Doh' Did YTB Just Have an "AHA" Moment?

As I said in yesterday's post, the appointment of Bob Dickinson is a fantastic move for YTB and they are to be congratulated for landing such a big fish! I have to admit, it was puzzling to me for a while and then I began to wonder if YTB may have had an "AHA" moment.

While many people with YTB are crowing about the success of YTB over the past 12 months, I really see it not so much as success, but finally doing the right things to get out of the trouble they placed themselves in in the first place. Here are some of the" accomplishments" I have heard from the YTB crowd:

• Being listed on the OTC stocks and off of the Pink Sheets (you were placed on the Pink Sheets for irregular accounting practices and failure to file SEC paperwork)
• Selling a record number of cruise certificates with Carnival (adfter being summarily fired by Royal Caribbean)
• Purchasing a travel agency in Canada (after realizing that TICO required a physical presence)
• Attempt at a purchase of Hickory Travel Systems (after realizing that IATA endorsement was important)
• Focus on training in travel (only when pressure was felt from the industry that training was essential)
• Partnership with a "big" Chinese Tour Operator (and we all know how that ended)
• Statement that IATA was a card mill and a competitor (resulting in denial of the IATA endorsement--is anyone surprised?)
• $414 Million in sales (or $3160 per RTA)
• Record commissions paid (if you call less than $200 per year a record)
  

So, as I said, I see a lot of the "accomplishments" more as catch ups for YTB in the quest to legitimize the company.

So where does YTB go from here? I think nthat finally, YTB may be seeing the light-MLM and Travel is a Bad Mix. How ironic. Back on October 12, Kim Sorensen said the following in Travel Weekly:

Sorensen said that YTB was a "networking company, but we also put major emphasis on the travel side. ...We want to legitimize the concept with our production." On the other hand, he said, YTB makes no pretense of competing with "high-touch, high-service" travel agents; it is after the consumer who is comfortable booking on the Internet.

Well, since October, it seems that a lot of his "legitimizing has not panned out as well as he would have liked. Even their own counsel quit or was fired, blew a whistle, was re-hired, and then disappeared again. So obviously there was work to be done.

Back on November 5th, Arnie Weissmann said in Travel Weekly:

Whether or not the debate on both sides is ever stripped of its good-vs.-evil trappings, it may, if history is an indicator, play out something like this: Since successful MLMs don't remain MLMs forever (adding a new foundation level to the pyramid becomes increasingly difficult), they very often continue in their industry but drop the pyramid model.

Have we reached that point? I believe we may be very close. For the first time in the history of YTB, they have brought someone with travel industry experience into the ranks of their management and Board. There have been a number of relatively high profile scams perpetuated by the untrained RTAs most recently in Tennessee a few days ago. Just maybe there is something about being legitimate and selling travel, rather than renting websites. Maybe with each new scam that YTB needs to deal with, they are taking those two steps backward on the road to legitimacy.

Maybe Arnie Weissmann is correct. Is YTB dropping the pyramid model? If they do, it will be a brilliant move on their part and will almost garner them industry-wide respect and that elusive terms--legitimacy!

As I think about this, they have had a pyramid structure for years and made a very few people very wealthy. The lion's share of their income comes from the people paying $49 a month. This is a $6.9 million dollar income stream per month! Granted, most of that goes out to the pyramid, but if that pyramid is halted, that is a tremendous income for a legitimate host agency. And we are not even talking commissions and overrides.

So now if YTB halts the pyramid, what happens? Well, there are 131,000 people paying YTB a lot of money. As has been proven time and time again, most of these folks are not serious and are not earning any money, but there is a very small faction that are serious. Let's say that faction is 10%. Well, if YTB eliminates the pyramid, the Reps fall away--they were not paying anything so nothing lost. And eventually, after some serious capitalization benefiting YTB, 117,000 RTAs will also quit the program--how many months they will continue to pay on the hopes of riches is undetermined. That leaves YTB with a 13,000 RTAs that are serious about selling travel. Are they producing like a TTA? Probably not, but that at least know they can. Notch up the training a little bit and VOILA--the largest host agency in the nation earning top tier commissions. Legitimacy=MISSION ACCOMPLISHED.

Some may say this is totally improbable, but remember, YTB's Board answers to shareholders--period. They have no loyalty or allegiance to any Rep or RTA. They need to provide results for their shareholders. How did YTB get to the travel numbers they claim to have? On the backs of the 10% of the RTAs that are producing. The remainder are dead weight in terms of travel commissions, but a cash cow in terms of revenue. Reps? Biggest liability out there in terms of financials.

