Happy New Year

Even Minnie Knows It's A Joke!

Exactly Who Owns YOUR Travel Biz?

Just before Christmas, we reported that it seemed YTB was changing their name to CTB. We reviewed the document and all we can say (in the immortal words of Rick Ricketts---Wow!, Just Wow!) As I mentioned before, if you are interested to see the 49 page documement that replaced the 6 page one, please send me an email.

To any of the YTB Affiliates, RTAs, or soon to come "Travel Agents" reading this blog, I suggest that you take this document to your attorney and get advice. One thing you need to know is that YTB reserved the right to change the terms (at their whim) when you originally signed up. By continuing to participate in the program, you are essentially agreeing to the new terms. Please get some professional advice, it will be the best $100 you ever spend.

With a 49 page document, you can imagine that there are a lot of issues. I will discuss (by page) the ones that seem the most critical to me.

• Page 7. CODE OF ETHICS. While they say that the founders of YTBTN have strong convictions, it does not seem to flow outward to the TSOs. There are still all sorts of questionable behavior and promotion going on. I feel that YTBTN does not care, until it becomes an issue.
• Page 9. Section 1.4 DELAYS. This is a frightening section as it allows YTBTN to default on any payments owed to the TSO for any number of reasons. Notably, government decrees or orders.
• Page 10. Section 2.1REQUIREMENTS TO BECOME AN AFFILIATE. It states to become a "Travel Agent" you must complete, enroll, and pay for ALL E-Campus modules. Currently there is no timeline for when all the modules will be available. Is YTB certifying people as "Travel Agents" when they complete only those available?
• Page 11. Section 2.4 GENERAL RESPONSIBILITIES OF A TRAVEL SITE OWNER. Section "b" prevents you from engaging any supplier in a dispute. Honestly, this is what agents do for their clients. Section "c" prevents you from advertising any trips online.
• Page 12. Section 2.6 TALENT RELEASE. I am not sure I woudl be willing to give YTBTN "lifetime" rights to my images, thoughts, and statements.
• Page 13, Section 3.2 ADVERTISING. This section precludes a TSO from using any promotional materials that were not produced by YTB. It further clarifies it that TSOs are not allowed to produce their own literature, ads, sales aids, promo materials, or internet web pages.
• Page 14. Section 3.3 INTERNET WEBSITES AND E-MAIL COMMUNICATIONS. This section says that the ONLY internet web page that you can use is the replicated site provided by YTBTN. TSOs are not allowed to design any other web site that that uses the YTB name, logos or promotes YTB either directly or indirectly.
• Page 15. Section 3.5. BLOGS, CHAT ROOMS, SOCIAL NETWORKS, ONLINE AUCTIONS, and OTHER ONLINE FORUMS. This prevents you from utilizing any blogs (Doug are you listening?), chat rooms, or essentially ANY internet means to to "market, sell, advertise, promote, or discuss YTBTN's products or services. Say goodbye to commenting on this blog by name, signatures on forums, the YTB room in WAHM, the YTB Family Ning Forum, all blogs and essentially all websites owned by TSOs that mention YTB.
  
• Page 15. Section 3.6 DOMAIN NAMES AND E-MAIL ADDRESSES. Gone are the days of having YTB featured in any of your email addresses or domains.
• Page 19. Section 3.16 CONFLICTS OF INTEREST NON-SOLICITATION. TSOs are not allowed to recruit other people from YTB or their customers into any other MLM company. Further, you are not allowed to recruit or solicit anyone in YTB or their customers for a year after you leave. This might actually make you an employee. Does not sound too independent to me.
• Page 20. Section 3.16 CONFLICTS OF INTEREST NON-SOLICITATION. You are not allowed to sell any competing products. With the addition of the lotions and potions and so forth, it seems that YTB is competing everywhere. And then there is the crazy (section "c") requirement about talking about other network marketing opportunities within 2 hours or 5 miles of any YTBTN event.
• Page 20. Section 3.18 GOVERNMENTAL APPROVAL OR ENDORSEMENT. Well, it is apparent that the California Attorney General is not endorsing YTB any time soon, but how may recruiting meetings have taken place where they say that YTB is legitimate and has been approved and been registered with "the Attorney General in all 50 states"?
• Page 21. Section 3.20 INCOME TAXES. Well, with the average TSO earning $139 a year in income, I suspect YTBTN saves a lot of money on printing these 1099s.
• Page 21, Section 3.21 INDEPENDENT CONTRACTOR STATUS. From a lot of the other rules in this document, it seems that you are not that independent at all. I also find it interesting that they state you are not buying a franchise or a business opportunity. What is the opening line of every YTB presentation--we offer two separate "business opportunities"?
• Page 21. Section 3.22 TRAVEL SITE OWNER'S NAME. You cannot advertise that you are part of YTB in the phone book nor are you allowed to answer the phone like you are part of YTB. Hopefully, little Timmy will not answer a ringing phone, "Hello, YTB Travel"
  
• Page 23. Section 3.24 CONFIDENTIALITY. This is the most frightening page in the document for any one that is interested in selling travel. It specifically states that your customer information is the "exclusive property" of YTBTN. So, you work hard and find customers and YTBTN takes them from you and then owns them. Of course clients will do what they want, but EVERY other legitimate host has a provision that states that the clients belong to the agent. But you can be sure that if you leave, YTBTN will be marketing to your clients very heavily.
  
