Travel Agent - September 1, 2008 - (Page 84)

NEWS IMPACT INDUSTRY Facing Legal Action, YTB Responds to Critics YTB INTERNATIONAL, based in Wood River, IL, has the dubious distinction of being one of the most controversial companies in the travel industry and is the target of sharp, often vitriolic, criticism from many agents. The recent legal action by the California state Attorney General and a new class-action lawsuit filed in Illinois underscores this. The accusations against YTB include that they are a multilevel marketing (MLM) plan focused on network building rather than the sale of travel, as well as being a card mill that encourages YTB agents to scoop up free or reduced travel. Charges that YTB is also an illegal pyramid scheme are commonplace. YTB critics see the company as a scam for the unwary seeking free travel benefits. The YTB business model is viewed out by many agents as an example of what a travel company should not be. YTB agents, it’s charged, pass themselves off as professional agents, earning the anger and frustration of veteran agents with vast expertise and professional credentials. Despite this criticism, YTB has survived—at least until the California action. And YTB can be expected to defend itself against the charges. The reality is that YTB has moved aggressively to carve out a strong, profitable, market position in the travel industry, critics be damned. And, often, YTB has gained the support of industry services sold by its RTAs’ websites. YTBI reported a 2007 gain of 84 percent to $414.5 million from $225.7 million in 2006. While reporting a loss of $3.5 million for the first quarter of 2008, total revenues increased to $42.7 million for the quarter. Sorensen also noted that YTB paid its and RTA’s reps more than $65 million in combined marketing and travel commissions through the third quarter of 2007. Combined, YTB’s performance is strong enough to allow YTB’s stock to be traded Over-theCounter (OTBBB) with all the transparency that a public company is required to deliver. In the interview, Sorensen expressed frustration with the criticism of agents leveled at YTB. YTB agents are getting the recognition from where it counts: industry suppliers who are benefiting from YTB’s marketing and sales clout, he argues. “There has been some progress in turning YTB’s image around. We are working all the time to get better. We have guaranteed-issue health insurance for RTAs, including company-paid major medical and life insurance for RTAs with commission income of $25,000. We are developing our own Travel Agent Certification program. Our training is expanding all the time. As long as we recruit large numbers of parttimers, a certain group out there will not like YTB,” Sorensen said. YTB’s expansion is critical to Sorensen and CEO Scott Tomer. One example is a recently signed CONTINUED ON PAGE 86 GEORGE DOOLEY suppliers who want YTB’s business. In an interview with Travel Agent prior to the California Attorney General’s lawsuit, J. Kim Sorensen, YTB’s founder and president, admitted that YTB’s business model was controversial and frequently misunderstood. Multilevel marketing isn’t illegal and pyramid schemes are, he noted, urging agents to understand the difference. Sorensen sees YTB’s model as being radically different from “traditional” brick-and-mortar agencies or host agencies. YTB sells travel via a 140,000-member network of Referring Travel Agents (RTAs) primarily via websites. Sorensen sees YTB’s power in attracting new entrants to the industry. Poll: Agents Split on YTB Case AS THE FALLOUT FROM THE YTB CASE CONTINUES, the results from TravelAgentCen tral’s online poll indicate an industry divided over whether the California Attorney General’s office is justified in pursuing charges against the company. We asked agents, “Do you agree with the charges being leveled at YTB?” and 49.8 percent of the 129 respondents support the actions of the California AG, while 48.5 percent did not agree (1.7 percent responded “don’t know”). SOURCE: WWW.TRAVELAGENTCENTRAL.COM Do you agree with the charges being leveled at YTB? Yes No Don’t know 1.7% 49.8% 48.5% 1.7% YTB’s Performance YTB International (YTBI) has three distinct components, Sorensen notes, including REZConnect Technologies, YTB Travel Network and YTB’s referral arm, YourTravelBiz.com. Combined, YTBI has reported year-over-year growth and ended 2007 with a $3.2 million net profit on revenues of $141 million. Also significant to Sorensen is YTB’s tracking of the aggregate retail value of all travel 49.8% 48.5% CONNECTING YOU For more information on industry news, visit www.travelagentcentral. com/consortia 84 | TravelAgent September 1, 2008 http://yourtravelbiz.com http://yourtravelbiz.com http://www.travelagentcentral.com/consortia http://WWW.TRAVELAGENTCENTRAL.COM http://www.travelagentcentral.com/consortia

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Travel Agent - September 1, 2008 Online Now Contents Contributors From the Editor From the Publisher Europe: Apartment Rentals Offer a Different View of Paris Pacific/Asia: Authentic Sarawak Culture and Longhouse Experiences are Highlights of a Visit to Malaysian Borneo South Pacific: Fiji’s Denarau Island Offers Paradise within a Paradise Las Vegas: As Business Slows, Discounts and Deals are in the Cards at Many Vegas Properties Central & South America: São Paolo, Brazil, is Ideal for Business or Leisure Vacations Caribbean: The Caves in Negril, Jamaica, Offers Quiet Luxury Rosecita Jeffers Takes Over the St. Kitts Tourism Authority Cruises: Crystal Cruises is Making Plans and Changes for the Future Keeping Cruises Affordable with These 12 Tips for Clients Cover Story: Top Supplier Sales Reps Hotels: At Chicago’s Stylish Avenue Hotel, the Kids are all Right Bali is Reinventing Itself as a Family-Friendly Destination Tours: GOGO Worldwide Vacations Renews its Commitment to the Travel Agent Community Agent Profile: Ramesh Kalicharran Looked for His Roots and Helps Others Find Theirs Agenda: Fam Trips, Deals & Incentives, Calendar Luxury Travel Expo The YTB Controversy Rages On The Latest News From the Caribbean Australia Promotes Australia New Flagship to Relaunch Orient Lines Classified Marketplace Agent Access In the Spotlight Editorial Index Advertising Index Trendwatch

Travel Agent - September 1, 2008

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