YTB is not named, but it's obvious they are one of the primary targets. When I was being recruited to YTB one of the main benefits being pushed was my ability to travel cheaply since I would be considered a "travel agent". That felt fishy to me since I clearly was not a travel agent, and had no intention of becoming one, but since I like to travel, it is what got me to look into the business. I stopped looking once I saw that the primary way YTB'ers make their money is by selling the travel agent web sites... NOT from selling travel. My understanding of MLM laws is that you can NOT sell web sites as your primary business no matter what you call them.... so my personal belief is that it's a matter of time before the FTC tries to shut them down.
Now though, if you're a YTB travel agent, the travel industry may shut you down. Certainly that should be a major concern if anyone else follows in Royal Caribbean's foot steps. According to the Travel Daily News article, Marriot "and other major players" are participating in a new designation program that travel agents will have to meet to get cheaper travel. Having been on the Scam.com forum recently this has been developing over time, and the "benefit" of cheap travel to "fake" travel agents has already started to disappear.
So... whether YTB is able to continue without legal trouble from the FTC may not matter much longer if new recruits dry up when they learn they can't actually save on their personal travel. This will be especially bad if YTB is banned completely, even those who meet the criteria of the industry. My prediction... pain for YTB.
25 comments:
The Orlando Marriot must not have received the memo, because I just got a $239 per night room for $139 because I'm with YTB.
I doubt RCI will stop recognizing the CLIA card I got through YTB. Also, did you know that YTB paid out $1.4 million in travel commissions to its RTAs in September? I don't understand how you question that YTB is a legitimate seller of travel. They have also won Carnival's Pinnacle award three years in a row (and were the first to earn it in 2007). How many other travel agencies can make that claim? You really need to do better research.
Yes, there are two ways to make money in YTB -- one is by selling travel, where the RTA earns 60% of the paid commissions. The other is by selling licenses to their state-of-the-art booking engine (not just a 'website'). Since when is it wrong, illegal or immoral to earn commissions on sales? Everyone either travels or knows someone who travels, and the fares found through YTB are equal to or less than the highly advertised sites 90% of the time. you should do a YTB vs. Expedia comparison. So who would your family and friends book their travel through? You, or a highly advertised site? Furthermore, if you book your own travel, you get paid the commission, and you can take a tax deduction for the business expense. It only makes sense to be in YTB, even without the discounts.
There has been something brewing and I thought you might be interested in this.
We as travel agents are starting to get fed up with the Multi Level Marketing companies and want to get rid of them. We have started a protest/petition that we will be sending to the big and small vendors.
Here is the letter that I have been sending out.
Regards,
Good evening friends.
Please support this by signing and forward on to any friends you may
have who are either employed within the legitimate travel industry or
may be interested in supporting it. It's of critical importance to those of
us who care. These company are fake travel agencies. We need to stop them.
Thanks.
Good evening all--
I wanted to send you a link to an online petition that was created this afternoon.
As you may (or may not) know, I have been in the industry for quite some time and currently write a travel column for MSNBC.com and Tripso.com. My columns are mostly very pro-agent as I have owned a B&M Retail storefront for many years, developed a small online agency, and have worked from the home based model. Finally, I am the administrator of the forums at Tripso.com. We are a community of over 6000 travelers and travel agents. The agents have their own private forum and they are vetted out for legitimacy.
One topic that keeps coming up is the impact that the MLM model for travel sales is having on the industry. YTB is a prime example. While not outright selling credentials (card mill) they are coming very close. The disappointing part is that the suppliers are rewarding them accordingly. By their own admission, the average travel agent in the YTB program earned nearly $70 in the month of July in commissions. Of their reported 110K agents, nearly 90K of them earned nothing. So, why are the suppliers rewarding these non-producing agents with discounted travel and FAM trips?
There has been talk of a certification program--ARTA has been on the forefront. I think now is the time. Because I buy TurboTax does not make me an accountant. If I sell a watch on eBay, I am not a jeweler. Why does our industry allow someone with no experience to call themselves a travel agent? They are the agent of themselves only! They provide no service to the customer. They provide no advocacy to the customer. As a matter of fact, if you go to any YTB site (they are all alike) and click on their HELP link it tells the client to call the supplier directly. GO ahead, try it....http://www.bluescitytravel.com/
They are also infringing on a copyright by allowing their members to become "Certified Travel Agents" and using the CTA designation. Why is The Travel Institute not screaming?
