SOURCE: Joystar, Inc.

November 30, 2006 07:13 ET

Joystar CEO Interviewed by Modern Agent Magazine

ALISO VIEJO, CA -- (MARKET WIRE) -- November 30, 2006 -- Joystar, Inc. (OTCBB: JYSR), one of the nation's largest and fastest growing travel agency networks and leading seller of cruises and vacations, was interviewed by Modern Agent Magazine. The following is an excerpt from the Q & A between James Shillinglaw, Editor and Joystar's Chairman and CEO, William M. Alverson:

Shillinglaw: Joystar Travel Network, the maverick mega-host agency, remains a growing player in the increasingly competitive market for at-home travel agents. In August, Joystar reported its second quarter results, which included its first-ever profit of $90,353. Gross travel bookings for the six months ended June 30, 2006 increased 612 percent to $33,056,000 compared to $4,643,665 for the six months ended June, 30 2005. Revenues for the six months ended June 30, 2006 increased 874 percent to $4,736,000 compared to $486,000 for the six months ended June 30, 2005.

In addition, it has introduced several new programs to make its agents more competitive, including, a comparison shopping marketplace that helps consumers make informed decisions for their leisure travel planning and then book through Joystar's agency members. We spoke with Bill Alverson, Joystar's Chairman and CEO, to get an update on the agency and its plans.

Joystar just recorded its first profitable quarter since you began in 2004. To what do you attribute this?

Alverson: We have most all our systems in place now. The technology we've built has allowed us to reduce our head count and we've opened up a facility in India to develop all our software and systems. We also have a private label version of TRAMS Client Base Plus now called Star Base. We've integrated all of our CRM and marketing tools.

Our commission levels are very high now and still climbing. We have been able to accomplish this in a very short time because we have so many agents booking travel now. Our lucrative payouts are very attractive to agents. When we launched our company back in the fourth quarter of 2004, we caught a lot of the old guard on their heels. We were able to grab market share very quickly. Our bookings have gone from $15 million last year to somewhere around $70 million for 2006. That's pretty good growth.

Shillinglaw: How many agents do you have right now?

Alverson: We have 1,500 active agents. Among those, we have 60 Enterprise members who host another 900 agents.

Shillinglaw: What do you offer that other host agencies don't? What's your appeal to at-home agents?

Alverson: We have seen other host agencies attempt to copy us. They try to match our fee structures and our payouts, but it really gets into benefits like our technology and the consumer websites we provide to our agents. Additionally, we recently introduced a $2 million errors & omissions insurance policy for our independent contractors. All our independent contractors are covered under the policy and we're paying for this. They don't have to pay anything and are covered for their bookings made through Joystar. That's a pretty powerful benefit for a lot of travel agents.

Shillinglaw: What are you launching that's new on the technology side?

Alverson: We are currently working on two major marketing initiatives to be lauched in the 4th quarter. The first, VacationCompare (, is a very powerful customer acquisition tool for our Pro 100 and Enterprise agency members. VacationCompare is to consumers shopping for cruises and vacations what LendingTree is to consumers shopping for home loans; we're going to kick-off a major advertising campaign in December. Our tagline is "Save Big When Travel Agencies Compete." The consumer wins big here as there will be fierce competition to win the bid and our top agency members have an opportunity to build their businesses.

We're also developing our "Hot Transfers," which are Joystar-owned clients and prospects who we will assign to one of our expert agents. With Joystar, you can have your own clientele that you've developed and we will pay you the lion's share of your commissions. At the same time, if you have more time in the day and want to make some extra cash, we will assign leads and clients to you and we'll pay you 30 percent of the commission.

Shillinglaw: What is the top level pricing plan that you currently offer to your agents?

Alverson: Enterprise is our flagship program. It's for existing agencies that want to move home and keep their sales force intact. It's also for agencies interested in developing an independent contractor sales force. If you have $1 million a year in sales, you're pretty busy in leisure travel. If you want to grow larger -- say to $3 million or $5 million -- you will have to leverage the efforts of others. So, the next logical step is to develop your own independent contractor sales force, whether that includes online affiliates, other at-home agents, or referral agents.

The Enterprise program also applies to every small and midsize host agency. We can deliver a turnkey solution for a host agency with $2 to $10 million a year in sales or working with 5 to 500 independent contractors. Even at $10 million a year in sales, you cannot compete with agencies like Joystar. You simply cannot offer the same tools, support, technology, and commission levels that we do.

What we are proposing is, rather than competing with Joystar, please consider partnering with us. We really can add value to a $10 million host agency and we protect the relationship they have with their clients and independent contractors. We won't allow independent contractors working with our Enterprise members to "go direct to Joystar" without the Enterprise member's blessing. Again, we are working successfully with over 60 agencies that have a combined 900 independent contactors. They are by far our top earners.

Shillinglaw: What other pricing plans do you offer to agents?

Alverson: If you're a solo superstar agent with no desire to work with independent contractors, we offer Pro 100. For less than $100 a month, an agent can have 100 percent of their commissions. And with our major preferred suppliers, we're at 16 or 17 percent commission now. Pro 100 is for anyone generating more than $5,000 or $6,000 a year in gross commissions. We also offer Agent Advantage XP, which is our free program for professional travel agents with a minimum of two years' experience; it pays you 80 to 90 percent of the commission. There are no sign-up fees, no monthly fees, and no annual renewal fees. You get a website and access to all our services and technology. For entrepreneurs who are getting started in their travel business, the fees are $100 to sign up and $20 a month. All of our newbies are matched with one of our Enterprise members. They get all of the access to our training, daily conference calls, and our online community, plus their very own mentor to guide them through the early and crucial phase of their career. We have found this helps ensure the success of the newbie, and it also ensures the success of our Enterprise members as we are helping them build their agencies.

