REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class |
Trading Symbol |
Name of each exchange on which registered | ||
At December 31, 2021 |
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☒ |
Accelerated filer |
☐ | ||||
Non-accelerated filer |
☐ |
Emerging growth company |
† |
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
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PART I. |
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ITEM 2 |
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ITEM 3 |
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ITEM 4 |
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ITEM 4A. |
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ITEM 5 |
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ITEM 6 |
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ITEM 7 |
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ITEM 8 |
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ITEM 9 |
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ITEM 10 |
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ITEM 11 |
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ITEM 13 |
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ITEM 14 |
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ITEM 15 |
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ITEM 16 |
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ITEM 16A. |
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ITEM 16B. |
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ITEM 16C. |
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ITEM 16D. |
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ITEM 16E. |
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ITEM 16F. |
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ITEM 16G. |
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ITEM 16H. |
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ITEM 16I. |
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ITEM 17 |
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ITEM 18 |
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ITEM 19 |
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ITEM 1 |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2 |
OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3 |
KEY INFORMATION |
A. |
[Reserved] |
B. |
Capitalization and Indebtedness |
C. |
Reasons for the Offer and Use of Proceeds |
D. |
Risk Factors |
• | The ongoing COVID-19 pandemic has disrupted the global economy and the travel industry and consequently, adversely affected our business, results of operations and cash flows, and it is difficult to predict the full extent of the impact that the pandemic will have on our Company. |
• | We are subject to the risks generally associated with doing business in Latin America. |
• | General declines or disruptions in the travel industry may adversely affect our business and results of operations. |
• | Our business and results of operations could be adversely affected by macroeconomic conditions. |
• | We are exposed to fluctuations in currency exchange rates. |
• | If we are unable to maintain or increase consumer traffic to our sites and our conversion rates, our business and results of operations may be harmed. |
• | We operate in a highly competitive and evolving market, and pressure from existing and new companies may adversely affect our business and results of operations. |
• | If we are unable to maintain existing, and establish new arrangements with travel suppliers, our business may be adversely affected. |
• | We rely on the value of our brands, and any failure to maintain or enhance consumer awareness of our brands could adversely affect our business and results of operations. |
• | We rely on information technology to operate our business and maintain our competitiveness, and any failure to adapt to technological developments or industry trends could adversely affect our business. |
• | Some of our airline suppliers (including our GDS service providers) may reduce or eliminate the commission and other compensation they pay to us for the sale of airline tickets, which could adversely affect our business and results of operations. |
• | Our business and results of operations could be adversely affected when one or more of our major travel suppliers suffers a deterioration in its financial condition or restructures its operations. |
• | Any system interruption, security breaches, or lack of sufficient redundancy in our information systems may harm our businesses. |
• | We are subject to payments-related fraud risks. |
• | Our ability to attract, train and retain executives and other qualified employees, particularly highly-skilled IT professionals, is critical to our business and future growth. |
• | We rely on third-party systems and service providers and any disruption or adverse change in their businesses could have a material adverse effect on our business. |
• | Our business depends on the availability of credit cards and financing options for consumers. |
• | We rely on banks or payment processors to collect payments from travel customers and facilitate payments to suppliers, and changes to credit card association fees, rules or practices may adversely affect our business. |
• | Our business could be negatively affected by changes in search engine algorithms and dynamics or other traffic-generating arrangements. |
• | Changes in internet browser functionality could result in a decrease in our overall revenue. |