I do understand that they are generating bookings and are valuable to the supplier in some respects. Several years ago, the suppliers all went to the franchises and consortia and made a tiered commission structure. As a Carlson Wagonlit Travel agency, I needed to produce so many berths per year to achieve the next higher commission level and marketing dollars. Why is this not enforced on YTB? Why are the franchises and consortia not screaming about this? Why is an "agent" who simply sells him or herself a cruise entitled to a 16% commission level when that is likely the ONLY customer they will ever have.
Seems like a slow move to the direct to consumer model to me. Is that the direction? And if it is, are the suppliers prepared for it? I cringe as it is when holding to speak with a supplier--and I supposedly have dedicated special phone lines. How are they going to handle 3M 10M or 100M passengers a year?
I am sure you can see there are many ramifications to allowing this model to go unchecked. I created this petition to hopefully make suppliers aware of the feelings of their traditional agents and those that support this model. I am not saying there is no place for the YTBs of the world, I am just saying that they need be held to a different standard.
Here is the link. If you feel it appropriate, please sign it, pass it along, or trash it.
http://www.petitiononline.com/NOMLM/petition.html
I feel this is a VERY serious issue for our industry and I feel that our leaders need to take a hard look and address this!
All the best-
John
--
John W. Frenaye, Jr.
PO Box 4875
Annapolis, MD 21403
410.280.0231 - O
410.280.2665 - H
443.782.2370 - F
443.994.3921 - C
Why do YTB agents keep harping on this Pinnacle Award thing from CCL? According to those in power at CCL, there is no such thing as a Pinnacle Award given by CCL!
Not to YTBer----
What was your cut of the $1.4 million dollars in September?
In July they paid out $1M in commission to 16K of their reported 110K members. Average take? Less than $60 for the month! That means that 90K people got NOTHING! Well, not the YTB corporate folks, they got $50 a month from each of those 90K people--so while 16,000 made about $60....the head honchos raked in a cool 4.5 million.
Who's getting rich here?
YTB>>Yes, there are two ways to make money in YTB -- one is by selling travel, where the RTA earns 60% of the paid commissions. The other is by selling licenses to their state-of-the-art booking engine (not just a 'website'). Since when is it wrong, illegal or immoral to earn commissions on sales?
Fancy cult words of a "state-of-the-art booking engine" it's still a replicating website. If any 'booking engine' has an affiliate script attached to it, than it's a replicating website.
That's not the problem however. The problem is the direct-sales vs MLM model for the travel industry.
Now, the MLM model works better for monthly consumer expenses like health products, phone services, or even beef jerky because it's something that a company makes the majority of their profits from the end user even if it is based off recruiting, the autoships saves their ASSets.
Meaning, as long as when a new member joins, the ACTUAL manufacturing of the products and/or distribution of the service goes up.
The problem with travel having an MLM model is that it will only be legit if all representatives make money ONLY by the booking.. PERIOD.
Once a company makes MORE money from recruiting, duplicate websites, paid trainings, business kits, etc. they fall under the FTC radar and goes down. Because the pyramid will not hold if EVERYONE in the organization is not traveling on a monthly basis. After awhile, the bottom feedings get bigger and bigger, and suck the blood out the overall profit margin of travel.
80% - 90% of their profit margin has to come from the travel ONLY.
Now having a basic affiliate program to a direct sales travel company will always work because you don't get paid unless someone books travel through your link. (like using commission junction and/or cookies).
So newer travel companies are trying to learn from past mistakes with more direct sales to earn income versus recruiting. Or giving incentives to representatives to sell this $$$$ amount within a certain time frame to save their ASSets.
I have my popcorn ready for this outcome.
But an MLM model on travel? I'm sorry.. I don't see it working for the long term. They will go down like other scams that are not even in the travel industry.
For example, lets say you join a health food company but you were not required to buy products from them monthly. But you could also earn residual income through their marketing tools, ebooks, lead-capture pages, and everything else under the sun, that has nothing to do with the actual health product. It happened to alot of different companies, not just the travel industry, and people need to recognize the root of the problem with MLM scams.