Finally, if you look at the number of MLMs that are popping up these days./ There is not a day that goes by (it seems) when there is not a new "get rich in travel" scheme in my email box. This only erodes the allure of YTB as a MLM company, so it might make sense to get out of that market right now. The reps that made money will be happy and can move onto the next industry, those that did not, may not have paid anything so no loss there. YTB can claim that the RTAs that made no money failed themselves (and they will claim that), and the ones that did, (small by a percentage and large by numbers) will continue on selling travel (not recruiting) in a large host agency model.

The beginning to the end is near and as I believe that YTB is beginning to see that indeed, MLM and Travel is A Bad Mix!

YTB and IATAN (again)

The other day, Travel Weekly ran a column about YTB fighting with IATA to get their cancellation rescinded. Now after all the posturing and all of the RTAs and Reps screaming that YTB does not need IATAN and so forth, it seems that management has a different view.

I suspect this about face has a lot to do with their provisional certifications in British Columbia and Ontario. But I also have to question how receptive IATA will be to reinstatement when you hear things such as this:

After labeling the IATAN program "the biggest card mill in the world," YTB said IATA's refusal to let the agency attempt to change practices in order to regain the IATA endorsement was an indication that IATA was trying to eliminate YTB as competition "for being a perceived threat to [IATAN's] monopoly in the travel card industry."

As one MLMer might say, LOL too funny. Now YTB thinks that their issuing their IATAN number to 140,000 people that paid them $449 was not the issue but that IATA felt they were a threat to the existence of the IATAN card. Are the executives at YTB drinking the Kool Aid too? I thought they just served it!

Here is a tip, when you are looking to affect change and you are not in control of it; it is wise to not piss off those who are in a position to affect that change.

So, why is IATA endorsement now all of a sudden such a big deal? Is Canada onto the scheme?

PS: Blog note--yesterday was indeed April 1 and for those TTAs and MLMers that believed the story about TAG acquiring YTB, it was false. The story was created by a colleague who will go unnamed and I applaud him for his creativity and sense of humor. Secondly, I am not ignoring the 10K--I am reading it. Not the most exciting bathroom reading material, but there is some interesting insight to be gained. Stay tuned. After all it is like 125 pages!

What Are People Looking For?

When someone wants information on a topic these days, they usually utilize the Internet and a search engine. Google is a popular one. Yahoo is another one used by many as well.

While many people have subscribed to this blog and many more are just bookmarking it and checking back, we do get a ton of traffic from the search engines. Last week, I was watching the search terms used to find this blog and I thought it was interesting.

For the most part, they are negative terms. People are actually looking for specific bad things, like "is this a pyramid scheme". They are not looking for "is MLM a great opportunity". Both search terms likely would have eventually brought you here, but the list below shows the search terms people used to get here--so there is no influence of the blog. At least at this point.

Take a look at some of the top phrases entered into search engines last week:

• FTC YTB
• Dr. Bob Seligman
• Is Mike The Travel Guy RTA a pyramid scheme
• Ted Lindauer
• Travel MLM
• Fired YTB Lawyer
• CLIA and YTB
• MLM cult
• Opinion about MLM
• YTB and TICO standards

Wow, Seligman is apparently still trying to be verified. People are still very curious about Ted Lindauer and his firing and I suppose his subsequent reconciliation. But a lot of people are wondering if MLM is a pyramid scheme or a cult.

How does this happen? I am unaware of any traditional business model in any industry that garners those terms in their searches. "Is GE a cult?" got one return on Google. YTB got 4,630. "Is the IBM salesperson a pyramid scheme?" got one. YTB got 6,780. "Fired American Express Lawyer" got no responses. YTB got 1.

Very interesting. It seems that it is not only the folks on here that are questioning the validity of MLM in travel. It seems to me that there might be more of a pervasive attitude out there as well. I have said it before, but if I were involved with a travel MLM and had to spend most of my time and effort defending the shady business practices, I would move on. Well, maybe I would put some pressure on management to do something first--one would think that if they were truly vested and interested in the business they would welcome the opportunity to "legitimize".

This Week's Top 5

Wanna know what everyone is reading? Here are the week's top 5 blog posts:
5. It Seems Like Yesterday
4. Rhode Island Refunds
3. Travel Training MLM Style--What A Crock!
2. TICO, The New Enemy

and the number one blog post of the week........

1. Travel Weekly Asks About Trip Whores

TICO--The New Enemy?