• Page 26. Section 4.8 SALE, TRANSFER OR ASSIGNMENT OF TSO'S BUSINESS. While the concept of someone actually selling this "business" is amusing in an of itself (I mean why would you not just buy a new one on sale for $250?), there is a clause to protect the upline at all costs. Also notable is the the clause that requires the purchaser to assume "all" obligations. I am not sure how YTBTN can legally require that a buyer assume all obligations. Most business sales are typically asset only transactions; liabilities remain with the seller.
• Page 30. Section 5.2 NON-DISPARAGEMENT. This says you are allowed to talk nice of YTBTN, but if you discover something that you disagree with, they will not address it at all. You are simply not allowed to voice any concern if they feel it is negative.
• Page 31. Section 5.4 VENDOR CONFIDENTIALITY/COMMUNICATIONS. You are no longer allowed to divulge the commission levels paid by vendors. So much for every recruitment presentation along with the examples.
• Page 32. Section 6.1 TRAVEL SALES. Customers must not be abandoned under any circumstances. (Unless they are in Atlanta and then that is ok because someone will step in). But my question is if YTBTN is serious about this, perhaps they ought to offer a method to contact the TSO on the websites. If you look at any site, there is still no way to contact the TSO and the minimal help offered still suggests to call the supplier directly for issues.
• Page 33. Section 7.1 BONUS AND COMMISSION QUALIFICATIONS. If you are not in COMPLETE compliance with all 49 pages of this document, YTBTN can elect to not pay you commissions or bonuses owed.
• Page 33. Section 7.2 ADJUSTMENTS TO BONUSES AND COMMISSIONS. This says that if the client cancels travel and the client is entitled to a refund, no commission will be paid. As any travel professional knows there are several instances where a client receives a refund and the commission is still paid.
• Page 34. Section 7.6 REPORTS. Apparently the big SAP program is not all that. Any reports not really guaranteed to be accurate. So if your client cancels and you do it through the Back Office, there is a possibility it might never make it.
• Page 36. Section 9.1 DISCIPLINARY SANCTIONS. This is a pretty extensive list and it seems they left out water boarding.
• Page 40. Section 10.2 SALES TAXES. I suspect (hope) this is a mistake, but this says YTBTN collects sales taxes on ALL transactions and remits them to the proper states. Well, many (if not most) states do not assess sales tax on travel. If YTBTN is collecting it, where is it going?
• Page 41. Section 11.1 EFFECT OF CANCELLATION. While most legitimate hosts will work with an independent contractor, YTBTN has refused to transfer any bookings. This further emphasizes that the clients do indeed belong to YTBTN.
  

Please Take Off The Blinders

It is always good to end the year upbeat. There are many reasons to be upbeat, but one recent blog post really had me (as my kids might say) ROTFLMAO.

The author was taking a shot at Joystar (I am no fan either) and some of the shots were amusing. For instance, he noted the following:

• He had covered the "exploits" of the Joystar CEO and his previous MLM. (Well, given that the author is in a MLM himself, dissing MLM does not seem right, but what about the Coach? Exploits? Lisa Marie...gas additives...AL Williams....come on)
• Joystar failed to pay commissions to agents. (This does indeed suck. But YTB just released a document that allows them to do the same thing.)
• Joystar laid off 14% of it's corporate staff. (Again, this sucks, but YTB also laid off staff. And when we commentexd on that, it was hailed as a good thing in a bad economy. But I guess it is not a good thing for Joystar.)
• Joystar did not renew SOTs and lost their CLIA accreditation and earned it back. (Well we all know that losing a CLIA accreditation is pretty bad--especiall when you don;t have IATAN to fall back on. Joystar did lose it temporarily. Unlike YTB who lost the IATAN accreditation, appealed the termination, and lost that. I shudder to think what might happen if CLIA wised up and closed the loophole and gave them the boot--back to the RTA caard for them.)
• Joystar is being sued by IHG Hotel Group for $163,000. (That amount is less than a month's new recruits to YTB. But last time I checked (and this may indeed change) but Joystar was not being sued by the Attorney General of California for $25 million nor did they have two separate class action suits filed against them in excess of $100 million.)

But the best ine in the entire post was after the author detailed all these "reasons" why Joystar is bad, he says, "And some think YTB has problems?"

To the author I say it is really time to take off the blinders. Preferrably before sending in that next payment of $49.95. Do you honestly not see the trouble looming on the horizon?

Hey Carnival!

Well, it has been just over a year since Lisa Bauer, Dondra Ritzenthaler, and Royal Caribbean took the gutsy move to terminate relationships with companies they deemed to be card mills. It has also been almost a year and Carnival Cruise Lines has been mum on the topic.

The question I have for Micky Arison and Gerry Cahill centers around if that was a good move or not? At what cost did you receive any incremental revenue? Did you receive any?

According to the 3rd Quarter SEC filings, it seems that Royal Caribbean's income is up 4.2% for the quarter and 7.4% for the year; while Carnival is down 3.2% for the quarter and 4.4% for the year. I know it is hard to compare apples to apples when Carnival has so many brands that are really diverse, but the bottom line is telling.

I wish I could find a breakout by brand because I content that continuing to do business with MLM or Card Mill agencies is indeed bad business.Looking at the bottom line, it appears that the expected incremental revenue from Royal Caribbean never materialized for Carnival.

If we look at one of the known agencies that was terminated by Royal Caribbean (YTB) is it obvious from their own SEC numbers that they bulk of their people do not sell much product. The Referring Travel Agents were responsible for a reported (yet unverified) $211 million in sales for 2007. There are claims that 2008 sales are higher, but that remains to be seen since their enrollment has dropped significantly.