I've got my popcorn ready too. Pass me a Corona while you're at it ;-)
Anonymous, I am really amazed at your "witch-hunt" mentality. What are you really afraid of? You must be afraid of losing legitimate travel business, or you would not be going to this much effort. Only the smallest-minded try to win by attacking the competition.
This is getting to be ridiculous. Now, to all the YTB haters out there...listen very closely: First of all, brick and mortar travel agencies are becoming a thing of the past...sorry but the truth isn't always easy. Expedia was 2nd in the world, overall for 2006(and YTB finished at 35th, overall IN THE WORLD). Consumers get to be their own travel agent and they can book it online through expedia, orbits, etc. Now, the expedia gets all the commission and they're pretty happy about that, while bringing ALOT of business to vendors, making them happy as well. YTB is doing the same thing Expedia is doing...except sharing 60% of the vendor commission with the ones that book it. Afterall, it's the end user that really brings business. YTB relies on volume and so does American Express, Travelocity, Expedia, and EVERYBODY else.
Yes, it is true that probably only 16k to 20k actually do some bookings and make money while the rest of the 90k don't make anything, but you also have to remember that YTB is just like any brick and mortar travel agency in terms of production, only in a larger scale. Most larger traditional agencies would only have 100 agents, some more, some less. Only 10 to 20% really make all the money, while the rest of the 80% are barely surviving. I know because I used to work for 2 large travel agencies in NY. The point is, this is the same law of average for almost everything - especially in the world of sales! A real estate firm will have 10% to 20% of their realtors making 80%of the sales and commission. most realtors don't really make money, only the 20% do. Now the realtors that hardly sell anything, are they able to take advantage of industry benefits and special deals? The answer is yes.
To the question about why does not the travel industry do anything about offering "joe schmoe" a credential and industry benefits because he's under YTB? The answer is simple: Because he brings business, so do I and so does the rest of YTB's RTAs. We bring business to the vendors for YTB. WE are the travel agents. In business, the bottom line is what matters.
A brick and mortar agency might have a hundred or two in their company, while only 20 to 40 of their agents do most of the bookings; YTB has over 135,000 with about more than 20,000 booking travel and a few more actively producing for YTB. Same difference. Change is inevitable. You can't stop it.
Sorry, but whether you like it or not, we will be NO.1.
For hard evidence on YTB's legitimacy, check out www.travelnearn247.com and click on "read more" in travel weekly's top 50 power list of 2006. NO ONE can dispute this fact.
Oh by the way, RCCL wasn't YTB's lifeblood...Carnival is the largest cruiseline in the world.
type in:
http://travelweekly.texterity.com/travelweekly/20070625/?pg=47&search=ytb&per_page=5&results_page=1&doc_id=-1
to see how YTB stacked up to the big boys of travel. This year, we're hurting alot of egos....over 1 BILLION in travel sales already.
Again, change is inevitable. Stop being small minded and ignorant.
no one is arguing that the internet isn't taking over travel... but paying for a "booking engine" is a slick attempt at getting around FTC rules that say MLM's are illegal if their primary business is selling marketing sites to each other. And since YTB makes the VAST majority of it's money by selling to each other... and NOT selling travel to others... it's just a matter of time before the house of cards crumbles IMHO.
Really? So we don't sell travel you say? Hmmm..It doesn't seem like it from where I'm standing. Let's see...YTB had 202 employees, 60k RTAs with $226 million in travel sales, putting YTB 35th in the world in overall travel in 2006. This year to date...309 employees in a 130k sq ft home office - buying an additional 23 acres of land for expansion, over 135,000 RTAs and having sold over 1 billion dollars already and the year isn't even over!
We ARE the new face of travel. We are YTB, we are here to stay and there's nothing you can do about it.
what were the PROFITS from the travel sales????? YTB can book a $500 flight, and get paid $5. That's $5 to YTB, and $495 to the airline. So maybe you made $10 million in GROSS profits on your Billion in travel sales... maybe half gets paid to the RTA's??? So $5 million split by 136,000 RTA's is about $36 in annual commissions earned by your RTA's.
