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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

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Travelzoo Inc.
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(TRAVELZOO LOGO)
 Travelzoo Inc.
 590 Madison Avenue, 21st Floor
New York, NY 10022

Travelzoo Inc.
590 Madison Avenue, 21st Floor
New York, NY 10022
(TRAVELZOO LOGO)
May 2, 200510, 2007
Dear Stockholder:
 
You are cordially invited to attend the Annual Meeting of Stockholders of Travelzoo Inc. on June 1, 2005.14, 2007. We will hold the meeting at The Warwick Hotel, Kent Room, 65 West 54th Street, New York, New York 10019 at 10:00 a.m. local time.
 
In connection with the meeting, we enclose a notice of the meeting, a proxy statement and a proxy card. Detailed information relating to Travelzoo’s activities and operating performance is contained in our 20042006 Annual Report onForm 10-K, as filed with the Securities and Exchange Commission, which is also enclosed.
 
Whether or not you plan to attend the Annual Meeting of Stockholders, please vote your shares via mail with the enclosed proxy card. Please note that you can attend the meeting and vote in person, even if you have previously voted by proxy. If you plan to attend the meeting in person, please provide advance notice to Travelzoo by checking the box on your proxy card. In addition, you may provide notice to Travelzoo that you plan to attend in person by delivering written notice to Travelzoo’s Corporate Secretary at 590 Madison Avenue, 21st Floor, New York, New York 10022.
 
If you hold your shares in street name through a bank, broker, or other nominee, please bring identification and proof of ownership, such as an account statement or letter from your bank or broker, for admittance to the meeting. An admission list containing the names of all of those planning to attend will be placed at the registration desk at the entrance to the meeting. You must check in to be admitted.
 
Travelzoo will make available an alphabetical list of stockholders entitled to vote at the meeting for examination by any stockholder during ordinary business hours at Travelzoo’s principal executive offices, located at 590 Madison Avenue, 21st Floor, New York, New York 10022, from May 6, 2005 untilfor ten days prior to the meeting. A stockholder may examine the list for any legally valid purpose related to the meeting.
 
On behalf of the entire Board of Directors, we look forward to seeing you at the meeting.
Sincerely,
Ralph Bartel
Chairman of the Board of Directors, President,
Chief Executive Officer, and Secretary
Sincerely,
Ralph Bartel
Chairman of the Board of Directors, President,
and Chief Executive Officer

TABLE OF CONTENTS

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
INFORMATION ABOUT THE ANNUAL MEETINGPROXY STATEMENT
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
RATIFICATION OF INDEPENDENT AUDITORS (PROXY ITEM NO. 2)Appendix A: Audit Committee Charter

TRAVELZOO INC.
590 Madison Avenue

21st Floor

New York, New York 10022
 
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 1, 200514, 2007
May 2, 2005
To the Stockholders of Travelzoo Inc.:
 
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Travelzoo Inc., a Delaware corporation, will be held on Wednesday,Thursday, June 1, 2005,14, 2007, at 10:00 a.m., local time, at The Warwick Hotel, Kent Room, 65 West 54th Street, New York, New York 10019, for the following purposes:
      1. To elect five directors for terms expiring in 2006; and
      2. To ratify the appointment of KPMG LLP as principal independent auditors for the year 2005; and
      3. To transact such other business as may properly come before the Meeting or any adjournment or postponement of the Meeting.
1. To elect five directors for terms expiring in 2008; and
 
2. To transact such other business as may properly come before the Meeting or any adjournment or postponement of the Meeting.
Only stockholders of record at the close of business on April 25, 200517, 2007 may vote at the Meeting. Your vote is important. Whether you plan to attend the Annual Meeting or not,please cast your vote by completing, dating and signing the enclosed proxy card and returning it via mail to the address indicatedindicated..  If you attend the meeting and prefer to vote in person, you may do so even if you have previously voted by proxy.
By Order of the Board of Directors,
Travelzoo Inc.
Ralph Bartel
Chairman of the Board of Directors, President,
Chief Executive Officer, and Secretary
By Order of the Board of Directors,
TRAVELZOO INC.
Wayne Lee
Corporate Secretary

PROXY STATEMENT
FOR THE TRAVELZOO INC.
2005
2007 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION ABOUT THE ANNUAL MEETING
Why am I receiving these proxy materials?
 
Travelzoo’s Board of Directors is soliciting proxies to be voted at the 20052007 Annual Meeting of Stockholders. This proxy statement includes information about the issues to be voted upon at the meeting.
 
On or about May 2, 2005,10, 2007, we began mailingintend to mail these proxy materials to all stockholders of record at the close of business on April 25, 2005.17, 2007. On the record date, there were 16,250,47915,250,479 shares of our common stock outstanding.
Where and when is the Annual Meeting?
 
The Annual Meeting of Stockholders will take place on June 1, 200514, 2007 at The Warwick Hotel, Kent Room, 65 West 54th Street, New York, New York 10019. The meeting will begin at 10:00 a.m. local time.
What am I voting on?
 
We are asking our stockholders to elect five directors and to ratify the appointment of Travelzoo’s independent auditors.directors.
How many votes do I have?
 
You have one vote for each share of our common stock that you owned at the close of business on April 25, 2005,17, 2007, the record date. These shares include:
 • Shares held directly in your name as the “stockholder of record,” and
 
 • Shares held for you as the beneficial owner through a broker, bank, or other nominee in “street name.”
If I am a stockholder of record, how can I vote my shares?
 
You can vote by proxy or in person.
How do I vote by proxy?
 
If you are a stockholder of record, you may vote your proxy by mail. If you receive a paper copy of the Proxy Statement, simply mark the enclosed proxy card, date and sign it, and return it in the postage paid envelope provided. If you receive the Proxy Statement viae-mail, please print the attached proxy card, date and sign it, and return it via mail to Travelzoo Inc., Attention: Corporate Secretary, 590 Madison Avenue, 21st Floor, New York, New York 10022.
 
If you vote by proxy, the persons named on the card (your “proxies”) will vote your shares in the manner you indicate. You may specify whether your shares should be voted for all, some or none of the nominees for director or any other proposals properly brought before the Annual Meeting. If you sign your proxy card and do not indicate specific choices, your shares will be voted “FOR” the election of all nominees for director. If any other matter is properly brought before the meeting, your proxies will vote in accordance with their best judgment. At the time of submitting this Proxy Statement for printing, we knew of no matter that is required to be acted on at the Annual Meeting other than those discussed in this Proxy Statement.
 
If you wish to give a proxy to someone other than the persons named on the enclosed proxy card, you may strike out the names appearing on the card and write in the name of any other person, sign the proxy, and deliver it to the person whose name has been substituted.

May I revoke my proxy?
 
If you give a proxy, you may revoke it in any one of three ways:
 • Submit a valid, later-dated proxy before the Annual Meeting,
 
 • Notify our Corporate Secretary in writing before the Annual Meeting that you have revoked your proxy, or
 
 • Vote in person at the Annual Meeting.
How do I vote in person?
 
If you are a stockholder of record, you may cast your vote in person at the Annual Meeting.
If I hold shares in street name, how can I vote my shares?
 
You can submit voting instructions to your broker or nominee. In most instances, you will be able to do this over the Internet or by mail. Please refer to the voting instruction card included in thesethe materials provided by your broker or nominee.
What vote is required to approve each proposal?
 
Each share of our common stock is entitled to one vote with respect to each matter on which it is entitled to vote. Our directors are elected by a plurality of votes, which means that the nominees who receive the greatest number of votes will be elected. Under our bylaws, a majority of the shares present at the meeting in person or by proxy is required for approval of all other items.
 
In order to have a valid stockholder vote, a stockholder quorum must exist at the Annual Meeting. A quorum will exist when stockholders holding a majority of the outstanding shares of our stock are present at the meeting, either in person or by proxy.
 
If a broker indicates on its proxy that it does not have authority to vote certain shares held in “street name” on particular proposals, the shares not voted (“broker non-votes”) will not have any effect with respect to such proposals. Broker non-votes occur when brokers do not have discretionary voting authority on certain proposals and the beneficial owner has not instructed the broker how to vote on these proposals.
 
Ralph Bartel holds an aggregate of 12,755,3747,649,407 shares of our common stock, representing approximately 78%50.16% of the outstanding shares as of April 25, 2005.March 31, 2007. He has indicated that he intends to vote in favor of all of the director nominees and in favor of the ratification of the appointment of KPMG LLP.nominees.
Who is paying the costs of soliciting these proxies?
 
We are paying the cost of preparing, printing, mailing and otherwise distributing these proxy materials. We will reimburse banks, brokerage firms, and others for their reasonable expenses in forwarding proxy materials to beneficial owners and obtaining their instructions. A few of our officers and employees may also participate in the solicitation, without additional compensation, by telephone,e-mail, other electronic means, or in person.
Where can I find the voting results of the meeting?
 
We intend to announce preliminary voting results at the meeting. We will publish the final results in our Quarterly Report onForm 10-Q for the second quarter of 2005,2007, which we intend to file on or before July 29, 2005.August 9, 2007. You can obtain a copy of theForm 10-Q by logging on to Travelzoo’s investor relations Web site atwww.travelzoo.com/ir,, by calling the Securities and Exchange Commission at (800) SEC-0330 for the location of the nearest public reference room, or through the EDGAR system atwww.sec.govwww.sec.gov.. Information on our websiteWeb site does not constitute part of this proxy statement.


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ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
 
Under Travelzoo’s certificate of incorporation, the number of directors of Travelzoo is fixed, and may be increased or decreased from time to time, by resolution of the Board of Directors. Each director holds office for a term of one year, until the annual meeting of stockholders next succeeding the director’s election and until a successor is elected and qualified or until the earlier resignation or removal of the director. Mr. Ralph Bartel, Mr. Holger Bartel, Mr. Ehrlich, Mr. Neale-May, and Ms. Urso are currently directors of Travelzoo.
 Ms. Mak, a director of the Company, advised the Company that she does not wish to be nominated to continue as a director following completion of her current term in June 2005. Ms. Mak indicated that this decision was based on other business commitments.
Nominees for a One-Year Term That Will Expire in 2006:2008:
 
The ages, principal occupations, directorships held and other information as of April 30, 2005,March 31, 2007, with respect to our nominees are shown below.
       