• | Our business depends on the continued growth of e-commerce and the availability and reliability of the internet in Latin America. |
• | Growth of e-commerce transactions in Latin America may be impeded by the lack of secure payment methods. |
• | Our future success depends on our ability to expand and adapt our operations in a cost-effective and timely manner. |
• | Acquisitions could present risks and disrupt our ongoing business. |
• | We are subject to potential tax, labor and social security contingencies and tax liabilities related to uncertain tax positions. |
• | Internet regulation in the countries where we operate is scarce, and several legal issues related to the internet are uncertain. |
• | We process, store and use personal information, card payment information and other consumer data, which subjects us to risks stemming from possible failure to comply with governmental regulation and other legal obligations. |
• | Amendment to existing tax laws or regulations or enactment of new unfavorable tax laws or regulations could adversely affect our business and results of operations. |
• | We may not be able to adequately protect and enforce our intellectual property rights; and we could potentially face claims alleging that our technologies infringe the property rights of others. |
• | Increased labor costs, compliance with labor laws and regulations and failure to maintain good relations with labor unions may adversely affect our results of operations. |
• | A failure to comply with current laws, rules and regulations or changes to such laws, rules and regulations and other legal uncertainties may adversely affect our business, results of operations or business growth. |
• | Complaints from travel customers or negative publicity about our services can diminish consumer confidence and adversely affect our business. |
• | Consumer adoption and use of mobile devices creates new challenges. |
• | We rely on Expedia for substantially all of the hotel and other lodging products that we offer for all countries outside Latin America. |
• | We may experience constraints in our liquidity and may be unable to access capital when necessary or desirable, either of which could adversely affect our financial condition. |
• | political, social and macroeconomic instability; |
• | cycles of severe economic downturns; |
• | currency devaluations and fluctuations; |
• | periods of high inflation; |
• | availability, quality and level of usage of the internet and e-commerce; |
• | high levels of credit risk and fraud; |
• | uncertainty or changes in governmental regulation, including applicable to travel services operations and internet and e-commerce services; |
• | uncertainty or changes in tax laws and regulations; |
• | limited access to financing, both for companies and for consumers; |
• | exchange and capital controls; |
• | limited infrastructure, including in the travel and technology sectors; |
• | adverse labor conditions and difficulties in hiring, training and retaining qualified personnel; |
• | the challenges of doing business across a region with multiple languages, different currencies and regulatory regimes that varies from country to country; and |
• | the impact of adverse global conditions in the region. |
• | health-related risks, such as the ongoing COVID-19 pandemic, or future outbreaks of Zika virus, H1N1 influenza, Ebola virus, yellow fever, avian flu, or other serious contagious diseases; |
• | terrorist attacks or threats of terrorist attacks or wars; |
• | fluctuations in currency exchange rates; |
• | increased prices in the airline ticketing, hotel, or other travel-related sectors; |
• | significant changes in oil prices; |
• | travel-related strikes or labor unrest, bankruptcies or liquidations; |
• | travel-related accidents or the grounding of aircraft due to safety or other concerns; |
• | political unrest; |
• | high levels of crime; |
• | natural disasters or severe weather conditions, including volcanic eruptions, hurricanes, flooding or earthquakes; |
• | changes in immigration policy; and |
• | travel restrictions or other security procedures implemented in connection with any major events, particularly those that affect travel by Latin Americans within their respective countries, across the region and outbound from the region to the rest of the world. |
• | we fail to offer compelling products and services; |
• | users increasingly engage with competing products and services instead of ours; |
• | we fail to introduce new and exciting products and services or those we introduce are poorly received; |
• | our websites or mobile apps fail to operate effectively on the iOS and Android mobile operating systems; |
• | we do not provide a compelling user experience; |
• | we are unable to combat spam or other hostile or inappropriate usage on our products, or if our anti-fraud measures are too conservative and we reject too many bona fide transactions; |
• | there are changes in user sentiment about the quality or usefulness of our existing products and services; |
• | there are concerns about the privacy implications, safety, or security of our products and services; |
• | our suppliers decide to discontinue the offering of their products through our platform; |
• | technical or other problems frustrate the user experience, particularly if those problems prevent us from delivering our products in a fast and reliable manner; |
• | we fail to provide adequate service to our travel customers and travel suppliers; |
