VRX Worldwide - financials - annual reports

2008 Annual Report

Letter to Shareholders

Over the past nine years VRX has been in a continuous state of change. The one constant throughout has been our ability to create amazing imagery at a scale and consistency that no other company can match. Despite the challenging economic climate in 2008, this competitive advantage enabled us to attract more customers and continue to grow our business on all fronts.

In 2008, our aggregate revenue grew 15% to $4.4 million. Service fees, representing 58% of our total revenue, increased 11% and licensing fees, representing the remaining 42% of our revenue, increased 22%. Our ability to create stunning imagery is the cornerstone of our business and continues to drive all other product and service offerings. Today, we actively work with over 8,000 hotels, keeping their content fresh at all times and providing them with a full suite of content hosting, distribution and licensing services.

Hotels are always in one of two states: being renovated or planning on being renovated.

As content has become more and more important to online consumers, the freshness and reliability of such content has become paramount. Since we began shooting hotels, the percentage of our annual service fees generated from refreshing hotel content has steadily increased with our hotel base.

In the beginning of 2005 we ended an exclusive three year services agreement with Expedia and began offering our production services to all hotel brands within the global hospitality industry. Shortly thereafter, we signed an agreement with Wyndham Hotel Group to undertake the industry’s largest photography initiative, covering 6,000 hotel properties across North America; including all Howard Johnson, Super 8, Travelodge, Ramada, Days Inn, Wingate, Baymont and Knights Inn properties. We completed the project within two years and since then we’ve been responsible for keeping the content of all 6,000 hotels fresh at all times. This project identified a new trend within the hospitality industry of keeping hotel content current at all times versus updating it every three to five years. VRX was uniquely suited to address this new opportunity and since then we’ve since established similar service relationships with many of the world’s leading hotel brands. Four years later, we work with 102 hospitality brands that encompass over 15,000 hotels worldwide - roughly 21% of the hotels represented by the top online travel agencies.

The need to frequently refresh the content of thousands of hotels significantly transformed our service business and strengthened our competitive advantage.

In the beginning, we had a large pool of photographers based in Vancouver that we would send out on thirty to ninety day photography trips. This approach worked extremely well in the beginning as we covered large hotel chains for the first time; however, it quickly became apparent that it wouldn’t enable us to cost effectively refresh their content in a timely, frequent and ongoing manner.

At the end of 2008, we reached optimal hotel density in twelve regions throughout North America. This justified employing one or more full time photographers in each of the twelve regions. Six months later, we have at least one full time, extensively trained, VRX photographer in each of these regions. This regionalization of our photography force exponentially increased the value we bring to our North American hotel clients as it allows us to quickly refresh their content as needed and dramatically reduced the cost structure of delivering our world class photography services.

Since VRX’s beginning, innovation has played a major role in our success.

We were the first company to fully integrate high dynamic range imaging into our production process, we established the first commercial, rich media libraries of destination (2001), hotel (2005) and cruise (2006) content and in 2008 we launched Athena, the first rich media distribution system that addressed the content and business needs of both hotels and online travel agencies.

The launch of Athena in early 2008 changed the way the online travel industry thought about content distribution.

Athena naturally evolved from our Hotel Program (2005) to provide greater pricing and content flexibility. Since Athena’s launch in mid 2008, many of our existing clients have joined Athena and we’ve signed agreements with well known brands including Red Roof, Fairmont, Loews, Pegasus and Expedia.

As the online travel industry has continued to change over the years, our ability to quickly adjust our offerings and continually deliver new value has established and maintained VRX’s position as a leader within our industry.

Despite the weakening global economy, I’m cautiously optimistic for what lies ahead. Throughout the remainder of the year, we will continue to focus on growing revenues by landing new hospitality clients, deepening our relationships with existing customers and adding new content related products and services. In addition, we will continue our cost reduction and productivity initiatives that were started at the beginning of 2008.

I’d like to thank the entire VRX team, including our new regional photographers, for their commitment, hard work and enthusiasm.

On behalf of our Board of Directors and all of us at VRX, I’d like to thank our investors and our customers who continue to support us and our passion for producing stunning visual content.