Name
 Age 
Position
 
Ralph Bartel, Ph.D.(2)  3941  Chairman of the Board of Directors,
President, and Chief Executive Officer
Holger Bartel, Ph.D.   3840  Director and Executive Vice President
David J. Ehrlich(1)  4244  Director
Donovan Neale-May(1)(3)  5354  Director
Kelly M. Urso(1)(2)(3)  3941  Director
 
(1)Member of the Audit Committee
 
(2)Member of the Compensation Committee
 
(3)Member of the Disclosure Committee
 
Each of the director nominees listed above was elected to be a director at the Company’s Annual Meeting of Stockholders held on June 2, 2004.1, 2006. Our board of directors has determined that each of Mr. Ehrlich, Mr. Neale-May, and Ms. Urso meet the independence requirements of the listing standards of the National Association of Securities Dealers (the “NASD”).
 
Ralph Bartel, Ph.D.,founded Travelzoo in May 1998 and has served as our President, Chief Executive Officer and Chairman of the Board of Directors, President and Chief Executive Officer since inception. Prior to September 2006, Mr. Bartel also served as the Company’s Chief Financial Officer. Prior to his founding of Travelzoo, from 1996 to 1997, Mr. Bartel served aswas a Managing Assistant at Gruner + Jahr AG, the magazine division of Bertelsmann AG. Mr. Bartel holds a Ph.D. in Communications from the University of Mainz, Germany, a Ph.D. in Economics from the University of St. Gallen, Switzerland, an MBA in Finance and Accounting from the University of St. Gallen, Switzerland, and a Master’s degree in Journalism from the University of Eichstaett, Germany.
 
Holger Bartel, Ph.D.,has served as a director since June 2005 and was elected Executive Vice President in 2001 after serving as Vice President of Sales and Marketing since September 1999. From 1995 to 1998, Mr. Bartel worked aswas an Engagement Manager at McKinsey & Company in Los Angeles. From 1992 to 1994, Mr. Bartel was a research fellow at Harvard Business School. Mr. Bartel holds an MBA in Finance and Accounting and a Ph.D. in Economics from the University of St. Gallen, Switzerland. He is the brother of Ralph Bartel.
 
David J. Ehrlichhas served as a director since February 1999.  Since February 2003,March 2007, Mr. Ehrlich has beenserved as Chief Executive Officer of ParAccel, Inc., a technology company. From 2003 to 2006, Mr. Ehrlich was Senior Vice President, Marketing and Chief Strategy Officer of Corporate Development for NetIQ Corporation. From 1998 to 2002, Mr. Ehrlich held the position ofwas Vice President, Product Management and Strategic Partnering for Visual Networks, Inc. From 1993 to 1998, Mr. Ehrlich worked as a consultant for McKinsey & Company. Mr. Ehrlich holds a bachelor’s degree in Sociology from Stanford University, a Master’s degree in Industrial Engineering from Stanford University, and an MBA from Harvard Business School.

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Donovan Neale-Mayhas served as a director since February 1999.  Since 1987, Mr. Neale-May has been President of Neale-May & Partners, a strategican independent marketing and public relationscommunications firm with 8060 full-time communications professionals headquartered in Palo Alto, California.its Silicon Valley and New York offices. Mr. Neale-May formed the firm in 1987 after running Ogilvy & Mather’s West Coast PR operations for five years.


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Kelly M. Ursohas served as a director since February 1999.  Since July 2003, Ms. Urso has been a principal at K. M. Urso & Company, LLC. From September 2001 to July 2003, Ms. Urso was employed as a tax attorney bywith Reynolds & Rowella LLP. From 1997 to 2001, Ms. Urso served aswas the leader of the expatriate tax group at General Electric International, Inc. Ms. Urso holds a bachelor’s degree in business administration from the University of Cincinnati and a Juris Doctor degree from the Thomas M. Cooley Law School in Lansing, Michigan.
 
The Board of Directors is not aware that any nominee named in this Proxy Statement is unwilling or unable to serve as a director. If, however, a nominee is unavailable for election, your proxy authorizes the named designees to vote for a replacement nominee if the Board of Directors names one.
 
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THESE NOMINEES.
Board Meetings and Committees
 
The Board of Directors has appointed an Audit Committee, a Compensation Committee, and a Disclosure Committee. Below is a table indicating the membership of each of the Audit Committee, Compensation Committee, and Disclosure Committee and how many times the Board of Directors and each such committee met in fiscal year 2004.2006. Each of Mr. Ralph Bartel, Mr. Holger Bartel, Mr. Ehrlich, Mr. Neale-May, and Ms. Urso attended at least 75 percent of the total number of meetings of the Board of Directors and of the committees on which he or she serves.
                 
  Board Audit Compensation Disclosure
         
Mr. Ralph Bartel  Chair       Chair     
Mr. Ehrlich  Member   Chair         
Mr. Neale-May  Member   Member         
Ms. Urso  Member   Member   Member   Member 
Number of 2004 Meetings  4   4   1   4 
 
         
  
Board
 
Audit
 
Compensation
 
Disclosure
 
Mr. Ralph Bartel Chair   Chair  
Mr. Holger Bartel Member      
Mr. Ehrlich Member Chair    
Mr. Neale-May Member Member   Member
Ms. Urso Member Member Member Chair
Number of 2006 Meetings 4 6 1 4
The Company does not require that directors attend the Annual Meeting. Ralph Bartel, our Chairman of the Board of Directors, and Ms. Urso were the only directors who attended the 20042006 Annual Meeting.
Audit Committee
Audit Committee
 
The Audit Committee’s primary responsibilities are to oversee and monitor (i) the integrity of Travelzoo’s financial statements, (ii) the qualifications and independence of our independent auditor,registered public accounting firm, (iii) the performance of our independent auditorregistered public accounting firm and internal audit staff, and (iv) the compliance by Travelzoo with legal and regulatory requirements. A complete description of the committee’s responsibilities is set forth in its written charter.charter, a copy of which is attached as Appendix A. The Audit Committee is responsible for appointing the auditorsindependent registered public accounting firm and is directly responsible for the compensation and oversight of the work of our independent auditors.registered public accounting firm. The Audit Committee is composed solely of independent directors as defined in the listing standards of the National Association of Securities Dealers and operates under a written charter adopted by the entire Board of Directors. The Board has determined that Mr. Neale-May qualifies as an audit committee financial expert within the definition of SEC regulations.
Compensation Committee
Compensation Committee
 
The Compensation Committee reviews and approves the compensation and benefits for the Company’s executive officers and directors, and makes recommendations to the Board of Directors regarding such matters. The Compensation Committee also approves the Company’s non-equity incentive plans. The Compensation Committee further reviews and discusses with management the Compensation Discussion and Analysis. The Compensation Committee does not have a charter. The Report of the Compensation Committee is included on page 10.12.


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Disclosure Committee
 
Disclosure Committee
The Disclosure Committee’s primary responsibilities are (i) to design, establish and evaluate controls and other procedures that are designed to ensure the accuracy and timely disclosure of information to the SEC and investment community and (ii) to review and supervise preparation of all SEC filings, press releases and other broadly disseminated correspondence.
Nominating Committee
Nominating Committee
 
Travelzoo does not have a nominating committee of the Board of Directors. Since it is a “Controlled Company” under Rule 4350(c)(5) of the NASD Manual, on account of the stock ownership by Ralph Bartel, such a committee is not required. Through his share ownership, Mr. Ralph Bartel is in a position to control Travelzoo and to elect our entire board of directors. Mr. Ralph Bartel considers candidates for director nominees.
Communications With Directors
 
The board has established a process to receive communications from stockholders. Stockholders and other interested parties may contact any member (or all members) of the board, or the non-management directors as a group, any board committee or any chair of any such committee by mail. To communicate with the board of directors, any individual directors or any group or committee of directors, correspondence should be addressed to the board of directors or any such individual directors or group or committee of directors by either name or title. All such correspondence should be sent “c/o Corporate Secretary” at Travelzoo Inc., 590 Madison Avenue, 21st Floor, New York, NY 10022.
 
All communications received as set forth in the preceding paragraph will be opened by the Corporate Secretary for the sole purpose of determining whether the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotions of a product or service, patently offensive material or matters deemed inappropriate for the board of directors will be forwarded promptly to the addressee. In the case of communications to the board or any group or committee of directors, the Corporate Secretary will make the sufficient copies of the contents to send to each director who is a member of the group or committee to which the correspondence is addressed.
Audit Committee Report
 
The information contained in this report shall not be deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that Travelzoo specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act.
The Audit Committee oversees Travelzoo’s financial reporting process on behalf of your Board of Directors. Management is primarily responsible for the financial statements and reporting processes including the systems of internal controls, while the independent auditors are responsible for performing an independent audit of Travelzoo’s consolidated financial statements in accordance with auditing standards of the Public Company Accounting Oversight Board (“PCAOB”), and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States.
 
In this context, the committee has met and held discussions with management and the independent auditors.auditors regarding the Company’s audited consolidated financial statements. The committee discussed with Travelzoo’s independent auditors the overall scope and plan for their audit. The committee met, at least quarterly, with the independent auditors, with and without management present, and discussed the results of their examinations, their evaluations of Travelzoo’s internal controls, and the overall quality of Travelzoo’s financial reporting. Management represented to the committee that Travelzoo’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States. The committee has reviewed and discussed the consolidated financial statements with management and the independent auditors, including their judgments as to the quality, not just the acceptability, of Travelzoo’s accounting principles and such other matters as are required to be discussed with the committee under auditing standards of the PCAOB.


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Travelzoo’s independent auditors also provided to the committee the written disclosures required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and the committee discussed with the independent auditors that firm’s independence, including those matters required to be discussed by Statement on Auditing Standards No. 61.

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In reliance on the reviews and discussions referred to above, the committee recommended to the Board of Directors (and the Board of Directors has approved) that the audited financial statements be included in the Annual Report onForm 10-K for the fiscal year ended December 31, 20042006 for filing with the SEC. The committee has retained KPMG LLP asnot yet selected Travelzoo’s independent auditors for fiscal year 2005.2007.
 