• | we or other companies in our industry are the subject of adverse media reports or other negative publicity; or |
• | we do not maintain our brand image or our reputation is damaged. |
• | the hosting of our websites; |
• | certain software underlying our technology platform; |
• | transportation ticketing agencies to issue transportation tickets and travel assistance products, confirmations and deliveries; |
• | third-party local tour operators to deliver on-site services to our packaged-tour customers; |
• | assistance in conducting searches for airfares and process air ticket bookings; |
• | processing hotel reservations for hotels not connected to our management system; |
• | processing credit card, debit card and banking payments; |
• | providing computer infrastructure critical to our business; and |
• | providing customer relationship management (CRM) services. |
• | our ability to attract travel customers in a cost-effective manner, including in markets where we have lower brand awareness or operational history; |
• | our ability to improve the competitiveness of our product offerings including by expanding the number of suppliers and negotiating fares and rates with existing and potential suppliers; |
• | our ability to market and cross-sell our travel services and products to facilitate the expansion of our business; |
• | our ability to compete effectively with existing and new entrants to the Latin American travel industry; |
• | our ability to expand and promote our mobile platform and make it user-friendly; |
• | our ability to build required technology; |
• | our ability to expand our businesses through strategic acquisitions and successfully integrate such acquisitions; |
• | the general condition of the global economy (particularly in Latin America) and continued growth in demand for travel services, particularly online; |
• | the growth of the internet and mobile technology as a medium for commerce in Latin America; and |
• | changes in the regulatory environments where we operate. |
• | measuring and limiting credit risk adequately, in particular given that the typical buy-now pay-later Koin users are individuals with limited access to traditional financial services; |
• | managing for and limiting payment defaults; |
• | greater exposure to fraud-related risks, including identity theft and payment fraud; |
• | additional compliance with legal obligations related to data privacy, data protection and information and cybersecurity; and |
• | potential risks associated with commercial relationships with merchants. |
• | have a majority of our board of directors be independent; |
• | have a compensation committee or a nominating or corporate governance committee; |
• | have regularly scheduled executive sessions with only non-management directors; |
• | have an executive session of solely independent directors each year; or |
• | adopt and disclose a code of business conduct and ethics for officers, directors and employees. |
• | Our board of directors may without prior notice to shareholders, or obtaining any shareholder approval, amend our memorandum and articles of association to authorize and subsequently issue an unlimited number of preferred shares in one or more classes and series and designate the issue prices, rights, preferences, privileges, restrictions and terms of such preferred shares. |
• | Our board of directors is currently made up of seven directors divided into three classes, with each class having a three-year term. Class I’s, Class II’s and Class III’s terms will expire at the Company’s annual meetings in 2024, 2022 and 2023, respectively. The only circumstance in which shareholders can elect new directors is at an annual meeting and in respect of those board seats whose term is expiring at the annual meeting. Elections will take place by plurality voting. Shareholders do not have the power to increase or reduce the size of the board or fill a vacancy on the board, which matters are the exclusive authority of our board of directors. |
• | Our shareholders may only remove directors for cause and only by resolution approved by shareholders holding not less than two-thirds of the voting rights at a meeting of shareholders called for the stated purpose of removing the director. |
• | There are a number of restrictions, conditions and other requirements (including advance notice period requirements) that apply to our shareholders’ ability to (i) request special meetings of our shareholders; (ii) nominate persons for election as directors at annual meetings of our shareholders; and (iii) propose other items of business or other matters for consideration at any annual or special meetings of our shareholders. |
• | All resolutions of the shareholders must be adopted at a meeting of our shareholders convened in accordance with our memorandum and articles of association. Shareholders are prohibited from adopting resolutions by written consent. |
• | There are restrictions on amending our memorandum and articles of association. Certain provisions of our memorandum and articles of association (including many of the provisions described above) may only be amended with the approval of both our shareholders and our board of directors. Provisions that may be amended by the shareholders without board approval require the affirmative vote of holders of two-thirds of the shares entitled to vote on the resolution. |
ITEM 4 |
INFORMATION ON THE COMPANY |
A. |
History and Development of the Company |