So the question to Carnival remains was the $33 million paid in commission really worth the additional sales? The YTB numbers indicate that the vast majority of sales made are for personal travel and not to that of legitimate clients. The California Attorney General has also alleged this in his $25 million lawsuit against YTB. So why is Carnival happy with essentially discounting cruises by 16% that they likely would have captured in any event? Sure, there are a lot of people in YTB that took cruises ONLY because of the discount, but come on--$33 million? And that does not even cover the override agreement in place. So is this really good business?

What about the bad press? Remember the YTB Travel Agent in Tennessee that sold a Carnival Cruise to "Grand Caymen" to hundreds of high school seniors and then vamoosed with the money? What was the cost to the reputation of Carnival and YTB?

What about your additional cost? There are marketing costs to attend their events, costs to facilitate the product update calls, and let's not forget that Carnival flew res center agents to Wood River to handle consumer calls for the recent "Sail-A-Thon". Why doesn't Carnival send res agents to all travel agencies to handle consumer inquiries? I think I know the answer--and I bet Carnival does as well.

Have you noticed a decline in bookings from legitimate agencies that used to support Carnival in years past? Has Royal Caribbean seen an increase?

I contend that accepting Card Mill business is likely bad business. Your bottom line sure seems to support this as well.

2009 looks to be one of the more challenging years facing the travel industry. Who is better positioned to help out Carnival Cruise Lines? Is it the travel professional who knows your product and sells to the public? Or is it the "I just bought my credential" agent that is looking for a 16% discount on his own cruise.

YTB Director Rings For Sale! Build Your Business With These Rings!

Yes, with the mere presence of these rings, you can build your own business.

Originally paid $4600 and willing to let them go for $2500 (Hmm, pretty close to how the stock has performed this year).

From the original owner (who has the original boxes):

"YTB is a Great Company... These rings will help you build your YTB Business."

It doesn't matter that you didn't earn them, you can just buy the ring just like you can buy your credentials.

If anyone is interested in this ring and a ladies version, click here very fast as I am sure these rings will go fast--or YTB will REACT and have the site pulled down. And there is an actual receipt--for some reason I thought YTB gave those rings to the winners sort of like the SuperBowl or World Series, but I guess I should have known better. But hey, it's a tax deduction!

Merry Christmas!!

Wishing Everyone A Very Merry Christmas!

'Twas the Night before Christmas

'Twas the Night before Christmas

(YTB version by Steve Mencik)

(with apologies to Clement Clarke Moore)

'Twas the night before Christmas and all through the land,
The YTB minions were happy, all was just grand,
Their websites were posted, their blogs filled with air,
In hopes that many travelers would soon visit there.

The RTAs and the REPs were all snug in their beds,
While visions of dollar signs danced in their heads.
The Coach and his son and their jolly elf Kim,
Would make sure that the money would simply rush in.

Then some REPs misbehaved at trade shows and FAM trips,
TTAs and suppliers said they acted like Dips.
John started a blog to discuss all this stuff,
The YTB crowd dismissed it as fluff.

He noted the fact that the average RTA,
Received next to nothing in annual pay.
The crowd said that those facts were real hazy,
You only would fail if you were very lazy.

The Coach and his cronies bought an abandoned K-Mart,
From there their empire would get a great start.
The loan for the land came from a sweetheart bank,
Run by a YTB director, and soon that bank sank.

Another director had a plane on sale for a while,
So the YTB three bought it, to travel in style.
While the company was growing, they raked in the money,
But they needed to stash it before things got funny.

They threw a big bash in the town of St. Louis,
With trimmings and trappings that were all superfluous.
The biggest attraction was a statue of foam,
That made all the environmentalists grimace and groan.

A Grumpy Old Agent started a long Card Mill list,
YTB was on it, I'm sure they were pissed.
RCL took notice and Perillo did too,
Soon even IATA said, "YTB you're through!"

But Coach said, "Who needs them, we'll be okay"
"We've got an ARC number, we're here to stay."
The California AG looked hard, yes he did,
And finally decided YTB's a pyramid.

Some former RTAs thought that they had been swindled,
They filed their lawsuits, YTBs numbers they dwindled.
While the SEC filings showed ever large losses,
The YTB minions cheered on their bosses.

Things aren't so bad, but the stock it would sink,
The stock could only be listed on sheets that are pink.
The DSA says we're great, why give us that ink?
How could it be bad, YTB's featured in Inc.?

But the losses were mounting, the effects they were telling,
YTB started to shed assets they were selling.
First an office they'd bought only one year before,
With office equipment included and more.

Then they sold off the jet to a company unknown,
But wait, the deal's off, they couldn't get a loan.
So they found another firm, but that deal wouldn't stay,
So Coach and his son figured out another way.

So the YTB three read on up on Robert Irsay,
And said to themselves maybe it's better this way.
We'll take our trucks to the K-Mart loading docks,
And empty the place and change all the locks.

We'll fill up the jet and to Rio we'll go,
We'll be out of the country and have all of our dough!
The three laughed as they left and soared out of sight,
"Sorry suckers!", they said, "have a pleasant good night."

Wow, This Incentive Sure Sucked!

In a desperate attempt at jump starting the anemic recruiting due to the legal problems of YTB, Coach called a play in August where the bonus levels were reset so a Rep woudl earn a $1000 bonus for every 6 members recruited regardless if their Power Team fell below a factor of six. No need to replace fallen RTAs.

Seemed like a great plan. Then he sweetened the deal and said that if you could earn 5 of those bonuses between August and the end of November, he woudl kick in an additional $2500.  At the time I called this another carrot that was unreachable for most. And apparently I was correct.

A total of 39 people out of an eligible 305,000 actually earned the bonus. Someone do the math and tell me what fraction of a single percentage that represents?  So, YTB has paid out $97,500 in additional bonus money. Each of those people had to recruit at least 30 RTAs.

