Gag Order From YTB?

  

A friend of mine is an RTA with YTB and attended the Travel Training in Arlington, TX last weekend.

It seems that half the day was devoted to Kim Sorensen talking about YTB. However, he refused to accept any questions because of his concern that "problems would arise from the questions." So what is Kim hiding that he cannot tell the people that essentially sign his paycheck?

The main training in the afternoon was Spring Tours and apparently they were not training; but telling the RTAs that they plan to train. They are planning on training RTAs to sell Spring Tours and they will have a webinar on November 18th.

Spring will be a hard sell since they are not USTOA members and consumers have no protection. Also, apparently the Spring alliance has irritated (to a degree) Globus, Trafalgar, and Collette who see them as a competitor.

One interesting tidbit did emerge from Spring Tours however. Apparently 131,000 RTAs were able to sell 48 packages to China. That is 48 out of the 1500 that were prepaid. RTAs you need to get on the stick!

What Is YTB's Favorite Color?

Hint: it's the color of their first quarter financial report which was released yesterday.

Here are the similarities to the annual report filed a little bit ago:

• Website sales and fees account for 79.5% of total revenue
• Travel commissions account for 12.5% (no real surprise there)
• Marketing income is 7%
• Miscellaneous is 1%

Pretty standard stuff.

On the expense side:

• 58.7% of the money earned went to the rep side of the business
• 9% of the money earned went to the travel side of the business --but they sell travel ;) ...really!

A comment that really stood out for me was that the training and marketing income DECREASED 10.5% over the previous year same quarter. Yet the number of RTAs (the guys who need training) INCREASED 67%. As I have been saying, they may offer training, but the adoption rate is dismal. There are currently 138,814 RTAs out there today.

Which brings me to the huge increase in the number of people that are bailing out on YTB. Last year, for the entire year, YTB had 66,910 RTAs quit the program. This is a simple calculation on page 12 of the report. Number of RTAs at the end of 2006 plus the number of websites sold minus the current number of RTAs. That gives you the number that bailed. They lost 5,575 RTAs per month last year!

Let's look at the first quarter of 2008. At the end of the year in 2007, they had 131,065 RTAs in the program. During the first quarter of this year, they added 30,893 (which incidentally is an 8% drop in recruiting from 2007) websites, which should effectively bring them to 161,958. However, they only currently have 138,814 RTAs. That means that in the past three months, 23,144 RTAs have dropped out of YTB. That is 7,714 per month or a 38% INCREASE in drop outs.

My speculation on why?

• Loss of IATA
• Loss of RCCL
• Continued bad publicity from RTAs scamming people
• Lack of qualified travel leadership
• The Olympic debacle
• The 2 Fly Free debacle
• The Piccolo debacle
• name your own debacle

OK--YTB reporters, start your cotton gins! Spin spin spin. Hint--don't try the "well we wanted to lose money and RTAs" line--it did not work when IATAN shot you down a second time, it won't work now.


PS: I forgot to mention that they posted a NET LOSS of $3.5 MILLION.

Act First, Think Later--A Tale Of Olympic Proportions!

Remember back in November when all the world was abuzz about fabulous Olympic Packages and a commission of 25%? Remember when I pointed out that none had been sold early on? Remember when I pointed out that later still none had been sold?

Well there is a good reason. Apparently YTB has partnered with an agency that had no right or authorization to sell tickets to the Olympics.

As I suspected, but only had confirmed from the IOC last week, tickets purchased by Shanghai Spring Tours must remain for sale to residents of China--not tourists. You see, 75% of the tickets are allocated for the Chinese!

Even Sorenson agreed when he told Travel Weekly last month that, "YTB is no longer marketing Olympic tours with tickets to the games in Beijing."

But the story gets more interesting as all the RTAs and Reps were saying that they were still offering the trips, but just calling the Olympic tickets "special events". As is typical, the YTBers had all sorts of stories about this. It was a copyright issue. They had such a response that they had to pull back and do the sales by lottery. And I even heard that they were completely sold out.

Well, I spoke with a man named Joe Jarvies who is the International Coordinator and Liaison to YTB, for Spring & Mandarin Tours a few weeks ago and he shed some additional insight. Apparently, Shanghai purchased $3 million dollars worth of Olympic Tickets for this program. Yet as China's "largest tour operator" they did not know that they were not for sale to non Chinese? And no one at YTB looked into this either? I wonder who will ultimately eat the $3 million? Joe indicated to me that their "workaround" was to not sell the tickets and to offer them as a "gift" for visiting China--so all the YTB clients could be given a "gift" when they landed. Yeah, I can see consumers flocking to that special deal!

When I spoke with the IOC, I was told that in order to use the term Olympic in any marketing or sales promotion, you needed to get approval from the IOC. This is mandated by the Ted Stevens Olympic and Amateur Sports Act. The IOC said they had not given Shanghai or YTB permission to use the logo or name and had issues a Cease and Desist letter. In addition, they have apparently turned over the improprieties on behalf of Shanghai Spring to the "proper" authorities in Beijing.

Not sure what that all means, but in a nutshell, YTB partnered with a company that had no right to sell Olympic packages. Someone is holding the bag on $3 million dollars. And once again, an exclusive program by YTB is disproved. I just wonder if any RTAs or their family purchased these trips and how they are handling the refunds!

A Partnership With An Uninsurable Operator!

About a week ago, a press release was issued about a travel MLM firm offering trips to Europe. It was even picked up as "news" by Modern Agent. In reading the release, I shake my head. Is it such a monumental task to be able to sell trips to Europe--like no one has ever done it? I also wonder why other agencies are not getting equal time in the press on their marketing efforts.

But as I read a little deeper, this was announcing a partnership with the same Chinese firm that is providing Olympic Packages (oops, Summer Event Packages...more on that later) for the agency. Now why on earth is a US based company partnering with an Asian company to provide travel to Europe? It just does not make sense! I don't see any European agencies partnering with Apple Vacations to provide travel to South Africa.

Certainly with the number of "agents" in place, it makes sense to seek out USTOA members? If not for a marketing advantages, how about the consumer protection membership brings? Are the clients of this "agency" very confident in Shanghai Springs? If the Olympic (oops, my bad ...Summer Event) sales are any indication, I guess not.

Now I have heard rumors that there is a continuous line of travel suppliers lining up to do business with this "agency". I would think that with all those options, it might make sense to partner with a company in the US that might be held accountable by US laws and not Chinese laws.

What do their current European vendors have to say. Collette Tours and Trafalgar. Seems like it is eroding the market share to me. Well, I guess if there was no market share to erode it is a moot point.

I just see this as yet another warning flag. Not only are we dealing with a company whose upper management has zero travel industry experience, but we are dealing with a sales force that is minimally trained and now the fulfillment is coming from a foreign corporation. There is zero protection for the consumer. Are the "agents" or the websites advising that this supplier is NOT COVERED by travel insurance? They are not on the Access America approved list of suppliers. So, if a policy is sold, the customer is SOL if the supplier defaults on the agreement.

But as the "agency" preys on the naive to join, I suppose the "agents" prey on the naive to buy! Good luck with that!