Building the online travel marketplace in Latin America The Despegar strategy

2. Building the online travel marketplace in Latin AmericaThe Despegar.com strategy Christian A. Vilate Chief Product Officer

3. Agenda Who we are Is there any potential for online travel in Latin America? What are the challenges and rewards of entering the Latin American market? How we deal with different cultures

4. Launched in December 1999 Today: full operational presence in 9 countries 9 call centers with fulfillment offices 100 employees Who We Are The leading online travel agency in Iberoamerica USA Spain Mexico Colombia Venezuela Brazil Chile Uruguay Argentina

5. Who We Are • Management Group Profile: • +20 MBAs from top tier US Schools • From 8 nationalities • With experience in diverse areas, among others: • travel industry • business consulting • investment banking • software implementation • media industry • telco industry Institutional Investors: Hicks, Muse, Furst & Tate; Merrill Lynch; Texas Pacific and The Accor Group

7. Agenda Who we are Is there any potential for online travel in Latin America? What are the challenges and rewards of entering the Latin American market? How we deal with different cultures

8. 500 million people 15-20% with standards of living of first world countries The fastest growingInternet region in the world Latin America in Figures

9. Iberoamerica is a healthy travel market... Travel & tourist demand in Latin America, Spain & Portugal • Improvements in hotel infrastructure • Increasing competition among airlines • More stable macroeconomic scenarios: • Exchange rate stability • Resurgence of credit markets 600 500 519 400 6.4% CAGR US$ Billions 300 263 200 100 0 1999 2010 Latin America Iberia Source: WTTC

10. ...with a huge opportunity for e-travel • Fragmented industry with no dominant leaders • Unreliable travel industry structure • Non-professional • Limited access to information and services • Frustrating buying experience for customers. • Inefficiencies and high cost systems • Non-transparent service: agents run after commissions

11. Agenda Who we are Is there any potential for online travel in Latin America? What are the challenges and rewards of entering the Latin American market? How we deal with different cultures

12. Low PC penetration High cost of telecomunication services Lack of confidence in e-commerce Lower credit card penetration / fraudrisks Non-transparent pricing policies & regulated markets Delivery process Huge managerial effort Understanding of cultural issues Low look-to-book ratio Challenges

13. Almost untapped market Easier to achieve brand dominance / cheaper media cost Very limited competition Higher profitability Inbound & outbound tourism First mover advantage is a key asset Rewards

14. Expand regionally at a fast pace Build strong local operations “Human touch” customer service Use technology as a key differentiator Explore new segments Our Strategy

15. Agenda Who we are Is there any potential for online travel in Latin America? What are the challenges and rewards of entering the Latin American market? How we deal with different cultures

16. Latin America is not “a single country” • Cultural diversity • Languages • Preferences & traditions • Economic diversity • Payment methods • Currencies • Regulatory & legal frameworks

17. Top 10 travel destinations coincide among countries... ...but relevant content is different. Cultural differencies • Andean countries (Colombia, Venezuela) & Mexico are very “US oriented” • Brazil is almost a continent in itself • Southern cone (Argentina, Chile & Uruguay): preference for european and caribbean destinations • Spain: is a more sophisticated market with completely different tastes

18. 2 hemispheres: allows for seasonal diversification Payment methods Different currencies Regulatory & legal frameworks Suppliers change from country to country Economic diversity

19. Our strategy Make local what is localRegionalize everything else Operations Technology Contents Brand Awareness

20. Local call centers • Customer service support tailored to each markets needs • Local language • Local 0-800 number • Staff trained in local editorial and travel content • Educational and selling mechanism • Goal is to migrate call center users to 100% web users • Call center is a necessary intermediate step from bricks to clicks • Reduces Latin American consumers’ skepticism

21. Local Presence • Higher understanding of each market dynamics • Opportunity to build and leverage local negotiations and to gain access to cheaper rates • Payment methods adapted to local usage • Local content (editorial + commercial) • Cross selling of products among countries • Greater control of local operations

22. Local Fulfillment Achieved through an association with a travel agent Revenue sharing c Travel Agency Carlson Wagon Lit Back office capacity

23. Regional Economies to Scale • Technology: lower labor cost • Brand awareness • Leverage local negotiations • Traffic deals with portals • Share best practices • Reference content

24. Regional Branding REVENUES TRAFFIC Online and off-line advertising campaigns Alliances Public Relations

25. Results by now are very rewarding • Conversion rate (look to book) is steadily growing • Strong improvement in quality of products and reservation tools • Regional expansion completed • Products have become competitive compared to market rates

26. Thank you. Christian A. Vilate Chief Product Officer cvilate@despegar.com