So why would anyone sell for YTB... well... to sell $500 memberships... that's NOT travel. That's where the money is being made, and sooner or later the FTC is going to look at the legality of that set up, and shut it down. You can book 10 billion in travel sales, but unless or until the illegal part of YTB is removed, it's still illegal
I'd like to pipe in here:
Annonymous states,
"They are also infringing on a copyright by allowing their members to become "Certified Travel Agents" and using the CTA designation. Why is The Travel Institute not screaming?"
Well, anyone who receives training from an accredited training company whether in person or online and successfully passes the training is considered a "certified travel agent", a generic term used by all travel companies. YTB uses (RTA) Refering Travel Agent. Maybe you should research your facts better.
Annonymous states:
"We as travel agents are starting to get fed up with the Multi Level Marketing companies and want to get rid of them."
Ah, here is the heart of your campaign. You should be fed up and for good reason... YTB is the only one you should be worried about. With 1+ billion is sales and climbing, 12,000 cruise cabins booked in one day and won Carnival's Pinnacle award three years in a row, you as a B&M should be concerned about the success of this company. You should be glad to see that more people in the biz are talking to more people about traveling. You don't see the resorts or hotels turning down the business we send them now do you.
Annonymous states:
"They provide no advocacy to the customer."
How do you know whether any YTBer does or doesn't. You are with great ignorance, assuming. I, and those I know all provide top notch service for every person who has an issue or question. Not many do, because we sell seemless travel with no problems and when one does, it has always been on the other end at the vendor, not in the booking or its services. Of those who ask any questions, I and others I know always follow through.
You also complain about those who work from home, verses the brick and mortor shops. I can tell you this, my family has had B&M shops in our family in three states dating back almost 80 years, and four generations of family and we have both in home and in store travel agencies.
In home cuts costs, and since the airlines cut their fees paid to brick and mortor shops many years ago, the main cusp of fees now paid to TA's is in cruises and group bookings.
My family has struggled over the years with cut backs in commissions paid by vendors, high cost of employees, work comp, insurance, competition between TA's, and the never ending increases in mall store leases to name a few. So many have now turned to the home based operations and guess what, they use the same computers there and visit the same vendors world wide as in the B&M stores and at a huge savings....
Guess what, you go to the same sites as we do, also. Maybe you should look at doing business the smart way instead of the OLD way.
We can book at the same resorts, crusie ship lines, car rentals, airlines and hotels anywhere in the world that you do.
Hum, you must get your CLIA card from some other accrededation then I did. All TA's in home based operations or in mall stores will need some form of official training. Although, some of the training is offered from various vendors, it is still the same credentials. I agree with YTBer.
Annonymous states:
"One topic that keeps coming up is the impact that the MLM model for travel sales is having on the industry."
Read this carefully folks: The key word here is "IMPACT"
YTB IS having a HUGE impact on the old way of doing business. And yes, change is inevitable as YTBer states. My family has been in this business a very long time and I have the newspapers clips from the 1930's to prove it and yes, we have had to migrate to a newer and more efficient way of doing business in order to survive. B&M stores and home based TA's all use the Internet the only difference in YTBer's is, they are part of a new generation of small business owners doing things better, cheaper and with more IMPACT than the old B&M outlet stores.....
IMHO
I agree that YTB RTA's are "referring" travel agents, not traditional agents as we've known in the past.
Since your site is dedicated to MLM & Pyramids... I wonder if instead of retrospective-sniping, you would detail the major characteristics of a business that is legitimate to own/run?
It has been reported that over 90% of 24-45 year olds have investigated the prospect of owning their own business at some point in their lives. What DIRECTION would you provide to those looking?
Mark Mixer
http://travelflurry.wordpress.com/
e: travelflurry@aol.com
W: http://successtrips.com
I have never read such garbage by people who have nothing else better to do. Go out and do some good in the world rather than get at YTB for being innovative striving for redistribution of wealth for our struggling middle class. You people who attack YTB have hidden agenda's and a sad case of low self esteem. You have made no contribution to society and therefore will not be successful as a slaunderer. Go home and scrub the dung which ouzing out your paws.
