it is a restaurant, a spa or a Broadway play and regardless of the form in which advertise choose vouchers, or non vouchers. Now let’s take a look at the revenue by type for each segment for this quarter starting on slide 7. North America fourth quarter revenue broke down by type shows travel growing at 12 percent year-over-year which is higher than the 4 percent rate we saw for the last year’s fourth quarter. Getaways drove much of this growth and offset some of the trends we continue to believe impact us such as the airline consolidation and competition. North America search revenue declined in the fourth quarter sequentially due to our conscious decision to reduce the traffic acquisition stand in this area as historically the fourth quarter has been a seasonally slower quarter for the search business. This search decline was the primary reason for the sequential decline and overall North American revenues. North America local revenue increased year-over-year however declined sequentially. We believe this was due to some internal factors such as key sales people moves and other sales people that were out due to extended sick leave. In addition; although this is business is still very need or less and growing, we believe that there was some seasonality that played a part in the decline based upon merchants having less capacity and subscribers being busy with holiday preparations. We still remain positive about the local opportunity and look forward to continuing to build out the sales and management team to try and further see this opportunity. Turning to slide 8, you will see the breakdown of revenue for our Europe segment. Europe travel is showing a 14 percent year-over-year growth which we expected a seasonally sequentially down fourth quarter but we believe the uncertainty and European economy drove the decline in spending and impacted our travel advertising sales. Europe search grow 57 percent year-over-year, again we pull back on the traffic acquisition stand for what we believe to be a seasonally slower quarter which impacted the revenue growth sequentially. Europe local grow at 493 percent as we are still embarking on our first full year of introducing the local deals voucher format in Europe. We learned a lot as we experienced different markets and are excited about applying these learning’s to future opportunities. So we hope this revenue break out helps you understand our results and the way in which we view our business. We have provided three years of quarterly and annual information for your reference and the appendix of this presentation. Okay. Turning to slide nine, this slide provides more detail on our operating income. Operating income for the Company this quarter was $8.2 million which is a record operating income for a fourth quarter. Our North America business contributed $6.5 million. Well Europe contributed record profits of $1.7 million. Our income tax expense was $1.9 million which includes the benefits from the resolution of favorable tax positions related to prior periods totaling approximately $600,000. All of this led to a record fourth quarter net income of $6.4 million and a strong fourth quarter EPS of $0.40. Turning to slide 10, as you may recall last quarter we explained the changing impact that the voucher format and it has on our cost structure. You can see this again on our left hand chart which shows local related and other costs. Cost to revenue decreased slightly improving gross profit by 40 basis points and was offset by the operating margin decrease of 60 basis point; due primarily to this seasonally slower fourth quarter. Turning to slide 11, you will see our operating expenses North America remained relatively stable as a percent of revenue while Europe operating expenses as a percent of revenue decreased as Europe has continued to scale since last year’s fourth quarter. Slide 12 shows that our headcount slightly decreased from 357 last quarter; to 350 this quarter. We did not aggressively hire given the seasonally slower quarter, this slight decrease is the attrition net of hiring. We plan to continue to hire while focusing on productivity in order to invest in opportunities for future growth. Turning to slide 13; you will see that we are maintaining our strong collections and growing on our cash balance. We ended the quarter with $38.7million in cash and cash equivalents and this is up from prior quarter as a result of our operating cash flow of over $7 million. On slide 14; we have summarized the financial results for the quarter, we achieved the highest fourth quarter revenue growth in four years. We maintained steady subscriber growth for a seasonally slower Q4 and we had record fourth quarter operating income and record profitability for our European business segment. With that it’s probably good time to pause and reflect on the highlights for the full year 2011. On the next slide, slide 15 has captured some of the key highlights of what we believe was an excellent year of growth for our Company. Full year revenue grew 32 percent year-over-year reaching a total of $148.3 million. Full year non GAAP bps reached a record level of $1.42 and subscriber growth remained strong at 14 percent. Turning on to the next two slides, slide 16 and 17 capture our full year revenues broken up by segment type. Similar to the break out I described earlier with the quarterly results. North America revenues grew overall by 24 percent representing the fastest growth rate in four years. This was sealed by local, our travel revenues continue to growth despite the airline consolidation and stepped up competition Turning to slide 17, this shows that Europe revenues increased by 58 percent year-over-year driven by across the board growth in travel, search and local despite the uncertain European economy. For overall, we are pleased with the mix and the growth of revenue in 2011 Slide 18 captures the full year record non GAAP operating income of $35 million with Europe contributing at first full year profitability. This overall increase in operating income resulted in almost three point increase in our operating margin. We are pleased with financial results, we are able to retain in 2011 and this is as we build our new local deals and Getaways voucher formats. We look forward to the opportunities in 2012 to growth with profitability. All right; that wraps up the financial part of our presentation, so now Chris will cover some of the highlights regarding Travelazoo’s growth strategy.