Regards,

David MacLaren
President and CEO

	Annual Reports
	2008 Annual Report 2007 Annual Report 2006 Annual Report 2005 Annual Report 2004 Annual Report 2003 Annual Report 2002 Annual Report 2001 Annual Report

	2008 Annual Report and Letter to Shareholders
	2008 Annual Report Click here to download Letter to Shareholders Over the past nine years VRX has been in a continuous state of change. The one constant throughout has been our ability to create amazing imagery at a scale and consistency that no other company can match. Despite the challenging economic climate in 2008, this competitive advantage enabled us to attract more customers and continue to grow our business on all fronts. In 2008, our aggregate revenue grew 15% to $4.4 million. Service fees, representing 58% of our total revenue, increased 11% and licensing fees, representing the remaining 42% of our revenue, increased 22%. Our ability to create stunning imagery is the cornerstone of our business and continues to drive all other product and service offerings. Today, we actively work with over 8,000 hotels, keeping their content fresh at all times and providing them with a full suite of content hosting, distribution and licensing services. Hotels are always in one of two states: being renovated or planning on being renovated. As content has become more and more important to online consumers, the freshness and reliability of such content has become paramount. Since we began shooting hotels, the percentage of our annual service fees generated from refreshing hotel content has steadily increased with our hotel base. In the beginning of 2005 we ended an exclusive three year services agreement with Expedia and began offering our production services to all hotel brands within the global hospitality industry. Shortly thereafter, we signed an agreement with Wyndham Hotel Group to undertake the industry’s largest photography initiative, covering 6,000 hotel properties across North America; including all Howard Johnson, Super 8, Travelodge, Ramada, Days Inn, Wingate, Baymont and Knights Inn properties. We completed the project within two years and since then we’ve been responsible for keeping the content of all 6,000 hotels fresh at all times. This project identified a new trend within the hospitality industry of keeping hotel content current at all times versus updating it every three to five years. VRX was uniquely suited to address this new opportunity and since then we’ve since established similar service relationships with many of the world’s leading hotel brands. Four years later, we work with 102 hospitality brands that encompass over 15,000 hotels worldwide - roughly 21% of the hotels represented by the top online travel agencies. The need to frequently refresh the content of thousands of hotels significantly transformed our service business and strengthened our competitive advantage. In the beginning, we had a large pool of photographers based in Vancouver that we would send out on thirty to ninety day photography trips. This approach worked extremely well in the beginning as we covered large hotel chains for the first time; however, it quickly became apparent that it wouldn’t enable us to cost effectively refresh their content in a timely, frequent and ongoing manner. At the end of 2008, we reached optimal hotel density in twelve regions throughout North America. This justified employing one or more full time photographers in each of the twelve regions. Six months later, we have at least one full time, extensively trained, VRX photographer in each of these regions. This regionalization of our photography force exponentially increased the value we bring to our North American hotel clients as it allows us to quickly refresh their content as needed and dramatically reduced the cost structure of delivering our world class photography services. Since VRX’s beginning, innovation has played a major role in our success. We were the first company to fully integrate high dynamic range imaging into our production process, we established the first commercial, rich media libraries of destination (2001), hotel (2005) and cruise (2006) content and in 2008 we launched Athena, the first rich media distribution system that addressed the content and business needs of both hotels and online travel agencies. The launch of Athena in early 2008 changed the way the online travel industry thought about content distribution. Athena naturally evolved from our Hotel Program (2005) to provide greater pricing and content flexibility. Since Athena’s launch in mid 2008, many of our existing clients have joined Athena and we’ve signed agreements with well known brands including Red Roof, Fairmont, Loews, Pegasus and Expedia. As the online travel industry has continued to change over the years, our ability to quickly adjust our offerings and continually deliver new value has established and maintained VRX’s position as a leader within our industry. Despite the weakening global economy, I’m cautiously optimistic for what lies ahead. Throughout the remainder of the year, we will continue to focus on growing revenues by landing new hospitality clients, deepening our relationships with existing customers and adding new content related products and services. In addition, we will continue our cost reduction and productivity initiatives that were started at the beginning of 2008. I’d like to thank the entire VRX team, including our new regional photographers, for their commitment, hard work and enthusiasm. On behalf of our Board of Directors and all of us at VRX, I’d like to thank our investors and our customers who continue to support us and our passion for producing stunning visual content. Regards, David MacLaren President and CEO