While the committee has the responsibilities and powers set forth in its charter, it is not the duty of the committee to plan or conduct audits or to determine that Travelzoo’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditor. Nor is it the duty of the committee to conduct investigations or to assure compliance with laws and regulations and Travelzoo’s business conduct policies.
Audit Committee
David J. Ehrlich (Chairman)
Donovan Neale-May
Kelly M. Urso
Director Compensation
Directors who are employed by the Company or its subsidiaries do not receive compensation for serving as directors. Directors who are not employees of the Company or its subsidiaries are entitled to receive certain retainers and fees. On June 9, 2006, the Compensation Committee reviewed its director compensation policy and determined that adjustments were necessary in order for the Company to attract and retain qualified independent board members. Taking into consideration statistical information provided in the 2006 Director Compensation Report published by the National Association of Corporate Directors, the Compensation Committee adjusted the retainers and meeting fees as follows:
 Audit Committee• Increase the annual board member retainer to $30,000 from $26,000;
 
 David J. Ehrlich(Chairman)• Increase the audit committee chair retainer to $30,000 from $26,000;
 Donovan Neale-May• Increase the fee for attendance of a board meeting to $1,680 from $1,500;
 Kelly M. Urso• Increase the fee for attendance of an Audit Committee meeting to $2,800 from $2,500;
• Increase the fee for attendance of a Disclosure Committee meeting to $1,680 from $1,500;
• Increase the fee for attendance of a Compensation Committee meeting to $2,800 from $2,500; and
• Increase the fee for attendance of a strategy meeting to $4,480 from $4,000.
Director Compensation
      During 2004, we compensated Mr. Ehrlich, Mr. Neale-May, and Ms. UrsoWe also reimburse non-employee directors for their services to us. Such compensation consisted of cash paid to each director as shownout-of-pocket expenses incurred in the table below.
     
  2004
Name Compensation
   
Mr. Ralph Bartel  N/A 
Mr. Ehrlich $20,000 
Mr. Neale-May $20,000 
Ms. Urso $27,500 
      Directors are compensated based on an hourly rate based upon their attendance ofconnection with attending meetings.


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The following table shows compensation information for Travelzoo’s non-employee directors for fiscal year ended December 31, 2006.
                             
              Change in
       
              Pension Value
       
              and Nonqualified
       
  Fees Earned
        Non-Equity
  Deferred
       
  or Paid in
  Stock
  Option
  Incentive Plan
  Compensation
  All Other
    
  Cash
  Awards
  Awards
  Compensation
  Earnings
  Compensation
  Total
 
Name
 ($)  ($)  ($)  ($)  ($)  ($)  ($) 
 
Mr. Ehrlich $81,480   —   —   —   —   —  $81,480 
Mr. Neale-May $54,360   —   —   —   —   —  $54,360 
Ms. Urso $59,480   —   —   —   —   —  $59,480 
StockSecurity Ownership by Directorsof Certain Beneficial Owners and Executive OfficersManagement
 
The following table shows the amount of our common stock beneficially owned as of May 2, 2005,March 31, 2007 by (a) each director and nominee, (b) each named executive officer, (c) all executive officers and directors as a group, and (d) each person known by the Company, as of December 31, 2006, to beneficially own more than 5% of the executive officers listed in the Summary Compensation Table on page 9outstanding shares of this proxy statement, and all current directors and executive officers as a group.common stock. In general, shares “beneficially owned” include those shares a person has or shares the power to vote, or the power to dispose of. The table also shows the number of options to purchase shares of our common stock that are exercisable, either immediately or by July 1, 2005:
                 
  Amount of Common Stock Beneficially Owned
   
  Number of Exercisable   % of Shares
Name Shares(1) Options(2) Total Outstanding
         
Holger Bartel  20   —   20   * 
Ralph Bartel  12,755,374   2,193,349   14,948,723   81%
David J. Ehrlich  —   —   —   — 
Kelly N. Ford  —   —   —   — 
Steven M. Ledwith  16   —   16   * 
Donovan Neale-May  —   —   —   — 
Lisa Su  6   —   6   * 
Shirley Tafoya  —   —   —   — 
Kelly M. Urso  —   17,725   17,725   * 
Directors and executive officers as a group (10 persons)  12,755,416   2,211,074   14,966,490   81%
 
         
  Beneficial Ownership 
  Number of
  Percent
 
Beneficial Owner
 Shares(1)  of Total(2) 
 
Directors and Named Executive Officers
        
Holger Bartel(3)  99,220   * 
Ralph Bartel(4)  9,820,823   56.37%
David J. Ehrlich  —   — 
Wayne Lee  —   — 
Christopher Loughlin  550   * 
Donovan Neale-May  —   — 
Shirley Tafoya  —   — 
Kelly M. Urso(5)  17,725   * 
Directors and executive officers as a group (10 persons)(6)  9,938,334   56.92%
Persons Owning More Than 5% of Common Stock
        
Prudential Financial, Inc.(7)  967,131   6.34%
751 Broad Street
Newark, New Jersey 07102		        
Barclays Global Investors, NA(8)  918,482   6.02%
45 Fremont Street
San Francisco, California 94105		        
* Less than 1%
 *
(1)Represents less than 1% ofExcept as otherwise indicated and subject to applicable community property laws, the outstandingpersons named in the table have sole voting and investment power with respect to all their shares of common stock.
(1) All shares are held directly.
 
(2)Shares that could be acquired by exercising stock options through July 1, 2005.
Security Ownership of Certain Beneficial Owners
      The following table shows all persons or entities that we know to beneficially own more than 5% of our stock as of May 2, 2005:
         
  Number of Percent of
  Shares of Outstanding
Name and Address of Beneficial Owner Common Stock(1) Common Stock
     
Ralph Bartel  14,948,723   81% 
590 Madison Avenue
21st Floor
New York, New York 10022		        
(1) Includes 2,193,349For each person and group indicated in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of 15,250,479 shares of common stock outstanding as of March 31, 2007, plus the number of shares of common stock that couldsuch person or group had the right to acquire within 60 days after March 31, 2007.
(3)Holger Bartel indirectly holds 1% of TZOO Inc., which is the holder of 7,726,674 shares and options to purchase 2,193,349 shares, through HBT Corporation LLC. Includes options to purchase 21,933 shares which are currently exercisable or will be acquiredexercisable within 60 days of March 31, 2007.


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(4)Ralph Bartel indirectly holds 99% of TZOO Inc., which is the holder of 7,726,674 shares and options to purchase 2,193,349 shares, through the Ralph Bartel 2005 Trust. Includes options to purchase 2,171,416 shares which are currently exercisable or will be exercisable within 60 days of March 31, 2007.
(5)Consists of options to purchase 17,725 shares which are currently exercisable or will be exercisable within 60 days of March 31, 2007.
(6)Includes options to purchase 2,211,074 shares which are currently exercisable or will be exercisable within 60 days of March 31, 2007.
(7)Based solely on information reported on a Schedule 13G filed with the Securities and Exchange Commission on February 9, 2007 by exercising stock options through July 1, 2005.Prudential Financial, Inc. As of December 31, 2006, 967,131 shares were beneficially held by Prudential Financial, Inc. of which it possessed sole voting and dispositive power to 268,300 shares and shared voting and dispositive power to 698,831 shares.
(8)Based solely on information reported on a Schedule 13G filed with the Securities and Exchange Commission on January 23, 2007 by Barclays Global Investors, NA. As of December 31, 2006, 918,482 shares were beneficially held by Barclays Global Investors, NA and its affiliated entities of which it possessed sole voting power to 898,571 shares and dispositive power to 918,482 shares.
Section 16(a) Beneficial Ownership Reporting Compliance
 
Under Section 16(a) of the Securities Exchange Act of 1934, the Company’s directors, executive officers and the beneficial holders of more than 10% of the Company’s common stock are required to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Based on our recordsSuch directors, executive officers and other information,beneficial holders of more than 10% of the Company’s common stock are required by SEC regulations to furnish the Company believeswith copies of all Section 16(a) forms they file.
To the Company’s knowledge, based solely on a review of the copies of such forms furnished to the Company or written representations from reporting persons, we believe that during 2004fiscal 2006, all applicable Section 16(a) filing requirements were met.satisfied on a timely basis with the exception of Shirley Tafoya, our Senior Vice President of Sales, who did not file a Form 3 at the time she became a reporting person of the Company. Ms. Tafoya has advised the Company that she does not hold, and has not held any of the Company’s securities.

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Code of Ethics
 
We have adopted a code of ethics that applies to our Chief Executive Officer, who is also our Chief Financial Officer, and our Controller (Chief Accounting Officer).for North America. This code of ethics is posted on our Web site located atwww.corporate.travelzoo.com/governancegovernance..  We intend to satisfy the disclosure requirement under Item 10 ofForm 8-K regarding an amendment to, or waiver from, a provision of this code of ethics by posting such information on our Web site, at the address and location specified above. A copy of the code of ethics is also available in print to stockholders and interested parties without charge upon written request delivered to our Corporate Secretary at Travelzoo Inc., 590 Madison Avenue, 21st Floor, New York, NY 10022.
Our Executive OfficersCompensation
 
Compensation Discussion and Analysis
Overview of Compensation Program
The following Compensation Discussion and Analysis, or “CD&A,” describes our overall compensation philosophy and the primary components of our compensation program. Furthermore, the CD&A explains the process by which the Compensation Committee or “Committee” determined the 2006 compensation for our Chief Executive Officer, Chief Financial Officer and three other most highly compensated officers, as named in the Summary Compensation Table on page 13. We refer to these individuals collectively as the “named executives” or the “named executive officers.”


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Compensation Philosophy and Objectives
The fundamental objectives of our executive compensation program are appointed annually byto attract and retain highly qualified executive officers, motivate these executive officers to materially contribute to our long-term business success, and align the Board and serve at the discretioninterests of the Board. Set forth below is information regarding our executive officers asand stockholders by rewarding our executives for individual and corporate performance based on targets established by the Committee.
We believe that achievement of May 2, 2005:these compensation program objectives enhances long-term profitability and stockholder value. The elements utilized to help achieve the Committee’s objectives include the following:
NameAgePosition
 • Accountability for Individual Performance.  Compensation should in large part depend on the named executive’s individual performance in order to motivate and acknowledge the key contributors to our success.
 
