SOURCE: Travelstar, Inc.

April 24, 2008 11:22 ET

Travelstar, Inc. Announces Shareholder Letter From CEO William Alverson

ALISO VIEJO, CA--(Marketwire - April 24, 2008) - Travelstar, Inc. (OTCBB: TVLS) announced today that the following shareholder letter was released today by Chief Executive Officer, William Alverson.

Dear Travelstar Stakeholder:

Since we launched our host agency in the third quarter of 2004, we have realized constant rapid growth. As I have said before, our goal is to be the largest, most profitable seller of complex travel in the world. A lofty goal, to say the least but, when you take a moment think about what we have accomplished in just three short years, and look at the world of opportunity that is just waiting for a bold company to want it badly enough, it becomes clear that together we can do this.

In 2007, I am proud to report we again experienced significant growth. Joystar, our host agency model, continued to fire on all cylinders with sales over 76,000,000. Agent growth was strong with membership revenue increasing 106% to over $529,000. We continue to attract professional agents to our network with our strong value proposition.

To accomplish our goal we must continue to invest and innovate on behalf of our travel agents, suppliers, and travelers. In 2007, we continued to invest in infrastructure, we built new capabilities and we invested in our Company-owned brands, VacationCompare.com and Travelstar.com. We also began developing our own wholesale tour products under the Starlight Vacations brand.

We expect the investments we made in 2007 to accelerate our top line bookings, provide us with high revenue margins and drive membership growth creating significantly stronger cash flow. We will begin to realize these benefits in the back half of 2008.

I would like to provide color on our investments and explain some of the positive changes we have made in our internal controls and accounting procedures. This will give you insight to our financial performance and meaningful year over year comparisons.

Our technology platform is the foundation for scalable growth. In 2007, we invested another $400,000 in technology and $126,000 in property and equipment. This primarily consisted of servers, a VoIP phone system and the capitalization of certain software development associated with Travelstar.com and VacationCompare.com.

Throughout 2007, we designed and implemented the processes to enhance our commission processing as well as internal controls and financial reporting capability. It is quite an undertaking to track the tens of thousands of complex travel bookings made by a network of virtual travel agents. We automated our confirmation process, introduced direct deposit for our agents and affiliates, and increased the frequency in which we pay them.

On the financial reporting side, we made decision to take a 25% reserve against our revenue. We did this because we wanted to be conservative in our accounting to investors and because of the nature of the complex leisure travel business. As our agents will tell you, there is a lag time of three to six months from the time the booking is made, to when we receive the revenue from our supplier partners. Additionally, we modified when we would recognize certain revenue.

We believe our conservative accounting practices to be in the best interest of the Company and its stakeholders and it takes us one step closer to our goal of being listed on the AMEX. However, the changes seriously impacted the year over year comparisons in our recent 10K filing because of the reserves and the fact that we did not recognize certain revenue.

Gross Bookings

To give you a better idea of the growth we experienced and understanding of the impact our new reporting procedures had on gross bookings, if you were to apply the same methodology to 2006 results, our 2007 gross bookings would have represented a 56% increase year over year.

Revenue

Prior to 2007, we recognized supplier overrides (bonus revenue paid to us retroactively by our preferred suppliers for reaching sales and growth levels) and certain group travel revenue in the period the bonus was triggered. In 2007, we changed this and now recognize the revenue when we receive payment from the supplier. If we were to apply the same accounting methodology to 2006, our 2007 revenues would have increased 58% compared to the prior year.

It is also very important to note that our override revenue goes directly to the bottom line. That is, we do not pay any commissions to our travel agents on this revenue. All of the revenue positively impacts our bottom line and increases our accounts receivable.

Another growth measurement is the fact that inclusive of the conservative accounting changes, our Accounts Receivable grew to $3,510,118 in 2007 from $2,701,253 in 2006.

Profit

Net income for the year ended December 31, 2007 was $1,113,840 (.02 cents per share) compared to a net loss of $11,128,689 for the year ended December 31, 2006.

Outlook

Our long-term goal is to increase complex travel bookings through our host agency and new consumer brands. We have spent close to a million dollars recruiting travel agents of the past three years. It has paid off in spades with a strong network of professional agents and healthy recurring membership revenue. This year, we plan to be very disciplined in our agent recruiting and our brand advertising spending. Instead, we will grow our consumer brands through revenue share agreements and other creative ways to drive customer and agent acquisition.

As Travelstar.com, our social networking site, matures, we are confident we will be able acquire customers much more cost effectively than through traditional advertising channels.

Affiliate networks, revenue sharing, social networking and capitalizing on the popularity and search engine friendliness of user-generated content are where we will focus our efforts for the foreseeable future.

Because we assign consumer leads and customers to our expert agents, we can deliver a brilliant customer experience and high conversion. Our consumer brands complement our host agency business with higher margin revenue without increasing our overhead. The consumer brands are a profit driver for Travelstar and offer incremental revenue to the agents in our Joystar network.

We believe investing in these types of value-added benefits for our travel agents will drive expert agent recruitment more than traditional recruitment advertising our competitors are clinging to. The competition for agents in the host agency space has become noisy. We are climbing above the noise.

If it isn't already clear, all of the brands in our portfolio are purposefully interrelated. In addition to long-term shareholder value, the success of our travel agents and affiliate network are always top of mind.

We are committed to being the leader in developing the next generation of travel sellers. We are constantly on the lookout for people who are passionate about travel, have a willingness to learn and a burning desire to succeed.

Part and parcel to this initiative was the recent enhancement to our agent-mentoring program. The program rewards the industry's top cruise and vacation agents for sharing their knowledge and best practices with new agents. Benefits of being a mentor include higher revenue potential, new customers and group leaders assigned to the agents.

No other host agency or supplier is taking these steps to ensure the success of the travel agent community.

We expect higher year-over-year membership growth in 2008 and significantly increased cash flow as we launch the new programs we have been developing. We are especially excited about our new group travel affiliate program aligned with Travelstar.com. We plan to take passionate travelers and entrepreneurs and show them how they can make extra money and travel for free promoting group travel. The possibilities are endless with this model. We've designed it to be a fun, part-time opportunity. Our travel agents win big with this one, too. All of our group leaders will be assigned to our agents who will handle the actual bookings. This keeps it nice and simple for the group affiliate because their only responsibility is to promote the group and it ensures a great travel experience for our travelers as an experienced agent is taking care of the details.

We're proud of what we've been able to accomplish in three short years of host agency operations and with our performance in 2007. As always, we remain committed to our hardworking staff, loyal agents & affiliates and our shareholders who share in our vision.

Very truly yours,

William M. Alverson

Chairman & CEO

About Travelstar, Inc.

Travelstar, and its family of brands (www.joystar.com, www.vacationcompare.com, www.travelstar.com, www.starlightvacations.com), is one of the nation's largest and fastest-growing leisure travel agency networks and a leading seller of cruises and vacation packages.

"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. Travelstar, 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 Travelstar, 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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