So if my math serves me right, this group is responsible for 1170 new RTAs in a 4 month period. The sign up fees alone on this equal $526,441. And we know YTB collects the first month rent up front as well, so that is at least another $58,441.

It seems as the Rep sales force (who was recruiting at a pace of 500 per day a year ago) is following the lead of the RTA sales force and, well not selling that much,

And again, it shoudl be noted, that the loudest mouths on this blog and the various forums apparently did not make the grade!

And Now For An Encore I Present...

Ladies and gentlemen, boys and girls, please put your hands together for the return engagement of none other than the one, the only, the fantastic....

TravelMoms

Yes, you thought she was gone. You may have thought YTB gave her the boot*, but she is back in all her glory and in her absence has now become a Destination Wedding Specialist!

*They probably just told her to go play quietly in another corner rather than give up the $50 a month!

YTB Changes Name. Now Called CTB

It is a good thing that YTB added Identity Theft to the "Extras" tab on all those cloned websites.

In case all RTAs have not seen the new document, I suggest that you carefully read the document in your back office entitled Travel Site Owner Policies and Procedures (modified 12/15/2008)

This is one of the most frightening documents I have read in a long time and will be addressing several key areas in the upcoming days. However, it is clear that YTB is taking the YOUR out of the Travel Biz!

The new restrictions, rules, and edicts essentially decimate whatever business you thought you may have built over the years. You do not have a travel business. As a matter of fact, I might suggest that you might even be considered employees based on what is stated in that document.

To the 90 some thousand RTAs that remain, welcome to Coach's Travel Biz!

Since blogger does not support uploading of a PDF file, if you cannot access the document in your back office, please click here and I will be glad to email you a copy.

Meet Mr. Ponzi

There was an article on the AP wire today that I thought was very interesting, and eerily similar to a cause near and dear to this blog. As many know, Bernard Madoff has been arrested and accused of running the world's largest Ponzi scheme. The experts that were interviewed for this AP article were quick to point out some commonalities of the con men who run the schemes.

• They seem trustworthy because of their charm, their command of finance and the unshakable confidence that they portray
• A Ponzi scheme, or pyramid scheme, is a scam in which people are persuaded to invest in a fraudulent operation that promises unusually high returns.
• People who run Ponzis generally fall into two categories: hucksters like Ponzi who plan to cheat investors and get out quickly, often fleeing the country, and people who start a legitimate investment venture but lose money, then try desperately to cover it up and dig themselves into a deeper and deeper hole.
• "Looking successful is the key because everyone's first question is going to be, `If this is such a great deal, then why are you wearing a cheap suit?'" said Eric Sussman, a former federal prosecutor from Chicago who helped on about a dozen Ponzi cases. "They have to have all the accoutrements of success."
• The Madoff debacle appears to be typical of Ponzi schemes in another way: They are typically orchestrated by people who look to their own churches.
• "Any Ponzi scheme is built on trust. People can't ask too many questions."

Wow, does this sound liek a familiar story? Perhaps the most telling was the opening line.....

They're smart and charming. They have an aura of success about them and exude respectability. Above all, they instill confidence.

Which is, after all, why they are called con men.

Bone Up On Your Math Skills

I know we talked about ratios the other day. Now let's see if we can recall our algebraic skills from middle and high schools....solve for n ....

n < 99,896

Need help? For the answer, click here!

High & Dry With YTB

At first, I was cynical. I came across a thread at WAHM about someone who bought a ticket to the UK from an RTA and she was unable to get to the airport. I thought it might be a Traverus fishing expedition at first, but ultimately it was a legitimate client and ultimately, she had her problem somewhat resolved.

The back story. Bought a ticket from YTB on an RTA site. Scheduled to fly to the UK on December 15, 2008. Does online check-in on the 14th, per the instructions of the RTA. Get's socked into a blizzard and cannot get to the airport. RTA is unable to help her. YTB headquarters advises her to call the vendor. Client calls the "vendor" and realizes it is none other than Travelocity in India.  Client is given some false promises from Travelocity as well as British Airways and decides to post the saga on WAHM asking for help.

As any travel agent with any experience knows, this is a very routine issue. It could have and should have been handled in a matter of minutes. However, it took three RTAs and a headquarters of 325 employees to get it resolved and the one that resolved it, was not even the one that sold it.

The end result was that the client has a new reservation on a different flight and is submitting the difference in fare to the insurance. Again, had she dealt with a trained professional, there would have been a lot less stress and no increase in fare.

Yes, YTB ultimately got the issue resolved. But this only reemphasises my point that they have no business putting out ill-advised non-trained people to call themselves travel agents--referring or not.  The original RTA had no interest in helping his client (but he readily accepted the commission on the fee). He had no training to even begin to help the client. When the client called YTB, they could not help her--well, it seems they could, they just did not want to--and pushed her off to Travelocity. Does anyone see the problem here?

And I also need to question why the client was told to call Travelocity when YTB has supposedly moved all their booking to a Canadian company. Why weren't the active PNRs bridged to the new fulfillment source? We know what type of control YTB has on the Reps and RTAs and it seems they have a similar level of control on thier PNRs. Frightening for the client.

This was one isolated instance reported on WAHM (of al places), but I have to wonder how many similar issues are poppin up under the radar each day that no one hears about? YTB says they sold $414 million last year. Many are saying they have already sold $1 billion so far this year. You KNOW this instance was a small drop in the bucket.