Ralph Bartel, Ph.D. • Recognition for Business Performance.  Compensation should take into consideration our overall financial performance and overall growth.
 • 39Attracting and Retaining Talented Executives.  Compensation should generally reflect the competitive marketplace and be designed to attract and retain superior employees in key competitive positions.
We implement our compensation philosophy through setting base salaries for our executive officers, through the use of our executive bonus plan and through reviewing and approving other terms of employment agreements.
Compensation Determination Process
Compensation Committee Members.  The Committee is responsible for establishing, overseeing and reviewing executive compensation policies and for approving, validating and benchmarking the compensation and benefits for named executive officers. The Committee is also responsible for determining the fees paid to our outside directors. The Committee includes Mr. Ralph Bartel (Chair) and Ms. Kelly M. Urso. Ms. Urso satisfies the independence requirements of the National Association of Securities Dealers. The Compensation Committee does not have a charter.
Role of Management.  During 2006, the Committee engaged in its annual review of executive compensation with the goal of ensuring the appropriate combination of fixed and variable compensation linked to individual and corporate performance. In the course of its review, the Committee considered the advice and input of the Company’s CEO and data prepared by management, including a comparison of the current compensation of the named executive officers with publicly available industry data from The Wall Street Journal. The Wall Street Journal data utilized by the Committee included salary and total compensation information based on the title, job description, and geographic location of similarly situated executives. The most significant aspects of the CEO’s role in the compensation determination process are evaluating employee performance, establishing business performance targets, goals and objectives and recommending salary and bonus levels.
The Committee compared the compensation received by the Company’s named executive officers with the levels of compensation received by similarly situated executives in the same geographic location in light of the named executives’ responsibilities, performance, experience and tenure, in order to arrive at the total compensation package for each of the named executive officers. In some cases, the compensation package that the Committee awarded a named executive officer was at or below the median compensation received by executives per the Wall Street Journal data, while in other instances the compensation was higher due to the individual named executive’s responsibilities, performance, experience and tenure.
Mr. Bartel did not participate in the determination of his compensation during 2006. The Committee did not engage an outside consulting firm to provide advice on executive compensation.
Components of Executive Compensation
The Committee has structured an executive compensation program comprised of base salary, cash bonus and non-equity incentive pay.


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Base Salary.  The Committee considered two types of potential base salary increases for the named executive officers in 2006: (1) “merit increases” based upon each named executive’s individual performance;and/or (2) “market adjustments” based upon the salary range for similarly situated executives.
In determining merit increases, the Committee considers the specific responsibilities of the executive and the executive’s overall performance and tenure with the Company. In addition, the Committee also considers the CEO’s evaluation of each named executive officer in making the decision regarding merit increases.
The Committee determines any market adjustments based on the Committee’s comparison of the executive’s compensation with statistical information on average compensation for similarly situated executives that is publicly available through the Wall Street Journal.
During 2006, the Committee increased the salaries of the named executive officers effective July 1, 2006 as follows:
 • President, Chief Executive Officer, Chief Financial Officer, ChairmanRalph Bartel’s base salary increased from $350,000 to $367,500;
• Wayne Lee’s base salary increased from $140,000 to $170,000 (effective as of June 12, 2006);
• Holger Bartel’s base salary increased from $320,000 to $336,000;
• Christopher Loughlin’s base salary increased from $218,390 to $368,590; and
• Shirley Tafoya’s base salary increased from $330,000 to $346,500.
After these base salary increases, Mr. Ralph Bartel’s, Mr. Holger Bartel’s and Mr. Lee’s base salary remained below the level of compensation for similarly situated executives. Ms. Tafoya’s base salary was set above the median level of compensation for similarly situated executives based on the Committee’s evaluation of Ms. Tafoya’s specific experience and the competition for similarly qualified executives in its market.
Executive Bonus Plan  We believe that the Executive Bonus Plan provides the Company with a valuable tool to assist in focusing executives on accomplishing operational and financial objectives over the Company’s quarterly periods. The plan is designed to reward the Company’s executives for achieving their quarterly targets as set per the Company’s Master Budget.
On June 9, 2006, the Committee amended the Executive Bonus Plan and renamed the plan the North America Executive Bonus Plan, effective July 1, 2006. The amount of the quarterly bonus was increased from $15,000 to $50,000. The Committee determined that the increase to the bonus available would provide a higher level of incentive on accomplishing the Company’s operational and financial objectives.
As of July 1, 2006, the Committee determined that of the named executive officers, Mr. Ralph Bartel, Mr. Holger Bartel, Mr. Wayne Lee and Ms. Shirley Tafoya would be eligible to participate in the North America Executive Bonus Plan; such named executives are collectively referred to in this section as the “participating executives.” Effective as of July 1, 2006, the participating executives were eligible to receive a bonus of $50,000 per quarter upon the attainment of the following goals:
• both of the Boardfollowing quarterly targets are met: (i) the revenue target as set forth in the Company’s North America Master Budget and there are not more than two customers that account for 10% or more of Directors,the Company’s worldwide consolidated revenues for the quarter and Secretaryno single customer accounts for more than 15% of the Company’s worldwide revenues for the quarter; and (ii) the operating income target as set forth in the Company’s North America Master Budget; and
Holger Bartel, Ph.D. 
 • 38two of the following three quarterly targets as set forth in the Company’s North America Master Budget are met: (i) collections; (ii) subscriber targets; or (iii) staffing goals.
The North America Master Budget is set at the beginning of the year by the CEO and provides quarterly targets for revenues, operating expenses, operating income, net income, subscribers, headcount, days sales outstanding, and other financial and non-financial performance metrics. The Company reserves the right to amend the North America Master Budget at any time and for any reason. The quarterly targets were not met for the third and fourth quarters of 2006 when the plan was in place and no bonuses were paid to the participating executives.


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Prior to July 1, 2006, Mr. Ralph Bartel, Mr. Holger Bartel, Ms. Shirley Tafoya and Mr. Christopher Loughlin, which we refer to as the “first half participating executives” in this section, were eligible to participate in the Company’s Executive Bonus Plan. Under this plan, the first half participating executives were eligible to receive a bonus of $15,000 per quarter upon the attainment of the following goals:
 • Executive Vice Presidentboth of the following quarterly targets, as set forth in the Master Budget, are met: (i) revenue target; and (ii) net income target; and
Kelly N. Ford
 • 37two of the following three quarterly targets as set forth in the Company’s Master Budget are met: (i) collections; (ii) subscriber targets; or (iii) staffing goals.
The Master Budget was set at the beginning of the year by the CEO and provided quarterly targets for revenues, operating expenses, operating income, subscribers, headcount, days sales outstanding, and other financial and non-financial performance metrics. The Company reserved the right to amend the Master Budget at any time and for any reason. The quarterly targets were met for the first quarter of 2006 when the plan was in place and a $15,000 bonus was paid in April 2006 to the first half participating executives.
Other Incentive Bonus Pay.  In 2006, Ms. Shirley Tafoya and Mr. Christopher Loughlin also received incentive bonuses pursuant to the terms of their employment agreements.
Pursuant to the terms of Ms. Tafoya’s employment agreement dated May 8, 2001, as amended, Ms. Tafoya received a quarterly commission equal to 1.0% of the Company’s net advertising revenues generated from the sales of advertising on theTravelzoo Website and theTop 20newsletter. The commission is capped at 1.0% of the Company’s net advertising revenues in the second quarter of fiscal year 2003. In 2006, Ms. Tafoya received $42,878 per quarter, which represents the maximum capped amount of the commission.
Pursuant to the terms of Mr. Loughlin’s employment agreement dated May 16, 2005, as amended effective July 1, 2006, Mr. Loughlin is eligible to receive quarterly and annual bonuses. Mr. Loughlin’s bonuses are payable in British pounds and have been translated into U.S. dollars for the purposes of this summary. Mr. Loughlin is eligible to receive the following quarterly bonuses:
         
  Quarterly Bonus
  Quarterly Bonus
 
  Payment prior to
  Payment after
 
Criteria
 July 1, 2006  July 1, 2006 
 
Revenue goal as defined in the official budget for Europe is met $9,215  $13,822 
Net income goal as defined in the official budget for Europe is met $9,215  $13,822 
Subscriber goal as defined in the official budget for Europe is met $9,215  $13,822 
Performance evaluation by the Chairman of the Company Up to $9,215  Up to $13,822 
         
Total Up to $36,860  Up to $55,288 
         
Under the terms of the annual bonus plan set forth in Mr. Loughlin’s employment agreement, prior to July 1, 2006, Mr. Loughlin was eligible to receive a 15% profit sharing bonus based on Travelzoo Europe’s pro forma operating income (before expenses relating to the profit sharing plan and before taxes) generated from salesand/or operations in the UK, with such bonus capped at $1,842,950. Beginning on July 1, 2006, Mr. Loughlin is eligible to receive 20% of Travelzoo Europe’s pro forma operating income generated from operations in Europe and such amount is not capped. In 2006, Mr. Loughlin received $129,944 and $0 pursuant to the quarterly and annual bonus plans, respectively, set forth in his employment agreement.
Cash Bonus.  In 2006, the CEO decided to award all individuals employed by the Company as of March 31, 2006 with a $1,500 cash bonus due to the Company’s performance and results during the first quarter of 2006. Such cash bonus wasgrossed-up to cover any taxes due in connection with such bonus. The CEO declared such cash bonus in his sole discretion and not pursuant to any written plan. At this time, we do not expect to make similar payments in the future. However, the CEOand/or the Committee may determine to declare such bonus payments from time to time as deemed reasonable and necessary to award the Company’s employees for the Company’s overall financial performance and results.


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Other Compensation-Related Matters
Perquisites and Additional Benefits.  The Company seeks to maintain an open and inclusive culture in its facilities and operations among executives and other Company employees. Accordingly, the Company does not provide executives with reserved parking spaces or separate dining or other facilities, nor does the Company have programs for providing personal-benefit perquisites to executives, such as permanent lodging, club dues or defraying the cost of personal entertainment. Named executive officers and employees may seek reimbursement for business related expenses in accordance with our business expense reimbursement policy.
Employment Agreements.  The Company has entered into employment agreements with the named executive officers, some of which contain severance and change of control provisions. The terms of such employment agreements are described in more detail below inEmployment Agreements and Potential Payments Upon Termination orChange-in-Control.  The Committee believes these agreements are appropriate for a number of reasons including the following:
 • Vice President of Marketingthe agreements assist in attracting and retaining executives as we compete for talented employees in a marketplace where such agreements are commonly offered;
Steven M. Ledwith
 • 47the change in control provisions require terminated executives to execute a release in order to receive severance benefits; and
 • Chief Technology Officer
Lisa Su30Controller (Chief Accounting Officer)
Shirley Tafoya42Senior Vice President of Salesthe change in control and severance provisions help retain key personnel during rumored or actual acquisitions or similar corporate changes.
 
