Offer Talks Terminated and Operational Update

21 December 2011

Travelzest Plc

("Travelzest" or the "Company" or the "Group")

Termination of Offer Talks and Operational Update

On 19 September 2011, Travelzest announced that it had received a preliminary approach in relation to a possible offer for the Company from Red Label Vacations Inc. ("Red Label"). In the period following the initial announcement the Company has made three further announcements including the most recent on 12 December 2011 confirming an extension had been granted until 30 December 2011.

The Company announces that following the request for the last extension it received an indicative proposal from Red Label which referred to a price which was at a premium to the current share price. The Company's board ("Board") is of the view that, considering the Company's strong Canadian market presence and continued growth in this market, the price proposed by Red Label significantly undervalues the Company.

Discussions with Red Label have now ceased and the Board can confirm that it is no longer in talks regarding an offer for the Company and is therefore no longer deemed to be in an Offer Period.

Red Label has informed Travelzest that it does not intend to make an offer for the Company and has consented to the release of this announcement. For the purposes of Rule 2.8 of the Code, Red Label reserves the right to announce an offer or possible offer or make or participate in an offer or possible offer for Travelzest (and/or take any other action which would otherwise be restricted under Rule 2.8 of the Code) within the next six months following the date of this announcement in the circumstances set out in Note 2 to Rule 2.8 or with the consent of the Panel.

Operational Update

The Company further announces that following the redevelopment of the business which started in 2009 it has completed the re-profiling of the Group and will now be focusing on the areas that will drive further growth, efficiency and shareholder value.

In line with this strategy, the Company will concentrate on its Canadian operations and divest of all of its under-performing UK assets. This follows the write down the value of these assets in the financial year ended 31 October 2010. Following this divestment programme, the Group will derive in excess of 90% of its revenue and profits from its Canadian operations, itravel2000 and The Cruise Professionals. The Company will retain a UK base in Cheltenham which will act as an integrated operational centre for the Canadian brands, plus certain developing UK brands such as holiday.co.uk, flight.co.uk and upper market brand Travelzest Holidays.

These measures are expected significantly to improve underlying operating profits for the business by approximately £1.5 million per annum and it is anticipated that all staff currently employed in the Cheltenham operational centre will remain.

The divesture process is underway and potential buyers have been identified for a number of the businesses and brands. Further announcements as to progress with this process will be made in due course.

The Company intends to announce it final results for the year ended 31 October 2011 in February 2012.

Mark Molyneux, Travelzest's Chairman, commented:

"Following the termination of discussions with Red Label we will now focus all our efforts on generating profitable growth in order to maximise shareholder value. The key growth area for the Company remains Canada and we will concentrate the Company's efforts in this market.

"Creating value for our shareholders is of paramount importance to us. By divesting those assets that are not performing, particularly (in the current very difficult economic climate) in the UK, which contrasts with much better conditions in Canada, we are building a stronger business that is well positioned for future growth."

Enquiries:

Notes to Editors:

Travelzest plc(LSE:TVZ.L) is a dynamic travel group, with a collection of online travel retailers and specialized merchant operators. Included in the Travelzest agency family are Travelzest Holidays, itravel2000, The Cruise Professionals,holiday.co.uk and flight.co.uk. Travelzest is traded on London's AIM Exchange under the symbol TVZ.