Kudos to the RTA that ultimately resoved this for the client. She did not have to do anything, but she did the right thing. I am glad she was able to convince whoever she needed to convince to take charge and recticfy the situation. But again, this one RTA likely represents less than 1% of the RTAs in YTB. The one who sold the trip didn't care.

So, I wonder what this client thinks of YTB right now? Who knows, but if it were me, I woudl be thankful for the one RTA and vow to never use them again for the treatment received up to the point when that RTA stepped in.

But YTB does not seem to care that there is yet another RTA or Rep dragging their reputation through the mud.  Well, maybe they like it.

If you want to read the three threads (if they are still online) you can read them:
here
here
and here.

I have a printed copy if they pull them to back up the facts!

Today's Math Lesson: Ratios

A Ratio is defined as the relationship between two numbers. For example, the ratio of travel commissions to recruiting commissions in a MLM travel company might be expressed as $20M:$103M. This represents 14.5% for Travel and 73.4% for Recruiting.

Now the FTC and the California Attorney General both don't like this type of number. They much prefer to see numbers that reflect more product being sold to consumers. Too much recruiting is never a good thing for a pyramid scheme. Never.

So, what is the obvious solution? Sell more product! But, that can be  problematic when your product has a very low yield to begin with; and it becomes even more of a problem when you realize that your sales force is inept.

So, to get the critical ratios up to an acceptable level, the only solution is to branch out and sell more stuff. Preferably products where you do not rely on your sales force and the consumer can handle it on their own.

So enter the following:

• Meats
• Seafood
• Produce
• Baked Goods
• Coffees and Teas
• Quick Meals
• Dining Out
• Flowers
• Rugs
• Pictures
• Furniture
• Kitchen Gadgets
• Garden Items
• Blinds
• Credit Monitoring
• Checks
• Receipt Scanning and Safekeeping
• ID Theft Protection
• Sunglasses
• Organic Products
• Handbags
• Jewelry
• Cars

Oh, and if travel can be sold, all the better. By adding these items, the ratio of product commissions to recruiting commissions will likely increase.  But the secret is to do this BEFORE everyone thinks you are a scam and you have already attracted the attention of numerous government agencies.

A Holiday Check List

• Sell ID cards, get fired by several suppliers--check
• Try to infiltrate Canada without obeying their laws--check
• Get IATAN endorsement yanked--check
• Appeal IATAN yanking and lose--check
• Find loophole in new CLIA requirements--check
• Filter $6 million to private company--check
• Lose a lot of money on buildings--check
• Buy a plane to look important--check
• Sell plane and lose money--check
• Don't listen to the Attorney General in California--check
• Get sued by the Attorney General in California--check
• Bail out the RTA that ripped people off in Baltimore--check
• Bail out the RTA that ripped people off in Houston--check
• Bail out the RTA that ripped people off in Memphis--check
• Pique the interest of the Attorney General in Illinois--check
• Pique the interest of the Attorney General in Florida--check
• Pique the interest of the Attorney General in Texas--check
• Pique the interest of the Attorney General in Louisiana--check
• Pump stock and sell it off--check
• Don't let independent Board Directors do their job--check
• Screw up Burt Saunder's dream for a DC gig--check
• Create a website to further cloud the truth--check
• Layoff 17 employees--check
• Lose $3.3 million in nine months--check
• Implement bonus reset program that fails--check
• Implement unreachable bonus programs that the RTAs will think they can reach--check
• Have more Reps and RTAs leave in the 3rd and 4th quarters than sign up--check
• Mention that Carnival has a rock climbing wall on the Cruise-A-Thon webcast--check
• Have no clue how much travel was sold or how many people sold it--check
• Sell more land to raise cash--check
• Try to deflect the Attorney General by saying its a franchise--check
• Buy some positive press from Saturday Evening Post--check
• Make the claim Inc. magazine endorses us--check

Is YTB About To File For Bankruptcy Protection?

I am not willing to bet the farm on this but after receiving two emails from different sources, reading a lot of commentary on different blogs and forums, and taking some time to think it through, I agree that there is a good chance that YTB might consider filing for bankruptcy protection prior to the end of the year. Most likely in the form of a Chapter 7 filing.

It is painfully obvious, even to the casual observer, that they are really struggling with cash flow, as well as legal issues. In the last month, they have:

• Tried to sell the plane three times (at a loss)
  
• Sold off the lion's share of their headquarters land
• Sold off an office building including furnishings (at a loss)
• Reduced the price to join the scheme by 50%
• Offered ridiculous incentives for existing Reps to recruit more people
• Pre-selling 2009 Convention tickets at a discount to raise quick cash
  

In addition, they were unable to have the Class Action suits dismissed as hoped in the December 8, 2009 Status Hearing. And speaking of hearings, there is another one with the Attorney General scheduled for January 5, 2009.

YTB has been in full out reactive mode for some time now. They are desperately trying to prove to the authorities that they are legal. They have added a new booking engine, they are adding more product (potions and lotions) to their RTA sites. All of these moves are desperate attempts to bring the percentage of non-recruiting revenue up to an acceptable level to appease the Attorney General. And no one really has missed that nuance.

Here is how I predict it plays out--YTB has sold a lot of assets and the proceeds from the assets are likely now no longer assets of YTB, Inc.. The economy is tough despite Coach's proclamation that YTB is recessionproof. The Attorney General is looking to "shut down" YTB and the plaintiffs on the Class Action suits are looking for money. Well, YTB all of a sudden "succumbs" to the economy and files a Chapter 7 liquidation bankruptcy. All of the stock is worthless (did anyone notice the large sell offs the past week?). So a trustee comes in to sell the remaining few assets--remember the valuable ones have already been sold. They liquidate what they can to pay off the top tier creditors. The RTAs and Reps are last on the list. The Attorney General realizes that YTB is shut down and is satisfied and may drop the case. The Class Action suits will need to determine if they have the time, will, and money to pursue a judgment against the individuals since the company is no longer an ongoing concern (a concern brought up several times in the 10-Q filing by their own accounting firm). The Attorney General also needs to make the decision to continue to pursue the principles as well as the Reps that will be names as Does 1 to 100..