Compensation Committee Report
The information contained in this report shall not be deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that Travelzoo specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act.
The Company’s Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee recommended to the Company’s board of directors that the Compensation Discussion and Analysis be included in this proxy statement on Schedule 14A.
Compensation Committee
Ralph Bartel Ph.D.,founded Travelzoo in May 1998(Chairman)
Kelly M. Urso
Compensation Committee Interlocks and has served asInsider Participation
During 2006, Ralph Bartel, our President, Chief Executive Officer, and ChairmanKelly M. Urso were members of the BoardCompensation Committee. Mr. Ralph Bartel did not participate in the determination of Directors since inception. Prior to his founding of Travelzoo, from 1996 to 1997, Mr. Bartel served as Managing Assistant at Gruner + Jahr AG, the magazine division of Bertelsmann AG. Mr. Bartel holds a Ph.D. in Communications from the University of Mainz, Germany, an MBA in Finance and Accounting from the University of St. Gallen, Switzerland, and a Master’s degree in Journalism from University of Eichstaett, Germany.
Holger Bartel, Ph.D.,has served as Executive Vice President since September 1999. From 1995 to 1998, Mr. Bartel workedcompensation as an Engagement Manager at McKinsey &executive officer during 2006. In 2006, there were no transactions between the Company in Los Angeles. From 1992 to 1994,and Mr. Ralph Bartel, was a research fellow at Harvard Business School.other than the payment of Mr. Bartel holds an MBA in FinanceRalph Bartel’s salary and Accounting and a Ph.D. in Economics from the Universityreimbursement of St. Gallen, Switzerland. He is the brother of Ralph Bartel.Company-related expenses.
Kelly N. Fordhas served as Vice President of Marketing since December 2002. From February 2001 to December 2002, Mr. Ford worked as Director of Media Strategy and Development at America Online Inc. From January 2000 to November 2000, Mr. Ford worked as Vice President of Marketing at ISalvage.com, Inc. From 1992 to 2000, Mr. Ford worked at Campbell Soup Company as Marketing Director. Mr. Ford holds a bachelor’s degree in Electrical Engineering with Computer Science Specialty from Stanford University and an MBA from INSEAD.


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Steven M. Ledwithhas served as our Chief Technology Officer since January 2000. From January 1998 to January 2000, Mr. Ledwith worked as Senior Mechanical Engineer at Radix Technologies, Inc. Mr. Ledwith holds a bachelor’s degree in Thermomechanical Engineering from University of Illinois at Chicago Circle.
Lisa Suhas served as Controller (Chief Accounting Officer) since October 2000. From April 1999 to September 2000, Ms. Su was a Treasury Accountant for Webvan Group, Inc. Ms. Su holds a bachelor’s degree in Economics/ Accounting from Claremont McKenna College and an MBA in Finance from California State University, Hayward.
Shirley Tafoyahas served as Senior Vice President of Sales since May 2001. From August 1999 to March 2001, Ms. Tafoya worked as Director of Western Sales at Walt Disney Internet Group. From 1998 to 1999, Ms. Tafoya worked as Sales Manager at IDG/ International Data Group. From 1994 to 1998,

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Ms. Tafoya worked as Director, Global Accounts, at CMP Media. Ms. Tafoya holds a bachelor’s degree in Business Administration from Notre Dame de Namur University.
ExecutiveSummary Compensation Table
 
The following summary compensation table sets forth information concerning the compensation to our Chief Executive Officer, Chief Financial Officer and three other most highly compensated executive officers during the fiscal year ended December 31, 2006.
                                 
                 Non-Equity
       
           Stock
  Option
  Incentive Plan
  All Other
    
  Fiscal
  Salary
  Bonus
  Awards
  Awards
  Compensation
  Compensation
  Total
 
Name and Principal Position
 Year  ($)  ($)  ($)  ($)  ($)(1)  ($)  ($) 
 
Ralph Bartel  2006  $329,723  $1,500(4)  —   —  $15,000(6) $1,500(9) $347,723 
Chairman, President, and Chief Executive Officer                                
Wayne Lee(2)  2006  $154,083  $1,500(4)  —   —   —  $3,000(10) $158,583 
Chief Financial Officer                                
Holger Bartel  2006  $328,000  $1,500(4)  —   —  $15,000(6) $3,000(10) $347,500 
Executive Vice President                                
Christopher Loughlin(3)  2006  $293,490  $1,500(4)  —   —  $144,944(7) $16,396(11) $456,330 
Executive Vice President, Europe                                
Shirley Tafoya  2006  $338,250  $2,750(5)  —   —  $186,510(8) $1,500(9) $529,010 
Senior Vice President of Sales                                
(1)The amounts reflected in this column reflect the performance-based cash awards paid to the named executives under our executive bonus plan and pursuant to certain employment agreements, as discussed in the Compensation Discussion and Analysis above. These amounts were paid during 2006 with the exception of amounts due for the fourth quarter of 2006, which were paid in January 2007.
(2)Mr. Lee became the Chief Financial Officer on September 17, 2006. Mr. Ralph Bartel fulfilled the duties of this position prior to Mr. Lee’s appointment.
(3)Mr. Loughlin’s compensation is denominated in British pounds and was translated into U.S. dollars using the average 2006 daily exchange rate of £1 = $1.8426 per OANDA Corporation.
(4)Amount consists of a $1,500 bonus payment made to all employees of the Company as of the end of March 31, 2006.
(5)Amount consists of a $1,500 bonus payment made to all employees of the Company as of the end of March 31, 2006 and a discretionary $1,250 employee bonus award.
(6)Amounts consist of bonuses earned during fiscal 2006 under our executive bonus plan.
(7)Of this amount, $129,944 was earned during fiscal 2006 under the Quarterly Performance Bonus Plan per the terms of Mr. Loughlin’s employment agreement and $15,000 was from bonuses earned during fiscal 2006 under our executive bonus plan.
(8)Of this amount, $171,510 was from commissions earned during fiscal 2006 under the terms of Ms. Tafoya’s employment agreement and $15,000 was from bonuses earned during fiscal 2006 under our executive bonus plan.
(9)Amount consists ofgross-up for taxes on bonus payments.
(10)Amount consists of the Company’s matching contribution of $1,500 under the tax-qualified 401(k) Plan and $1,500 for thegross-up for taxes on bonus payments.
(11)Amount consists of the Company’s contribution of $15,449 to the UK Employee Pension Contribution Plan and $947 for thegross-up of taxes on bonus payments.


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Grants of Plan-Based Awards
The following table sets forth summarycertain information concerning all compensation we paid our chief executive officer andwith respect to non-equity incentive plan awards granted to each of our named executive officers during the yearsfiscal year ended December 31, 2002, 2003 and 2004.2006.
Summary Compensation Table
                      
      Long Term  
    Annual Compensation Compensation  
         
      Shares  
  Fiscal   Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#)(1) Compensation
           
Ralph Bartel  2004  $225,001   15,000   —   — 
 Chairman, President, Chief  2003  $196,002   —   —     
 Executive Officer, and  2002  $192,000   —   5,000   — 
 Secretary                    
Lisa Su  2004  $133,801   15,000   —   — 
 Controller  2003  $124,339   —   —   — 
    2002  $103,337   —   —   — 
Steven Ledwith  2004  $162,215   15,000   —   — 
 Chief Technology Officer  2003  $147,126   —   —   — 
    2002  $130,000   —   —   — 
Holger Bartel  2004  $273,000   15,000   —   — 
 Executive Vice President  2003  $246,495   —   —   — 
    2002  $240,000   —   —   — 
Shirley Tafoya  2004  $386,512   15,000   —   — 
 Senior Vice President of  2003  $294,275   —   —   — 
 Sale  2002  $134,448   —   —   — 
Kelly Ford  2004  $200,001   15,000   —   — 
 Vice President of Marketing  2003  $186,133   —   —   — 
    2002  $13,925   —   —   — 
 
(1) The options issued to Ralph Bartel during 2002 constitute compensation for participation on the Board of Directors.
Employment Agreements
      Ralph Bartel has entered into an employment agreement with us. His current employment agreement became effective on July 1, 2004, and provides for an annual salary of $250,000. We may terminate the agreement with or without cause by delivering two weeks’ advance written notice to Mr. Bartel. He may terminate his employment agreement with or without cause by delivering two weeks’ advance written notice to us.
      Mr. Bartel has agreed not to compete with us, solicit our suppliers or employees or reveal our confidential information during the term of his employment agreement and for one year thereafter. In addition, Mr. Bartel is bound by a proprietary inventions agreement which prohibits him from, among other things, disseminating or using confidential information about our business or clients in any way that would be adverse to us.
Certain Transactions
      In connection with a registration statement related to the re-sale of up to 750,000 shares by Ralph Bartel, our Chairman of the Board and Chief Executive Officer, the Company paid approximately $50,000 which

9

included accounting fees and expenses, legal fees and expenses, and the SEC registration fees. The Company did not pay any fees and expenses of counsel for Mr. Bartel. Any commissions, discounts or other fees payable to a broker, dealer, underwriter, agent or market maker in connection with the sale of any of the shares will be borne by Mr. Bartel.
Option Grants in Last Fiscal Year
      No options were granted to our executive officers during fiscal year 2004.
Option Exercises and Year-End Values
      The following table contains information concerning options exercised by our executive officers during fiscal year 2004 and unexercised options held on December 31, 2004:
         
  Estimated Possible Payouts Under
 Number of SecuritiesValue of Unexercised
  Non-Equity Incentive Plan Awards Underlying UnexercisedIn-The-Money Options/
  Shares AcquiredValueOptions/SARS at FY-End(#)SARs at FY-End($)(1)
Nameon ExerciseRealized($)Exercisable/UnexercisableExercisable/Unexercisable
Threshold
  Target
Name
($)  ($) 
 
Ralph BartelBartel(1)  —   130,000
Wayne Lee(1)—   2,193,349/0100,000
Holger Bartel(1)  $—211,354,977/$0130,000
Chris Loughlin(1)—30,000
Chris Loughlin(2)—184,295
Shirley Tafoya(1)—130,000
Shirley Tafoya(3)—171,510 
 
(1) Calculated by (A) determining the difference between (1) the average of the high and low trading prices per share of Travelzoo’s common stock on December 31, 2004 and (2) the exercise price of the option and (B) multiplying such difference by the total number of shares under option, net of the aggregate value of all option exercise proceeds.
Stock Option Plan
 We do not currently have any stock option plan or other equity based compensation plans in effect.
Report of the Compensation Committee on Executive Compensation
      The Compensation Committee consists of two directors, one of whom is an independent director. Ralph Bartel does not participate in the committee’s decision as to his specific compensation package. The committee regularly reviews the company’s executive compensation polices and practices and establishes the compensation of executive officers.
Compensation Principles
      The fundamental objective of Travelzoo’s executive compensation program is to attract, retain and motivate key executives to enhance long-term profitability and shareholder value. Travelzoo’s executive compensation program meets this objective by:
(1)• providingAmount represents the potential payments under the quarterly incentive bonus pay program. The business measurements and performance goals for a level of compensation that is competitive with other similarly sized publicly traded companies, with particular emphasis on thosedetermining the payout are described in the Internet and media industries, andCompensation Discussion & Analysis.
 
