Cuba Ventures Corp.

Travelucion's Strength & Strategic Position

Travelucion Media and its predecessor’s presence in Cuba over the past two decades has given it a competitive advantage in the Cuban travel space. Steve Marshall, Founder and President of Travelucion Media, lived in Cuba for over 11 years and became a special adviser to numerous companies providing support and investment in a range of commercial sectors. He is knowledgeable concerning the idiosyncrasies of dealing with the Cuban Government and Cuba’s foreign investment laws.

Travelucion Media is a certified European Travel Supplier. In addition to the management and administrative offices in Spain, Travelucion Media and its predecessors have maintained representation in Cuba since the mid 1990’s. The company also has four proprietary web servers located in Germany and has localized web content delivery through caching servers providing low-latency content in 19 countries. All software, data, content and design are owned by Travelucion Media. While the company has outsourced some of its ongoing development and IT related activities, there are no third-party software products or systems used anywhere within the current network of 432 websites and as such no third party royalty payments.

Over the years, Travelucion Media has serviced hundreds of thousands of customers booking travel to Cuba and has built a strong customer base which it plans to expand on. All foreign travel agencies operating in Cuba must obtain an operating license from a state-run agency and supplier for rooms and services, which are in order of size and sales volume: Havanatur, CubaTUR, Gaviota Tour, Cubanacan, Ecotur. Travelucion Media is in a unique position due to its long operating history in Cuba to be able to provide Cuban travel bookings through these locally operated suppliers in particular Havanatur, CubaTUR and Gaviota Tour. Travelucion’s proprietary online booking systems have been developed to poll prices from each agency to determine the lowest price and best travel options for customers. This is a competitive advantage unique to Travelucion Media and provides the company’s customers the ability to indulge in high end hotel and spa accommodations or create uniquely Cuban travel packages with exclusive private home rentals, antique car services and access to a multitude of guided or self-discovery tours across Cuba in addition to basic hotel and car rental bookings.

International visitors to Cuba reached 3 million people in 2014 bringing in approx. US $2.6 billion in tourism revenue (source: CompassCayman.com). In December 2014, U.S. President Barack Obama announced that the U.S. would normalize diplomatic relations with Cuba. This will potentially inject billions of dollars into the Cuban economy and it included the relaxation of travel restrictions for qualified U.S. citizens going to Cuba. A general tourist travel ban for Americans remains in place but there are easing regulations in which travelers to Cuba no longer have to receive government permission and instead can simply qualify for one of 12 categories of travel permitted under a general license. With the relaxation of rules for American travelers to Cuba, growth in travel to Cuba is on an upward trajectory. Already in 2015, American visits to Cuba were up over 50% and are expected to continue to grow to around 10 million people a year comprising a multi-billion dollar market assuming all travel restrictions are lifted (source: International Monetary Fund). It is important to note however that the 54 year old trade embargo imposed on Cuba by the U.S. prohibits most American companies from doing business with Cuba. This creates an opportunity in that a potentially multi-billion dollar market consisting of qualified U.S. travelers going to Cuba will not be serviced by the bulk of U.S. travel companies. This significantly diminishes the U.S. competition until such a time the U.S. Congress votes to lift the trade embargo.

The notable change in U.S. government policy toward Cuba has helped the company’s revenues grow over 150% from 2014 to 2015. The increasing U.S. interest in Cuba can be seen by the increase in the number of visits to Travelucion’s websites which generate over 30 million page-views a year. Before December of 2014, only 11% of visitors to the Cuba centric websites were American but this shot up to over 33% of visitors after Obama’s announcement. However, given the general U.S. tourist ban still in place, this online American traffic represents only 6% of the company’s online booking sales as the conversion rate on American traffic is still quite low compared to other countries. The company sees this latent demand as excellent growth potential without any additional marketing initiatives and is set up to handle the travel requirements of qualified U.S. travelers to Cuba.

The company is uniquely positioned and able to offer custom vacations with rooms, car rentals, and specialty tours. There is a strong and growing demand for custom vacations where the customer selects where and when they want to go and what they want to do. The increase in U.S. based travel interest in Cuba is expected to increase hotel and flight costs, as well as rapidly deplete the available hotel rooms across the country.With many tourists looking to embrace the Cuban culture and hospitality, the company expects higher interest in private home rentals and B&B bookings, specialty tours, private restaurants, and self-drive car rental services as well as other car services such as the historic car tours offered in Havana. Additional tourism activities such as fishing, water sports and spa services are all things that can be booked through Travelucion Media. The company also plans to establish relationships and partnerships with large North American travel and cruise line companies as the cruise industry opens up to Cuba.

Travelucion Media will continue to build on its 4,000 private home (Casa Particulares) rental listings database using a model similar to that of Airbnb and HomeAway. The company has recently signed an exclusive contract to market Cuban medical treatments across its websites generating over 30 million page views a year. With rising healthcare costs and wait times in developed countries, Cuba is perfectly situated to become a key destination for this as it has one of the best healthcare systems in the world. As per the contract, Travelucion Media will keep a 10% commission on all medical procedures and treatments booked through its websites. The company also offers ecotourism packages for travelers looking to see the natural side of Cuba. The company is focused on developing its business to cater to the traveler who wants the freedom to buy any type of customized experience.

Travelucion Media, through its online presence and 432 Cuba related websites, has been able to take advantage of the commercial void in the online media, marketing and travel space in Cuba. The company has developed a strong social media platform consisting of passionate Cuba social media followers across Facebook, Twitter, Pinterest and Instagram. Cuba is gearing up for GDS (Global Distribution System) incorporation for central booking which will streamline the booking process for travel providers. Travelucion is preparing its 432 multi-language Cuba website for GDS integration in preparation for GDS real-time bookings through Amadeus, Abacus and, when authorized, American GDS companies Travelport and Sabre. This could decrease costs and increase booking volumes for the company going forward. Steve Marshall has also taken the necessary courses and is licensed to run a travel business that can incorporate the use of a GDS distribution channel.

Lastly, Travelucion’s portfolio of web assets has been built up over almost 20 years and as a result these sites are well known and show up high on search engine lists. The web traffic to these sites is substantial at over 30 million page views per year and growing. The increased interest in Cuba through our websites has directly translated into increased sales for Travelucion Media. This web traffic is created organically and is not purchased from any third party like Google. This alone is a huge competitive advantage and cost savings for the company as “pay for clicks” and SEO programs are an expensive part of many marketing budgets and in particular, pay for clicks to Caribbean destinations can cost $2.00 to $10.00 per click. Travelucion pays no third party any fees for these online lead generation and SEO programs which could amount to many millions of dollars saved going forward. All traffic to the online e-commerce booking platform originates from the company’s own websites as the IT software is all proprietary and owned and built by the company’s IT personnel. Furthermore, this could be monetized as Travelucion Media could look to sell its online traffic to other companies who are looking for it for their respective Cuba related businesses in the form of banner ads and digital marketing contracts.

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