Meanwhile. YTB management will look like the poor victims of a poor economy. They will profess that they tried everything--selling assets, decreasing the costs, giving those that want to quit free months, all for the "benefit" of the Reps and RTAs. The Reps and RTAs will buy into this story (as they do with any story told from Wood River) and laud them as heroes. The Reps and RTAs will then re-group and some may stay in travel with a legitimate host, others (most) will simply move onto the next get rich quick pyramid scheme they see. And the three musketeers? They already have their hotel reservations for the 2009 Snake Oil Convention in Vegas!

Burt Quits....Well Sort Of....

Burt Saunders, one of the few "independent" Board members of YTB has resigned his Board seat. But don't feel too sorry, YTB has hired him as a legal consultant for $12,000 per month. Burt's legal expertise is in land use and healthcare. I guess this is just what YTB needs after they have sold all the land and buildings and have an Attorney General breathing down their neck.

I am not sure why Burt woudl choose to work for peanuts, when he could be making $30,000 per month if he just became a Recessionproof RTA.

But I guess $144,000 a year is better than nothing.

Riddle Me This!

We just heard that a MAJOR travel industry supplier has broken out the old word processor and is preparing a letter to be sent to a MAJOR MLM/Card Mill travel agency suggesting that they part ways.

I wonder who could be the MAJOR supplier?

I wonder who could be the MAJOR MLM or Card Mill travel agency?

Stay tuned.  Story is developing!

Wimpy Goes To A Conference

If anyone remembers the old Popeye television cartoon, there was a character named Wimpy who was always ready to pay you tomorrow for a cheeseburger today. Somehow, you always knew that Wimpy was never going to come through on his end of the deal.

When I received an email from YTB last month, I had a similar response. It seems that they are in the process of pre-selling registrations to their Annual Convention (July 29 to August 2, 2009 in St. Louis) for a mere $98. But you need to pay for it by December 31st. After that, it increases to $125 and finally $250 "at the door".

Pre-selling registrations at a discount is nothing new. In fact, CLIA began pre-selling their CLIA 360 show shortly after the last one concluded. But as we all know, thanks to YTB, CLIA is not short of cash and everyone is fairly certain that they will actually be around to have their show.

But such is not the case with YTB. With RTAs flying the coop in droves, the stock tanking, their insiders selling shares, two class action suits, an attorney general suit, and a MAJOR supplier preparing to terminate their agreement, I am not so sure YTB will be around for the big shindig in July.

Where Are They Now?

Over the past year, I have had the "opportunity" to speak, email, and even meet several RTAs and Reps from YTB. At the time, they all had one thing in common--an unrequited love for YTB and the knowledge that they had found the secret to success.

Last week, I took a few minutes and sent them all an email to see how they were doing. Not one was returned. Now that is not surprising at all to me. But was interesting is that the majority of the most ardent supporters of YTB no longer have travel websites. You see, true to the mantra, they included the RTA website address on all their emails to me so I can follow these things. But I have to question why someone that says he is making $30,000 a month decides to throw it all away? Why is it that a man who was an "internet pioneer" and running businesses in many states, threw it all away? Why does someone that can thank YTB for their Cocaine White Bently and Mercedes G-500 just throw it all away?  Why are some of the lower level directors who seemed to have it all throwing it all away?

Why is it that the websites of the 42 business cards I have picked up over the last year from various bulletin boards in restaurants and supermarkets all lead to a dead site? Now mind you, the recruiting site is still active, but the travel sites are all dead.

Well, I think we all know the answer don't we. Even the devout know. Deep down inside they know that they have been taken for a fool. No one wants to believe it. There is always one more shot at the golden ring.  Well, here's the secret, there is no golden ring.

HRH Elizabeth II Better Look Out

The real queen has a competitor. While the real Royal family is wealthy beyond imagination, it seems that The Travel Queen is right on her tail with YTB.

Now I know that YTB has rules about disclosing income, but apparently there is an exception for travel "royalty". Come to think of it, there seems to be exceptions for many in YTB. I guess it just depends on who you sleep with know.

Well, take a look at the Travel Queen. She earned OVER $375,000 last year and you too can email or call the Queen for more information.

I wonder....do they have any palaces in Memphis? Maybe Graceland is up for sale!

The Facts Half-Truths About YTB--Part 8

Today, let's take a look at the eighth and last tab on the new YTB site called www.TheFactsAboutYTB.com . We have saved the best for last!

Fact Check:

The first thing to note is that the URL is "fast"check not "fact" check. A Freudian slip? You tell me.

Rhode Island. A lot of truth here, but it was not YTB that "voluntarily" shut down operations. When they were confronted by the DBR, they made the decision to shut down. It should be noted that at the time they shut down operations, there was already significant progress in the RI legislature to repeal the agency licensing laws. Rather than risk any suits or penalties, YTB likely felt it was better to wait the few months till the legislature approved the new budget which did away with funding for the program.