(2)• linking the compensation of executives to the operating and financial performance of the company by reviewing the salary regularly and making adjustments relative to the company’s overall performance.
Salary
      Travelzoo targets executives’ annual salaries to be competitive with comparable companiesAmount represents the potential quarterly bonus payments under the terms of Mr. Loughlin’s employment agreement. Mr. Loughlin was also eligible for an annual bonus payment which did not have a targeted payout amount, as the amount that Mr. Loughlin may receive for such bonus is not capped. The measurements for determining the quarterly and annual payouts are described in the Internet and media industries with whom the company competes for management. It considers the experience and performance of the individual executive, the compensation of his or her peers in the industry, the responsibilities and change in responsibilities during the past year of the individual executive, the overall performance of the department under the executive’s control and the overall performance of the entire company. The committee does not have a formula for its determination and the committee considers all factors in making its decision. Executive salaries are reviewed annually by the committee.

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Stock-Based Compensation
      Travelzoo did not compensate executives with stock or stock options in 2004.
CEO Compensation
      The CEO’s compensation is determined in accordance with the executive compensation principles established by the committee. The committee considers overall performance, individual performance, competitive compensation and targeted pay levels when determining Mr. Bartel’s compensation. Performance is measured in terms of financial results and overall growth of the Company. His current employment agreement became effective on July 1, 2004, and provides for an annual salary of $250,000. Mr. Bartel’s annual salary was increased to $250,000 from $200,000 as of July 1, 2004.
Compensation Committee Discussion & Analysis.
 
(3)Ralph Bartel(Chairman)
Suzanna Mak
Kelly M. UrsoAmount represents the potential commission payments under the terms of Ms. Tafoya’s employment agreement. The measurement for determining the payout are described in the Compensation Discussion & Analysis.
Compensation Committee Interlocks and Insider ParticipationOutstanding Equity Awards at December 31, 2006
 During 2004,
The following table sets forth certain information concerning equity awards for each of our named executive officers that remained outstanding as of December 31, 2006.
                 
  Number of
  Number of
       
  Securities
  Securities
       
  Underlying
  Underlying
       
  Unexercised
  Unexercised
  Option Exercise
  Option
 
  Options (#)
  Options (#)
  Price
  Expiration
 
Name
 Exercisable  Unexercisable  ($)  Date 
 
Ralph Bartel  29,700   —   2.00   10/30/2011 
Ralph Bartel  4,950   —   3.00   3/25/2012 
Holger Bartel  300   —   2.00   10/30/2011 
Holger Bartel  50   —   3.00   3/25/2012 
Option Exercises and Stock Vested
For the year ended December 31, 2006, there were no option exercises or stock vested.
Employment Agreements and Potential Payments Upon Termination orChange-in-Control
The Company has employment agreements with its named executive officers and certain other employees. The employment agreements as of December 31, 2006 with the Company’s named executive officers are described below.
Mr. Ralph Bartel entered into an employment agreement with the Chief Executive Officer of Travelzoo, was a memberCompany on April 1, 2000. Pursuant to the terms of the Compensation Committee.agreement, Mr. Ralph Bartel did not participate inis an at-will employee and the determination of his compensation as an employee during 2004.Company or Mr. Ralph Bartel may


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terminate the agreement, with or without cause, upon two weeks prior written notice. Mr. Ralph Bartel is not entitled to receive any severance or change of control benefits under the terms of the agreement. Mr. Ralph Bartel is paid a base salary and is eligible to participate in the Company’s executive bonus plan. In addition, Mr. Ralph Bartel is entitled to participate in or receive such benefits under the Company’s employee benefits plans and policies as may be in effect from time to time.
Mr. Ralph Bartel agreed that the Company will own any discoveries and work product (as defined in the agreement) made during the term of his employment and to assign all of his interest in any and all such discoveries and work product to the Company. Furthermore, Mr. Ralph Bartel agreed to not, directly or indirectly, perform services for, or engage in, any business competitive with the Company during the period of his employment. He also agreed to not, directly or indirectly, solicit the Company’s customers or employees during the term of his employment and for a period of one year thereafter.
Mr. Wayne Lee entered into an employment agreement with the Company on December 9, 2005. Pursuant to the terms of the agreement, Mr. Lee is an at-will employee and the Company or Mr. Lee may terminate the agreement, with or without cause, upon two weeks prior written notice. Mr. Lee is not entitled to receive any severance or change of control benefits under the terms of the agreement. Mr. Lee is paid a base salary and is entitled to participate in or receive such benefits under the Company’s employee benefits plans and policies as may be in effect from time to time.
Mr. Lee agreed that the Company will own any discoveries and work product (as defined in the agreement) made during the term of his employment and to assign all of his interest in any and all such discoveries and work product to the Company. Furthermore, Mr. Lee agreed to not, directly or indirectly, perform services for, or engage in, any business competitive with the Company or solicit the Company’s customers or employees during the term of his employment and for a period of one year thereafter.
Ms. Shirley Tafoya entered into an employment agreement with the Company on May 8, 2001. Pursuant to the terms of the agreement, Ms. Tafoya is an at-will employee and the Company or Ms. Tafoya may terminate the agreement, with or without cause, upon two weeks prior written notice. However, if Ms. Tafoya’s employment is terminated at any time due to a change of control (as defined in the agreement) or if she is not offered a position of comparable pay and responsibilities in the same geographic area in which she worked immediately prior to a change of control, Ms. Tafoya will be entitled to receive her base salary and medical benefits for a six month period in exchange for executing a general release of claims as to the Company. Assuming that Ms. Tafoya was terminated by the Company as of December 31, 2006 following a change of control of the Company, Ms. Tafoya would be entitled to receive $173,250 and the company would incur additional expenses for medical benefits of approximately $4,575.
Ms. Tafoya is paid a base salary and is eligible to participate in the Company’s executive bonus plan. Ms. Tafoya also receives a 1.0% commission on net advertising revenues (as defined in the agreement) generated from the sales of advertising on theTravelzooWebsite and theTop 20newsletter; such commission is capped at 1.0% of the Company’s net advertising revenues in the second quarter of 2003. In addition, Ms. Tafoya is entitled to participate in or receive such benefits under the Company’s employee benefits plans and policies as may be in effect from time to time.
Ms. Tafoya agreed that the Company will own any discoveries and work product (as defined in the agreement) made during the term of her employment and to assign all of her interest in any and all such discoveries and work product to the Company. Furthermore, Ms. Tafoya agreed to not, directly or indirectly, solicit the Company’s customers or employees during the term of her employment and for a period of one year thereafter.
Mr. Holger Bartel entered into an employment agreement with the Company on November 1, 2000. Pursuant to the terms of the agreement, Mr. Holger Bartel is an at-will employee and the Company or Mr. Holger Bartel may terminate the agreement, with or without cause, upon two weeks prior written notice. Mr. Holger Bartel is not entitled to receive any severance or change of control benefits under the terms of the agreement. Mr. Holger Bartel is paid a base salary and is entitled to participate in or receive such benefits under the Company’s employee benefits plans and policies as may be in effect from time to time.


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Mr. Holger Bartel agreed that the Company will own any discoveries and work product (as defined in the agreement) made during the term of his employment and to assign all of his interest in any and all such discoveries and work product to the Company. Furthermore, Mr. Holger Bartel agreed to not, directly or indirectly, perform services for, or engage in, any business competitive with the Company during the period of his employment. He also agreed to not, directly or indirectly, solicit the Company’s customers or employees during the term of his employment and for a period of one year thereafter.
Mr. Christopher Loughlin entered into an employment agreement with the Company on May 16, 2005. The term of the agreement is three years, commencing on May 16, 2005, after which time either party may terminate the agreement, with or without cause, upon twelve months prior written notice. During the initial term, the Company can terminate the agreement for cause (as defined in the agreement) without any severance obligations. The Company can also terminate the agreement without cause by making a payment equal to the amount of base salary that Mr. Loughlin would be entitled to receive during the balance of the initial term or any notice period. Assuming that Mr. Loughlin was terminated by the Company without cause as of December 31, 2006, Mr. Loughlin would be entitled to receive $506,811.
Mr. Loughlin is paid a base salary and is entitled to certain annual and quarterly bonuses. SeeComponents of Executive Compensation — Other Incentive Bonus Payabove for a description of such bonuses. Mr. Loughlin is also eligible to participate in the Company’s UK Employee Pension Contribution Program, pursuant to which the Company contributes 7% of his base salary to the pension. Mr. Loughlin is also entitled to participate in any private health insurance scheme that may be arranged by the Company for its executives. The Company agreed to pay for six economy class tickets from the United States to London for Mr. Loughlin’s spouse between May 16, 2005 and May 31, 2006. Mr. Loughlin did not use any such tickets during 2006.
Mr. Loughlin agreed to not, directly or indirectly, engage or become interested in any business competitive with the Company during the term of the agreement. In addition, Mr. Loughlin agreed to not, directly or indirectly, solicit any of the Company’s customers or perform services for, or engage in, any business competitive with the Company for a period for six months after the termination of his employment. Mr. Loughlin also agreed that the Company will own any inventions or intellectual property created during the term of his employment and to assign all of his interest in any such intellectual property to the Company.
PERFORMANCE GRAPHCertain Relationships and Related Party Transactions
 
The Company maintains policies and procedures to ensure that our directors, executive officers and employees avoid conflicts of interest. Our Chief Executive Officer, Chief Financial Officer and Controller for North America are subject to our Code of Ethics and each signs the policy to ensure compliance. Our Code of Ethics requires our leadership to act with honesty and integrity, and to fully disclose to the Audit Committee any material transaction that reasonably could be expected to give rise to an actual or apparent conflict of interest. The Code of Ethics requires that our leadership obtain the prior written approval of the Audit Committee before proceeding with or engaging in any conflict of interest.
Our Audit Committee Charter further provides that the Audit Committee will review all related party transactions and potential conflict of interest situations involving the Company’s principal stockholders, directors or senior management. Upon notice of a potential conflict of interest, the Audit Committee will evaluate the transaction to determine if it is in the Company’s best interests and whether, in the Audit Committee’s judgment, the terms of such transaction are at least as beneficial to us as the terms we could obtain in a similar transaction with an independent third party.
In 2006, there were no related party transactions exceeding $120,000 between the Company and its directors, executive officers or principal stockholders.