So, YTB is in Canada with their Referring Travel Associates! I wonder how they are going to address the training mandates that are being imposed by the Travel Industry Council of Ontario (TICO) in 2009?

Last week I asked TICO and I received the following:

Thank you for your email. I have attached the link to TICO's FAQ' s in relation to Education Standards. Any person selling travel or consulting for the purpose of selling travel services to the public in connection with an Ontario registered travel retail agency is required to meet the Education Standard by July 1, 2009. http://www.tico.on.ca/travelagents/minimumeducationstds.htm

Regards,

Dorian Werda
Manager, Administration & Claims

Travel Industry Council of Ontario

Travel Industry Council of Ontario

2700 Matheson Blvd. East.

Suite 402, West Tower

Mississauga, Ontario L4W 4V9

Tel: (905) 624-6241 ext 224
Toll Free: 1-888-451-8426

Email: dwerda@tico.ca

Web: www.tico.ca

Let me excerpt a few passages that ought to be of particular concern to the "9,000" RTAs that just signed up.

Every person in Ontario who is working for a retail travel agency and is selling travel services or providing travel advice to the public must, by law, meet the Industry's Education Standards by July 1, 2009. This includes industry Supervisors and Managers.

And from the FAQ page:

Q Why are Education Standards necessary?
A Since TICO was established, they have identified hundreds of complaints and situations that have arisen due to the lack of knowledge or misinformation about the rules governing the industry. These rules, embodied in the Travel Industry Act, 2002 and Ontario Regulation 26/05, spell out the role of the agency and wholesaler and touch on vital issues of 'obligation to the client' and 'due diligence'. TICO is being proactive and instituting a basic course to ensure that there is a level playing field and that all registrants will be familiar with the Act and Regulation. This will, in the long run, save consumers, agencies and wholesalers a lot of stress, a lot of time, and even a lot of money.

Q How will the introduction of TICO Education Standards affect the way I do business?
A a) as an agency owner: As of July 1st 2009, you will have documentation from each employee attesting to the fact that as a staff member who deals with the public, he/she has satisfied the requirements of the TICO Education Standard, by passing the Travel Counsellor Exam. It is suggested that employees present both the original documentation and a copy to the employer, so that the employer can verify that the copy is genuine. The employer should only keep the copy--and return the original letter to the employee.

Also, as an agency owner, if you deal with the public, you will have passed the same Travel Counsellor Exam as all your staff. When you renew your TICO registration after June 30th, 2009, you will be required to confirm that all staff selling travel services or providing travel advice to the public are compliant with the Standard.

In addition, you will ensure that the Supervisor/Manager of the agency has complied with the Standard by passing the Travel Counsellor Exam and, if necessary, the Supervisor/Manager Exam.

b) as an agency Supervisor/Manager: As of June 30th, 2009 you will have passed the Travel Counsellor Exam. Every travel agency is required to name a Supervisor/Manager on their application for registration or renewal. This individual is the Supervisor/Manager “on record” with TICO. The Supervisor/Manager on record with TICO as of June 30th, 2009 will be “grandfathered”. This means that he or she will be given a temporary exemption from having to pass the Supervisor/Manager exam by July 1, 2009. An individual that has not been approved as a Supervisor/Manager by TICO and who wishes to act as the Supervisor/Manager on record with TICO on or after July 1, 2009, must write and pass the Supervisor/Manager Exam.

Please note that all supervisors and managers or other individuals who may wish to advance in the industry in the future are welcome and encouraged to take the exam. A combination exam is available for those wishing to write both the Travel Counsellor and the Supervisor/Manager exams at the same time.

In addition, in your capacity as agency Supervisor/Manager, you are responsible for ensuring that all travel counsellors are compliant with the Standard.

c) as a travel agent who deals with the public. As of July 1, 2009 you are required to pass the Travel Counsellor Exam. Upon passing the exam, you will be sent a "Pass" letter/Certificate. Take the original, along with a copy, to your employer. Give them the copy for their files as proof that you have complied with the Education Standards.

Q I work in a Call Centre - do TICO Education Standards affect me?
A Every person in Ontario who is selling travel services or providing travel advice to the public on behalf of an Ontario travel agency must, by law, meet the TICO Education Standards by July 1, 2009.

Since RTAs are not YTB employees, they are considered "agency owners" and are subject to the additional requirements. But this all happens in July, and if my calculator is correct that equates to $4.5 million in sign up fees and $7.6 million in rental fees till compliance is mandatory.