YTB a Pyramid. YTB has some good info here, but it is flawed. Apparently the Attorneys General in several states also feel it is flawed. Just a cursory look at any of the SEC 10Q or 10K filings will demonstrate that YTB is indeed a pyramid scheme. The majority of their money is earned from recruiting. The websites they "provide" are nothing more than a rebranded site from Travelocity which is available to anyone for free. Of course the true litmus test will be in a court. It may be in California, Florida, Louisiana, Texas or in Washington, DC if the feds become involved. YTB feels they skirt the law by offering travel as an afterthought. If they were interested in being a travel agency, why not eliminate the MLM component of the business model? The answer is too simple--because they would be out of business. The recruiting drives the pyramid. And if the current numbers are indicative, recruiting will dry up pretty quickly in 2009!

Card Mill. YTB was dubbed a Card Mill by Royal Caribbean which terminated their agreement. YTB was dubbed a Card Mill by ASTA. YTB was dubbed a Card Mill by IATAN who rescinded their accreditation. YTB appealed this decision and the decision was upheld. The only entity that does not deem YTB to be a Card Mill is YTB itself. If it looks like a duck.... YTB uses the argument that they sold $414M ($211M) and that proves them to not be a Card Mill. Well, let me put it in a different light. According to their own figures, each of their "agents" sold $1500 in travel in 2007. Does this seem like a profession to you? Or maybe someone buying a trip for themselves. If each agent sold the minimum required by IATAN for a legitimate credential, their sales would be upwards of $6.9 BILLION. It also does not help that CLIA has discovered YTB to be a cash cow for them and is not addressing the loopholes that allow YTB to continue to operate as a Card Mill.

California Attorney General's Lawsuit. They are not commenting on this as they should not be. However, many Reps and RTAs have bragged that Scott Tomer disclosed information about the suit at several large meetings. Regardless, this will be decided in the courts and there is not any "settlement" talk at present. One thing that YTB does not mention here is that the AG was investigating them for 18 months and trying to get them to comply with the State laws. Apparently YTB woudl not comply and the suit was filed. Why did YTB not comply? Why did they not disclose this material information in any of their SEC filings? Why did they not inform the field of the investigation? Why did they allow insiders with inside knowledge of this investigation to sell off huge chunks of stock during the investigation? Isn't this insider trading? Michael Brent, Coach Tomer and others made a LOT of money off of stock sales when the stock was trading high knowing full well that a lawsuit that likely will kill the company was imminent.

Royal Caribbean. Royal Caribbean did a brave and a good thing and made a decision at to what was "good business" and what was "bad business". YTB says they were singled out--they were not. There were several agencies that also were terminated. YTB also says that Royal Caribbean never notified them. Well they did and Royal Caribbean published that notification in the trade press but did not disclose the names of the recipients.

IATA/IATAN Status. This paragraph is factually correct, but it does not say WHY this move was taken. YTB was charged with illegally re-selling the credentials and was terminated by IATAN. Initially YTB thumbed their nose at IATAN feeling they were not needed. When their recruiting started to slide (IATAN was used as a huge selling point) YTB appealed their decision and hired Al Anolik to represent them. The initial decision was upheld and YTB was required to remove all references to to IATAN from their business. Something that has been done corporately, but not in the field. Many Reps are still claiming they can get IATAN, and many business cards and CRTA cards. One RTA just the other day claimed that IATAN would give her a card when she proved her travel sales. She was corrected rather quickly.

Negative Information about YTB. While YTB may consider the negative information a "success tax", most companies woudl not. While YTB may eb very successful in the MLM industry, they are far from it in the travel industry. What they have managed to do is to take an industry and use it to further an agenda to recruit. Travel is an ancillary means to achieve their desired results. Yes, travel is sexy, desirable, and alluring. This is the selling point and it has been effective for YTB as they have been able to recruit 138,000 people to pay the price. However, when you boil it down to dollars and cents, it is not worth it. The RTAs pay in an inordinate amount of money for a subordinate amount of return. Just look at the most recent 10Q--the RTA paid YTB $97.7 million dollars. In return they received $16.2 million. These are cold hard numbers. No spin, It is incredible that YTB has the nerve to liken themselves to companies such as Microsoft, McDonalds and WalMart. Perhaps YTB does not realize it but all of those entities actually sell a product.

Franchising. The initial announcement about franchising came out just before the attorney general filed suit. This was a last ditch effort to stave off litigation and it did not work. There has been no further discussion of this to my knowledge, but it is interesting that on this site, YTB claims that the MLM will not change, they will merely call it a franchise to gain more acceptance of the public. I suspect that some regulating authority might have something to say about that!


Stock Prices. Of course there is no comment on that. But if yo look at any of the public records you will see that the principles have been ditching the stock left and right. Michael Brent is the largest shareholder and rather than take his chances, he entered into a Sales Plan to divest himself. Strangely enough, the Coach himself is the minority shareholder in his own company. One might think if you believed in the longevity of your own product, you might invest in it. Well then again, maybe Coach is reading the writing on the wall as well.

REZconnect & YTB. This is the way that YTB was able to become a publicly traded company without any oversight or review by the SEC. It is doubtful that had they gone the traditional route that approval would have happened.

Better Business Bureau. YTB tries to belittle the effectiveness of the BBB. It is true they are not a government entity. It is not true, as some of the YTB Reps have said that you need to pay the BBB to get a good rating. YTB cites the number of complaints against Orbitz, Priceline and Expedia. Yes they do outnumber the ones that YTB has, but YTB has suggested we look at the record and compare.

How does YTB fare when you look at the number of complaints per dollar of travel sold? Not too well I am afraid.