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Performance Graph
The following graph compares, for the threefive year period ending December 31, 2004,2006, the cumulative total stockholder return for Travelzoo, the NASDAQ Stock Market (U.S. companies) Index (the “NASDAQ Market Index”), and the Standard & Poor’s 500 Publishing Index (the “S&P 500 Publishing”). Measurement points are the last trading day of each of the Company’s fiscal years ended December 31, 2002, December 31, 2003, December 31, 2004, December 31, 2005, and December 31, 2004.2006. The graph assumes that $100 was invested on December 31, 2002 in the Common Stock of the Company, the NASDAQ Market Index and the S&P 500 Publishing and assumes reinvestment of any dividends. The stock price performance on the following graph is not indicative of future stock price performance. Only three years of cumulative total stockholder return is provided because Travelzoo’s stock wasn’t registered under Section 12 of the Exchange Act prior to that date. Price information is not given for periods prior to 2002 because the shares of the Company were not publicly traded before 2002.
(PERFORMANCE GRAPH)
                 
 
  Measurement Point 12/31/2002 12/31/2003 12/31/2004  
 
  Travelzoo Inc. $100.00  $217.50  $2,385.75   
 
  NASDAQ Market Index $100.00  $149.51  $162.36   
 
  S&P 500 Publishing $100.00  $118.80  $115.28   
 
(GRAPH)
                     
Measurement Point
 12/31/2002 12/31/2003 12/31/2004 12/31/2005 12/31/2006
 
Travelzoo Inc.  $100.00  $217.50  $2,385.75  $550.00  $748.75 
NASDAQ Market Index $100.00  $149.51  $162.36  $164.95  $180.66 
S&P 500 Publishing $100.00  $118.80  $115.28  $100.68  $115.81 
RATIFICATION OF INDEPENDENT AUDITORS (PROXY ITEM NO. 2)Independent Public Accountants
 Our Audit Committee, pursuant to its charter, has approved the appointment of
KPMG LLP (“KPMG”) served as Travelzoo’s principal independent auditors to examine the consolidated financial statements of Travelzoo and its subsidiariesregistered public accounting firm for our 20052006 fiscal year.
      The Audit Committee and our Board of Directors are requesting that the stockholders ratify the appointment of KPMG LLP as Travelzoo’s principal independent auditors. The Audit Committee and the Board of Directors are not required to take any action as a result of the outcome of the vote on this proposal. However, if the stockholders do not ratify the appointment, the Audit Committee may investigate the reasons for stockholder rejection and may consider whether to retain KPMG LLP or to appoint other independent auditors. Furthermore, even if the appointment is ratified, the Audit Committee in its discretion may approve the appointment of different independent auditors at any time during the year if they determine that such a change would be in the best interests of Travelzoo and its stockholders.

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      KPMG LLP representatives are not expected to be present at the Annual Meeting or to make a formal statement. Consequently, representatives of KPMG LLP will not be available to respond to questions at the meeting.
The Audit Committee has not yet selected our independent registered public accounting firm for our 2007 fiscal year. The Audit Committee annually reviews the performance of our independent registered public accounting firm and the fees charged for their services. This review has not yet been completed. Based upon the results of this review, the Audit Committee will determine which independent registered public accounting firm to engage to perform our annual audit. Stockholders approval of our accounting firm is not required by our bylaws or otherwise required to be submitted to the stockholders.


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Principal Accountant Fees and Services
 
During fiscal year 2004,2005 and 2006, KPMG charged fees for services rendered to Travelzoo as follows:
         
Service 2003 Fees 2004 Fees
     
Audit fees $181,950  $214,170 
Audit-related fees $89,900  $67,309 
Tax fees  —   — 
All other fees  —   — 
       
Total $271,850  $281,479 
       
 YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS TRAVELZOO’S PRINCIPAL INDEPENDENT AUDITORS FOR THE YEAR 2005.
         
Service
 2005 Fees  2006 Fees 
 
Audit fees(1) $898,760  $736,240 
Audit-related fees  —   — 
Tax fees  —   — 
All other fees  —   — 
         
Total $898,760  $736,240 
         
(1)Audit fees consisted of fees for professional services rendered for the annual audit of Company’s consolidated financial statements and review of the interim consolidated financial statements included in quarterly reports.
VotingPolicy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
 
The Audit Committee pre-approves all audit and permissible non-audit services provided by the Company’s independent registered public accounting firm. These services may include audit services, audit-related services, tax and other services. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on acase-by-case basis. During 2005 and 2006, all services provided by KPMG were pre-approved by the Audit Committee in accordance with this policy
Voting
Under the Delaware General Corporation Law and our certificate of incorporation and bylaws, the presence, in person or represented by proxy, of the holders of a majority of the outstanding shares of our stock is necessary to constitute a quorum of stockholders to take action at the Annual Meeting. Once a quorum of stockholders is established, the affirmative vote of a plurality of the shares, which are present in person or represented by proxy at the Annual Meeting, is required to elect each director. The affirmative vote of a majority of the shares entitled to vote and present in person or by proxy in favor of any other matter properly brought before the Annual Meeting is required to approve of such action.
 
Shares represented by proxies which are marked “vote withheld” with respect to the election of any person to serve on the Board of Directors will not be considered in determining whether such a person has received the affirmative vote of a plurality of the shares. Shares represented by proxies that are marked “abstain” with respect to any other proposal will not be considered in determining whether such proposal has received the affirmative vote of a majority of the shares and such proxies will not have the effect of a “no” vote.
 
Shares represented by proxies which deny the proxy-holder discretionary authority to vote on any other proposal will not be considered in determining whether such proposal has received the affirmative vote of a majority of the shares and such proxies will not have the effect of a “no” vote.
 
We know of no matters to come before the Annual Meeting except as described in this Proxy Statement. If any other matters properly come before the Annual Meeting, the proxies solicited hereby will be voted on such matters in accordance with the judgment of the persons voting such proxies.
Stockholder Proposals for the 20062008 Annual Meeting
 
Proposals of eligible stockholders intended to be presented at the 20062008 Annual Meeting currently scheduled to be held on June 7, 2006, must be received by us by January 2, 2006February 15, 2008 for inclusion in our proxy statement and proxy relating to that meeting. Upon receipt of any


18

such proposal, we will determine whether or not to include such proposal in the proxy statement and proxy in accordance with regulations governing the solicitation of proxies.
 
If a stockholder wishes to present a proposal at Travelzoo’s Annual Meeting in the year 20062008 or to nominate one or more directors and the proposal is not intended to be included in Travelzoo’s proxy statement relating to that meeting, the stockholder must give advance written notice to Travelzoo by March 15, 2006.

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2008. These requirements are separate from and in addition to the requirements a stockholder must meet to have a proposal included in our proxy statement.
 
Any such notice must be givendelivered or mailed to our Corporate Secretary, at Travelzoo Inc., 590 Madison Avenue, 21st Floor, New York, New York 10022. Any stockholder desiring a copy of our bylaws will be forwarded one upon written request.
Householding
 
As permitted by applicable law, only one copy of this Proxy Statement is being delivered to stockholders residing at the same address, unless such stockholders have notified the Company of their desire to receive multiple copies of the Proxy Statement.
 
The Company will promptly deliver, upon oral or written request, a separate copy of the Proxy Statement to any stockholder residing at an address to which only one copy was mailed. Requests for additional copies, or requests for a single copy to be delivered to a shared address should be directed to Investor Relations, Travelzoo Inc., 590 Madison Avenue, 21st Floor, New York, New York 10022 or by telephone at(212) 521-4200.
Other
 
We will bear the cost of solicitation of proxies. Proxies will be solicited by mail and also may be solicited by our executive officers and other employees personally or by telephone, but such persons will not be specifically compensated for such services. It is contemplated that brokerage houses, custodians, nominees and fiduciaries will be requested to forward the soliciting material to the beneficial owners of stock held of record by such persons and we will reimburse them for their reasonable expenses incurred in connection therewith.
 
Even if you plan to attend the meeting in person, please sign, date and return the enclosed proxy promptly in accordance with the instructions shown on the enclosed proxy. You have the power to revoke your proxy, at any time before it is exercised, by giving written notice of revocation to our Corporate Secretary or by duly executing and delivering a proxy bearing a later date, or by attending the Annual Meeting and casting a contrary vote. All shares represented by proxies received in time to be counted at the Annual Meeting will be voted. Your cooperation in giving this your immediate attention will be appreciated.
Ralph Bartel
Chairman of the Board, President, Chief Executive Officer, and Secretary
RALPH BARTEL
Chairman of the Board of Directors, President,
and Chief Executive Officer
590 Madison Avenue, 21st Floor
New York, New York 10022


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14

TRAVELZOO INC.