Shillinglaw: What other initiatives is Joystar introducing to help its agents?

Alverson: Joystar has formed a new for-profit division called Joystar University Online, which is going to offer online training and education programs to the travel agent community. This business is very complex and you need to narrow the focus for someone who is coming into it so they don't become overwhelmed.

Shillinglaw: What will this education and training programs include?

Alverson: Our program will include destination specialist and lifestyle specialist courses. For our members, there will be Joystar-specific content, with regard to procedures, technology, and best practices for working with Joystar's preferred suppliers. This is what is lacking in many of the training programs currently available in the industry. They are not interactive and they are not engaging. Online training is a standalone business model, but it's also very complementary to our existing business model. We're going to create thousands of travel specialists. The e-learning courses will have third-party certification and testing and will drive a much more qualified, competent, and confident travel seller. We want to be the largest seller of complex travel. That's the real business for Joystar, so we are going to create more good travel agents. At the same time, online e-learning and education can be a very profitable business model.

Shillinglaw: How do you think the market has evolved since you began your business? How has the host agency market changed?

Alverson: I think it's matured a lot on the host agency level. You've seen some of the other hosts wake up because of companies like Joystar. They've recognized that in order to stay competitive as a host agency, they are going to have to step up their service levels and their value proposition. We're happy about that. If it's good for the agent, at the end of the day we're OK with that. However, I do believe you will continue seeing this shift to mega-host agencies. The industry is still so young and emerging, but within another 12 months it's going to be almost impossible as a host to compete with a mega-host agency. Of course, we are hoping it doesn't come to that. We would rather a host agency join forces with Joystar for a win-win relationship.

Shillinglaw: If you were an at-home agent today, what would you look for if you wanted to associate with a host agency?

Alverson: The first thing is obviously the monetary factor. If you're in this business to make a profit, you must look at the economics of the deal. What are the host agency's preferred supplier commission levels? How much of those commissions do they pass on to you? What is their fee structure? What are some of the potential hidden costs? Do you have to pay extra for a website and maintenance of that site? You potentially have to add several hundred dollars more to the cost associated with doing business with that host if you have to develop your own website. Then it's going to come down to the service.

As an entrepreneur, you're always going to have your own needs. Every agency and every business is unique. Our multi-million-dollar producers require as much attention as our newbie agents. It's a whole different set of issues we have to help them with. Clout with suppliers is also something that cannot be ignored in the relationships that a host has over and above the commission levels. Lastly, you should ask for referrals and do your homework.

Shillinglaw: What's your prediction for the future of host agencies? Is there going to be consolidation? Are we going to end up with just a few large players?

Alverson: I don't really think you're going to see many acquisitions, where a mega-host agency, Joystar for instance, would consider growing through acquiring a smaller host agency. The reason is, we are growing organically through our recruitment efforts. Essentially, we are acquiring individual agents from other host agencies and we know which hosts are losing their agents. That's what we've looked at several times when a host has come to us saying it is for sale. Why would we acquire a host agency when we already know we are acquiring their agents? I think mega-host agencies are going to dominate and smaller agencies are going to have a difficult time if they don't partner with them. As soon as you can get over the emotional phase, it's a very wise business move. Sadly, some agency owners can't past their emotions.

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About Joystar, Inc.

Joystar, Inc. (,,, is the one of the nation's largest and fastest-growing leisure travel agency networks and a leading seller of cruises and vacations. The Company sells complex travel products including cruises, vacation packages and group travel through its growing national sales force of virtual travel agents and online affiliates. Joystar offers comprehensive business opportunities that combine innovative technology, marketing opportunities and expert support services to the Company's independent and home-based travel agents. With Joystar, experienced and new travel agents can concentrate on promoting travel and creating client loyalty without the administrative and financial burden of owning/operating a traditional storefront travel agency.

"Forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 may be included in this news release. These statements relate to future events or our future financial performance. These statements are only predictions and may differ materially from actual future events or results. Joystar, Inc. disclaims any intention or obligation to revise any forward-looking statements whether as a result of new information, future developments or otherwise. Please refer to the documents filed by Joystar, Inc. with the Securities and Exchange Commission, which identify important risk factors that could cause actual results to differ from those contained in forward-looking statements, including, but not limited to risks associated with our ability to (i) increase revenues, (ii) obtain profitability, and (iii) obtain additional financing, changes in general economic and business conditions (including in the online business and financial information industry), actions of our competitors, the extent to which we are able to develop new services and markets for our services, risks in connection with acquisitions, the time and expense involved in such development activities, the level of demand and market acceptance of our services and changes in our business strategies.

Additionally, forward-looking statements concerning the performance of the travel and leisure industry are based on current market conditions and risks, which may change as the result of certain regulatory, political or economic events, a shift in consumer travel preferences, as well as those risks and uncertainties described in the Company's filings with the Securities and Exchange Commission, which could cause actual events or results to differ materially from the events described in the forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.

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