• Orbitz .0000002
• Priceline .0000003
• Expedia .0000001
• YTB .0000004

So, YTB has twice the level of complaints with the BBB as Orbitz when you base it on travel sold. And as is typical with most MLM companies, when people end up losing money, they are embarrassed and ashamed that they fell for the ruse and likely do not report it. Orbitz, Expedia and Priceline are all legitimate travel agencies with trained personnel selling a product. They are not selling smoke and mirrors and the promise of riches and traveling like an insider.

The Facts Half-Truths About YTB--Part 7

Today, let's take a look at the seventh tab on the new YTB site called www.TheFactsAboutYTB.com :

Awards:

Princess Cruise Lines (nor Cunard) would comment on YTB and any awards they may or may not have won. However, I assume this is an accurate description. Certainly with 138,000 sales reps they ought to be a top seller for almost EVERY vendor. But I am sure if you break it down to production per agent, it is not nearly as impressive.

Carnival's Pinnacle Award. YTB has used this award as a sales tool for many years and I believe they got the words confused. You see, at every recruiting seminar I have attended, every power point presentation says "YTB has won the Pinnacle Award for the last three years". What I guess they really meant was "YTB won the Pinnacle Award three years ago." It was funny, but when questioned about the Pinnacle Award, Vicki Freed (who was with Carnival at the time) stated that she only remembered them getting it one year, not three. Of course the YTB Reps and RTAs denied this and insisted that it was three years in a row. They even insisted they won it again this year even after the winners were announced!

Apple Vacations Platinum Agency. First off, according to the Apple Vacations site, they are not a platimun agency but a Golden Apple Agency, but this could be an oversight as well. Yes, it is an award, but it is not that difficult to achieve. For Platinum, your agency needs to send a minimum of 1000 passengers per year with Apple Vacations. With YTB, that equates to .01 passenger per RTA. Not overly impressive on the individual level.

The Facts Half-Truths About YTB--Part 6

Earlier this week I said that the "Values" page was the shortest page in the site. I was wrong, it is the second shortest. The shortest is the one for today--SUPPORT. But again, no surprises that there is not too much YTB says on the support issue. Today, let's take a look at the sixth tab on the new YTB site called www.TheFactsAboutYTB.com:

Support:

First Class Training is indeed a travel training program. While it is a very minimal program, it is a step in the right direction and it was developed as a result of the current lawsuit by California against YTB. Formerly, this class was called Certified Referral Travel Agent Training (CRTA) and while the title suggested something about travel--the curriculum was anything but. When confronted, YTB developed something about travel. It is an open book online course completed in 4 hours and there is a costs for the RTA to do this. To be candid, it needs to be pointed out that in your $449.99 start up fee, and your ongoing $49.95 monthly fee, travel training is NOT included.

The YTB e-Campus by Marc Mancini is another good step in the right direction. The classes are not really "unique" to YTB as they advertise as they are the same curriculum that Marc has been teaching for years. They are however a very nice income stream for YTB. The classes are licensed in bulk to YTB and then YTB charges the RTAs individually. It also needs to be noted that YTB is very behind in releasing these classes--or maybe they have not paid for the classes yet. The initial concept was to release a unit per month, but in the year plus that it has been around there have only been a handful of units released. And finally, while YTB will not release the numbers, the percentage of RTAs taking these classes is woefully minimal.

The YTB National Convention. Well, what more proof do you need that this is the "largest annual event in the travel industry" than a YouTube video produced by Beryl-Martin--a company privately and wholly owned by Scott Tomer, Coach Tomer, and Kim Sorensen. Ironically enough, the California Attorney General served YTB papers on the eve of their convention charging them with operating a pyramid scheme and fraudulent business practices. Fake seemed to be the theme of thhis year's convention--fake statue (which has it's own story), fake Ray Charles, fake attendance numbers, etc.

Please note that there is not a single mention of any support that might be offered to the people that purchase travel. But we already know how they support that.

The Facts Half-Truths About YTB--Part 5

Today, let's take a look at the fifth tab on the new YTB site called www.TheFactsAboutYTB.com :

In The News:
This by far is the most amusing and deceptive page of the site. Most of this has been rehashed, but here we go again.

• Inc. Magazine--it was a paid advertisement
• Funshine East Travel Trade Show--39 Vendors for a sales force of 138,000 is ridiculous. Apparently most vendors do not see value in paying to attend. It needs to be noted that of the 39 vendors, a lot were YTB related companies--YTB Cars, YTB Flowers, the YTB Store, etc.
• Saturday Evening Post--YTB paid to have Coach Tomer on the cover.
• Sorensen named "influential". This is true, but Jack the Ripper was also influential. Sorensen was named influential not for any good brought to the travel table, but for infusing the industry with 100,000 untrained people looking for free trips and upgrades calling themselves travel agents.
• #26 in Travel Weekly. Again, true. But the numbers are self reported and not verified by the publication other than to have an executive say they are right. And again the actual article states that YTB RTAs only produced $211M and not $414M.
  

So, it seems that the good news for YTB must be purchased. As for the bad news, no one needs to look too far. Just do a Google search.

As a matter of fact, here are a bunch of not so good news stories that YTB neglected to include in the "In The News" section:

IATAN Seems To Be The Card Of Choice

Travel Weekly is reporting that Outrigger Resorts will now be requiring an IATAN card upon check in for any industry rates. But for those that are not cardholders, they can take their specialist course and qualify, but they will require references from other suppliers that verify individual productivity.

They are not interested in using a CLIA card as an identifier since it is not automated. I suspect also because of the loopholes afforded amateurs to obtain the card.

According to an Outrigger spokesperson, determining who was qualified at check-in is a problem for Outrigger and many of its competitors. Wonder why?

Kudos to Outrigger. If possible, my Hawaii business lies with them!