1999 |
• Launched site in Argentina. | |
2000 |
• Launched sites in Brazil, Chile, Colombia, Mexico and Uruguay. | |
2001 |
• Launched sites in the United States and Venezuela. | |
2007 |
• Launched site in Peru. | |
2009 |
• Expanded our offerings to include hotels. | |
• Launched sites in Bolivia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Nicaragua, Panama, Paraguay and Puerto Rico. |
2010 |
• Launched sites in El Salvador and Honduras, reaching our 20th market. | |
• Cumulative one million travel customers served. | ||
2012 |
• Launched our mobile apps on Android and iOS. | |
• Expanded offerings to include packages, rental cars and cruise products. | ||
2013 |
• Reached one million downloads of our mobile app. | |
• Expanded our offerings to include destination services. | ||
• Expanded hotel offerings to include vacation rentals. | ||
2014 |
• Cumulative 10 million travel customers served. | |
• Our mobile app is included in the iTunes Store’s “Best of 2014”. | ||
• Launched travel affiliates program. | ||
• Expanded our offerings to include travel insurance and travel assistance. | ||
2015 |
• Reached 10 million downloads of our mobile app. | |
• Deepened strategic partnership with Expedia, including its equity investment in our Company. | ||
2016 |
• Awarded “E-commerce Leader in the Tourism Industry in LATAM” by the Latin American E-Commerce Institute. | |
• Expanded our offerings to include our bus product. | ||
• Expanded our destination service offerings to include our local concierge product. | ||
2017 |
• Initial public offering and listing on the New York Stock Exchange. | |
2018 |
• Launched sales call centers in Peru, Ecuador, Mexico, Chile, Colombia, Argentina and Brazil. • Developed tour operation business. | |
2019 |
• Completed rebranding our core business, including logos, website and images in order to update our outward facing content. • Acquired Viajes Falabella in Chile, Argentina, Peru and Colombia. • Entered into an API connectivity agreement with CTrip International Travel (Hong Kong) Ltd., for the integration of Despegar direct lodging offering in Latin America with CTrip’s platform. • Entered into a ten-year exclusive agreement with Industrial and Commercial Bank of China Limited, to launch a co-branded credit card in Argentina in partnership with Mastercard. |
2020 |
• Acquired Best Day, a leading travel agency in Mexico. • Acquired an 84% equity stake in Koin, an online payment platform in Brazil. • Entered into a co-branding agreement with Banco Santander to launch a co-branded credit card under our loyalty program in Brazil.• Entered into a ten-year commercial partnership agreement with Tarjeta Naranja, the leading branded proprietary credit card issuer in Argentina and a subsidiary of Grupo Financiero Galicia.• Entered into an Investment Agreement for the issuance 150,000 Series A Preferred Shares of the Company and warrants to purchase 11,000,000 ordinary shares of the Company at an exercise price of $0.01 per share (the “Warrants”) with LCLA Daylight LP, an affiliate of L Catterton Latin America III, L.P. • Entered into an Investment Agreement for the issuance of 50,000 Series B Preferred Shares to Waha LATAM Investments Limited, an affiliate of Waha Capital PJS. | |
2021 |
• Entered into a co-branding agreement with Banco Invex to launch a co-branded credit card under our loyalty program in Mexico.• Published our first corporate sustainability report, which constitutes a first step in the Company’s ESG process. • Launched our loyalty program in Mexico, through which customers have access to exclusive discounts and collect points that can be exchanged for our services. The loyalty program marked the one-million-member milestone during 2021. | |
2022 (to date) |
• Reached an agreement to acquire a 51% ownership stake in Stays.net, Brazil’s leading vacation rental channel manager for a total price of approximately $3.1 million. Stays.net is a preferred software partner for leading international booking platforms to offer vacation rentals. Completion of the transaction is subject to customary closing conditions and is expected to occur in the second quarter of 2022. • Acquired the remaining 16% equity from minority shareholders of Koin. |
B. |
Business Overview |
• | Increasing internet penetration . |
• | Increasing adoption of mobile devices, including smartphones |
• | Superior user experience |
• | Growth in banked consumers and proliferation of credit products |
• | scaled customer support with better flexibility integrating 46% more resources and 50% more providers in multiple countries; |
• | improved customer experience through resources and process re-engineering, where phone service became two times better and time to resolve customer needs became 40% more efficient. Additionally, we continue to invest in our self-service platform improving its performance even as suppliers’ commercial terms kept changing; and |
• | improved platform productivity by 25%. |
• | global OTAs with presence in Latin America, such as Booking.com and Expedia and travel metasearch sites; |
• | search websites and apps, such as Google and its travel businesses, and e-commerce and group buying websites and apps; |
• | alternative accommodation and vacation rental businesses, such as Airbnb; |
• | local offline travel agency chains and tour operators, such as CVC Brasil Operadora e Agência de Viagens; and |
• | smaller online travel agencies lacking a pan-regional presence. |