ANNUAL MEETING OF STOCKHOLDERS

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

Appendix A: Audit Committee Charter
I.  STATEMENT OF PURPOSE
The undersigned hereby appoints Ralph Bartel as his/her Proxy, with full powerAudit Committee (the “Committee”) will assist the Board of substitution, to represent him/her at the Annual Meeting of StockholdersDirectors (the “Board”) of Travelzoo Inc. (the “Company”) on June 1, 2005, or any adjournments or postponements thereof. If you do not indicate how you wish to vote,in fulfilling the Proxy will vote for all nomineesBoard’s oversight responsibilities with regard to the BoardCompany’s financial reporting process. The duties of Directors,the Committee are ones of oversight. It is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and prepared in accordance with generally accepted accounting principles. The primary responsibility for the ratificationCompany’s financial statements and internal controls rests with the Company’s management. Similarly, it is not the duty of the appointmentCommittee to conduct investigations or to assure compliance with laws and regulations or to monitor the Company’s legal compliance programs. The primary responsibility for these matters also rests with the Company’s management. The Board recognizes that the Committee necessarily will rely on the advice and information it receives from the Company’s management and independent auditors. Recognizing these inherent limits on the scope of KPMG LLPthe Committee’s review, however, the Board expects the Committee to serve asexercise independent judgment in assessing the quality of the Company’s financial reporting process and its internal controls. The Board also expects that the Committee will maintain free and open communication with the other directors, the Company’s independent auditors forand the year ending December 31, 2005, and as he may determine, in his discretion,financial management of the Company.
II.  COMPOSITION OF THE AUDIT COMMITTEE
The Committee shall be comprised of at least three members of the Board, with regard to any other matter properly presented at the meeting.

(Continued, andnumber of members to be marked, dateddetermined from time to time by the Board. The members shall be designated by the Board, and signed,the composition of the Committee shall, in the judgment of the Board, be such as to comply with (i) Rule 4350(d)(2) of The NASDAQ Stock Market Rules, or the applicable rule governing audit committees of such other national market system or exchange on which the Company’s stock may be traded from time to time, (ii) Sections 301 and 407 of the Sarbanes-Oxley Act of 2002 and any rules or regulations promulgated thereunder (the “Act”), and (iii) any successor laws, rules or regulations.

III.  MEETINGS
The Committee shall meet at least four times annually, or more frequently as the Committee may from time to time determine may be appropriate. At least quarterly, the Committee shall meet in separate executive sessions with the Company’s Chief Financial Officer, the independent auditors and the Controller. Unless the Board has previously designated the Chair, the members of the Committee shall designate a Chair by majority vote. Two or more committee members shall constitute a quorum.
At the invitation of the Chair of the Committee, the meetings will be attended by the Chair of the Board, Chief Executive Officer, Chief Financial Officer, Controller, representatives from the independent audit firm,and/or other persons as are appropriate to matters under consideration.
IV.  DUTIES AND RESPONSIBILITIES OF THE AUDIT COMMITTEE
The duties and responsibilities of the Committee shall include the following:
  A.  Independent Auditors
1. Receive the written disclosures and letter from the Company’s independent auditors contemplated by Independence Standards Board Standard No. 1,Independence Discussions with Audit Committees,as the same may be modified or supplemented, and discuss with the independent auditors any issues required to be discussed regarding their objectivity and independence. Receive the disclosures, as the same may be modified or supplemented, required by Section 204 of the Act, and discuss with the independent auditors any issues disclosed therein. Approve, in advance, the retention of the independent auditors for any non-audit service permissible under Sections 201 and 202 of the Act and the fee for such service. Consider any significant non-audit assignments awarded to the independent auditors and determine whether or not these have any impact on the other side)

independence of the independent auditors in the performance of the annual audit.


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TRAVELZOO INC.

Mailing Instructions

2. Annually evaluate the qualifications, the quality control procedures and prior performance of the Company’s current independent auditors, which shall be ultimately accountable to the Board and this Committee, as representatives of the shareholders. Based on the representations regarding independence and the results of such evaluation, determine whether to recommend to the Board that the independent auditors be reappointed or replaced and whether it is appropriate to adopt a policy of rotating on a regular basis; provided that the independent auditors must be replaced if the lead audit partner, or the audit partner responsible for reviewing the audit, has performed audit services for the Company in each of the five (5) previous fiscal years. If you receive this proxy card via mail, please datea determination is made to recommend that the current independent auditors be replaced, recommend to the Board such replacement.
3. Meet with the independent auditors and sign it,financial management of the Company in advance of the annual audit to review its proposed scope, the proposed scope of the quarterly reviews, and return itthe procedures to be followed in conducting the audit and the reviews.
4. Review and approve the independent auditors’ annual engagement letter, and the compensation of the independent auditors.
5. Review with the independent auditors any matters required to be discussed by Statement of Auditing Standards No. 61, as the same may be modified or supplemented.
6. Review and discuss, prior to filing, the Company’s financial statements proposed to be included in the postage paid envelope provided.

Company’s Annual Report on Form10-K with the Company’s financial management and independent auditors, including major issues regarding accounting and auditing principles and practices as well as the adequacy of internal controls that could significantly affect the Company’s financial statements. If you receive this proxy card via e-mail, please printdeemed appropriate after such review and discussion, recommend to the proxy card, dateBoard that the financial statements be included in the Annual Report onForm 10-K.

7. Review and sign it,discuss, prior to issuance or filing, the Company’s financial statements proposed to be included in the Company’s public earnings reports and return it to:

Travelzoo Inc.
Attention: Secretary
590 Madison Avenue
21st Floor
New York, NY 10022

DETACH PROXY CARD HERE

Please Detach Here

You Must Detach This Portionthe Company’s Quarterly Reports onForm 10-Q with the Company’s financial management and independent auditors, including the results of the Proxy Card
Before Returningindependent auditors quarterly reviews. The Chair of the Committee may represent the entire Committee for purposes of theForm 10-Q review.

8. Discuss at least annually with the Company’s independent auditors the following: the adequacy and effectiveness of the Company’s internal financial controls; the management letter issued by the independent auditors and management’s response thereto; actions management has taken or progress it has made in addressing issues raised by the independent auditors; any difficulties encountered in the Enclosed Envelopecourse of the audit work, including any restrictions on the scope of activities or access to required information; any disagreements with management; and major areas of financial risk.
9. Review with management and the independent auditors any comments or inquiries from the Securities and Exchange Commission relating to the Company’s financial statements or other financial matters included in the Company’s filings with the Commission.
10. Obtain reports from management that the Company’s subsidiary(ies) are in conformity with applicable legal requirements, including disclosures of insider and affiliated party transactions.
11. Review major changes to the Company’s auditing and accounting principles and practices as suggested by the independent auditors or management.
1.  B.  Management
1. Discuss at least annually with the Company’s management and outside counsel the effectiveness of the Company’s legal compliance programs, any legal matters that may have a material impact on the Company’s financial statements and any material reports or inquiries received from regulators or government agencies.
2. Review all related party transactions and potential conflict of interest situations involving the Company’s principal shareholders or members of the Board or senior management.
3. Authorize and oversee investigations deemed appropriate by the Committee into any matters within the Committee’s scope of responsibility as described in this Charter or as may subsequently be delegated to the


A-2

Committee by the Board, with the power to retain independent counsel, accountants and other advisors and experts to assist the Committee if deemed appropriate and to determine appropriate compensation for such advisors.
4. Prepare the disclosure required of this Committee by S-K Item 306 of the Securities and Exchange Commission regulations to be included in the Company’s annual proxy statement.
5. Review this Charter on an annual basis and make recommendations to the Board concerning any changes deemed appropriate; ensure that this Charter is filed with the Securities and Exchange Commission, as required.
  C.  Other Matters
1. Establish procedures for (i) the receipt, retention and treatment of complaints receive by the Company regarding accounting, internal accounting controls or auditing matters; and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
2. Report actions of the Committee periodically to the Board with such recommendations for action as the Committee deems appropriate.
3. Maintain minutes or other records, either separately or within the minutes of the Board, of meetings and activities of the Committee.


A-3

(PROXY CARD)
TRAVELZOO INC. ANNUAL MEETING OF STOCKHOLDERS THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Ralph Bartel as his/her Proxy, with full power of substitution, to represent him/her at the Annual Meeting of Stockholders of Travelzoo Inc. (the “Company”) on June 14, 2007, or any adjournments or postponements thereof. If you do not indicate how you wish to vote, the Proxy will vote for all nominees to the Board of Directors, and as he may determine, in his discretion, with regard to any other matter properly presented at the meeting. (Continued, and to be marked, dated and signed, on the other side)

(PROXY CARD)
TRAVELZOO INC. Mailing Instructions If you receive this proxy card via mail, please date and sign it, and return it in the postage paid envelope provided. If you receive this proxy card via e-mail, please print the proxy card, date and sign it, and return it to: Travelzoo Inc. Attention: Corporate Secretary 590 Madison Avenue 21st Floor New York, NY 10022 ? DETACH PROXY CARD HERE ? 1. ELECTION OFo DIRECTORS FORall nominees listed belowoWITHHOLD AUTHORITY
DIRECTORS(except to vote for all below (except as marked nominees listed below to the contrary, if any, below) Nominees: 01 Ralph Bartel, 02 Holger Bartel, 03 David Ehrlich, 04 Donovan Neale-May, 05 Kelly Urso. (INSTRUCTIONS: To withhold authority to vote for all nominees listed below

Nominees:01 Ralph Bartel, 02 Holger Bartel, 03 David Ehrlich, 04 Donovan Neale-May, 05 Kelly Urso.
(To withhold authority to vote for an individual write that nominee’s name in the space provided below.)

an individual write that nominee’s name in the space provided below.) ___? 2. THE PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP TO SERVE AS INDEPENDENT AUDITORS FOR THE COMPANY AND ITS SUBSIDIARIES FOR THE YEAR ENDING DECEMBER 31, 2005

oFORoAGAINSToABSTAIN

3.  SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE SAID MEETING AND ANY POSTPONEMENT OR ADJOURNMENT THEREOF

MARK HERE IF YOU INTEND TO ATTEND THE MEETING The undersigned hereby acknowledges receipt of the Proxy Statement and 20042006 Annual Report of Travelzoo Inc.
Date, 2005
(signature)
(signature, ___, 2007 ___Before Returning it in the Enclosed Envelope Please Detach Here Signature You Must Detach This Portion of the Proxy Card ___Signature, if jointly held)
held ? Please sign exactly as name appears at left. If stock is jointly held each owner should sign. Executors, Administrators, Trustees, Guardians and Corporate Officers should indicate their fiduciary capacity or full title when signing.


oMARK HERE IF YOU
INTEND TO ATTEND
THE MEETING