You can be smelt from a mile away.
I think the person with low self esteem has just spoken. And speaking of redistribution of wealth, you can rob a bank and hand out the cash, but that's illegal too. YTB has attempted to skirt a clear cut law about not paying for recruitment and for mere marketing sites by calling them "stores". Burnlounge got burned for the very same thing. So far YTB has gotten away with their "work around" of the law, but whether or not the FTC lets that continue forever is an open question. When people call questionable business practices into question... it's those who have something to hide who get as mad as you have gotten.
I can't believe those who feel YTB is lagit. Its simple, when your business model clearly shows the majority of profit comes from selling memberships, its a pyramid. There is no real work or cost associated with YTB to spining off sites for new "agents". Come people, the rule of thumb, if it sounds too good to believe, it usually is. I had a guy trying to get me hooked into this...when he described it to me I knew right away it was a pyramid. Only a small few make money...off the backs of memberships of other agents signing up at $500 a pop.
the people making money through YTB are the directors which make up less than 1% of the YTB "employees". check out the 2007 income disclosure statement. http://www.ytb.com/downloads/YTB_IncomeDisclosure_2-8-08.pdf
RIP OFF
I was so sad to see my friend fall for this crap. Why is it that people who fall for these pyramid schemes sound like crazy religious zealots?
Well I read all this stuff about YTB but the proof is in the pudding. The kansas city cheifs football organization bought a YTB website to get commission from there fans and their own travel and we know they travel alot.
They just set up in Canada YTB in Febuary.
And above all I have friends making money from this thing so if you can't sell don't get in it.
If you can then get in it. Some people are not cut out for MLM business and don't get mad at the people that are good at it.
YTB is selling a product a webstore just like millions of other hosting sites on the internet that is not illegal.
In turn you can make money of the product by opening your own business at home.
So where is the illegal part. You can open a Mcdonalds if you want hire workers to sell your hambergers at minimum wage. What is the difference.
All the YTB haters only hate because they cannot make the money.
Because if you was making the money you will be talking about YTB. Don't be jealous of those that can make a living and make there dreams come true do you and leave YTB out of it
I can rob banks and make money... so don't be jealous that you can't rob banks too. Cause I got friends that makes the money killing bank tellers and anyone else who don't give them the money. And since they are making the money it must be legal.
Duh!!!! Did you miss the part where it's illegal and the California Attorney General is trying to shut them down????
Don't belive the hype about YTB because they been in business since 2001 that is seven years. If the business was so bad I don't think they would be still in business. Travel Agents hate YTB because people can book there own travel and take there commissions. Be mad at Travelocity,Orbitz because they are bigger and taking your customers not us.
My husband and I were asked to attend a YTB seminar. We did not know anything about this company and I have to say after over an hour of listening, we had some serious questions about how this company works. Try to ask a question you are dismissed. I thought travel agents were trained and educated not merely ministers who decided to get into the travel business to shelter more income. This stinks! It makes it seem that if you make $2.00 a month you can deduct your all you living expenses because you are a "business owner". The IRS might have some issues with this. This smells of a scam! What is the liability if you book a trip for someone to China and they arrive and it fails to deliver what is represented? Our million dollar sales rep, could not answer that question. With the economy the way it is, this company is pandering to the uneducated consumer and making false promises that could really get someone in trouble.
This is hilarious. I'm a REAL travel agent in Australia. A friend of mine gave me his travel agent business card from USA. i looked up the company and was diverted to a YTB site.
I think it's funny the folks who talk up the company are saying that YTB paid 1.4million in commissions in a month, as their membership income from their fake travel agents is 1.7 million a month. That means that most people ar e getting back some of the money they spend on YTB membership, each month. This isn't a real travel agency by any standard. My single store - only 7 people, sells $7 million a year n travel. If YTB reps did the same, their sales would be 34 billion dollars a year, not the measly 411 million. It seems the average YTB rep sells about 1.2% as much as a real travel agent. They should be shut down so consumers are not ripped off and it should be illegal to pretencd to sell something when it's clear to all that the bulk of the company's income is not from that source.
I'm gla I live in a place where such scams are illegal. No travel wholesaler is allowed to sell to companies like YTB here.
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