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. We have been able to attract such high quality subscribers over the last 14 years because our content consistently comes with a high recommendation and is absolutely an outstanding travel opportunity. It’s content to define an audience it’s not the other way around and everyone has to understand that. Given leisure travel particular internationally travel is consumed by those with a high disposable income and more freedom it makes perfect sense by travel that does have such high quality audience. By having a high quality audience wealthier and slightly more matured people; we are able to attract high quality establishment to work with us. In last six months we published local deals in more than 160 top restaurant which could be runs on by celebrities like Gordon Ramsey and Ken Oringer in Boston as well as outstanding restaurants in side of lights of the Ritz Carlton, Rosewood and Four Seasons hotels. These new relationships and top side establishments are only possible because of the quality insurance these brands have when addressing our audience. We continue to stay focused on attracting high quality subscribers Turning to slide 23, we are constantly thinking about how to further engage our subscribers and adapt a new technology and media consumption behavior. Two initiatives in 2011 include the introduction of HTML email format for local deals and the new iPhone app. A new HTML email format brought into improved (inaudible) and a positive lift to our brand perception among our subscribers and our advertisers. Our new iPhone app which now has over 300,000 downloads allows subscriber to access our deals on the go and purchase both local and travels deals directly on their phones. You really can bring up the iPhone up right now if you have got one and book holiday to Italy, a dinner in Midtown, Manhattan or a Getaway to a stunning countryside property in Whales. As you can see we are getting under the skin of our relationship with our subscribers both in understanding more about them and introducing new ways for them to interact with us On slide 24, I’ll highlight the progress of our voucher sales business with local deals in Getaways as a potential opportunity ahead which is still very positive route. We continue to grow the markets that receive local deals and Getaways. In Q4 our average deals per week decreased while we maintained consistent average gross revenue per deal. So what happened in Q4 in particular expect North America local. Some internal factors impacted deal sourcing. We decided to move to move a few of our top producers and managers to other locations around North America to spur growth in those areas. So for example we took our top manager from the southern California region and now he’s running the entire eastern sea board and that had some short term impact on our business we also have some of our key sales folks out sick through extended periods of time. In addition we consumed our deal pipeline at the end of September which most of you who followed the report would have seen and that caused a slow October. Lastly, we believe that there may be some seasonality in this business for us because we focused mostly on travel and leisure pursuits and this business could be subject to the same demand curve we see in travel or Q4 is seasonally slower. We continue to believe in local deals and Getaway opportunities and plan to go out to capitalize on this opportunity. In fact Mark Webb, a seasoned senior executive with 30 years of experience leading large sales organizations like British Airways and American Express is joining us in February as president in Travelzoo local to lead our global assets on local and you will see a press release later today which will introduce Mark. We believe that the open new market increase the deals per a week are opportunity expands and that based on our growing subscriber base and high quality deal experience, we have a real opportunity over time, please remember we are trying to capture this opportunity while staying profitable. So it may take a bit longer than some others but we feel confident in the long term opportunity. Moving onto slide 25, I would like to emphasize that our strategy is focused on quality leadership across our products whether its local deals, Getaways or the Top 20 list. Before daily deals company’s were here, we were focused on high quality deals, we remain focused on high quality deals and after many of these daily deals companies close their door as they do not have profitable businesses, we will focus on high quality deals. We believe that over the long run our subscribers will remain engaged and we will continue to attract new high quality subscribers if we continue to deliver outstanding high quality information. For example, we recently published a dinner for two at the Mansion restaurant inside the Rosewood Mansion at Turtle Creek. It was $120 for the dinner for two people the rest one is well known as Dallas’s best restaurant as I got a rating at 26 points and cause extraordinary to perfection and the property itself is listed as among the very best in the world in the communist gold list and Travel and Leisure’s top 500 resorts. And many of these properties, we run as Getaways are featured in these lists. In Q4, we worked with Bacara [ph] in Santa Barbara one of Communists top resorts in the US. Actually you can see that property here in the middle of the picture to if you look in the middle image in the top down to Bacara that is $299. Let not forget our flagship Top 20 list offering the most outstanding deals every week. In many of the world’s best destinations and of course you did publish that in all six countries. I met a UK hotel advertiser yesterday who featured more than 10 hotels in 2011 and she told me that for every 10 clicks to her website from the Travelzoo Top 20 page, she gets a booking. For those of you who are not familiar with Internet clicks, our conversion rates 50 to 1 or 40 to 1 would be considered very good; 10 to 1 is off the charts. She also told me that the average ROI from our Top 20 program was 9.5 to 1 in 2011, up from 7.5 to 1 in the prior year. And this morning I met a UK tour operator who spent $0.5 million with us last year here in the UK and the CEO told me, he prefers the direct advertising business to the Top 20 offers. Selling vouchers for holidays doesn’t work as well as it does for hotels and restaurants and spas because it opens up a slew of complications around dates and traveling across borders. We’ve built an excellent family of products to support our quality leadership strategy. We feel our product offers an excellent geographic footprint and we have different business models to create a sound and balanced portfolio and a great opportunity for us to pursue in the future. On slide 27 we conclude by summarizing what we’re able to achieve in 2011, and we will continue to focus on in 2012. We will continue to aggressively scale Local Deals and Getaways in North America and Europe while keeping our eyes squarely focused on quality and productivity. We’ll continue to grow our subscriber base especially in Europe. As we scale, we want to improve efficiency and operating margins. We’ll continue to leverage our global content opportunity. And we intend to further improve earnings per share. As a reminder, Travelzoo’s consistent practice is not to provide guidance for future periods because of the dynamics of the industry. This concludes our prepared presentation. So, now I turn back to the operator for the question-and-answer session.

(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.