Just Picture It Now

Thursday, December 20, 2007

Things That Make You Go "Hummmmm"

I posed the question in my last post as to how YTB ends up "costing suppliers money". I've since found out that the problem is that YTB does not give suppliers their money's worth. Which I would consider constitutes some sort of monetary investment into YTB. Either way, there is a very large outcry in the Travel Agent Community that YTB is paid top commissions from suppliers for simply "referring" people to a web site. Many smaller Agencies across the country simply can not produce the volume that 136,000 collective RTA's produce and they feel it extremely unfair that we as an individual YTB RTA producing a small fraction of what they produce, are paid several commission points higher than they are.

Personally, I will freely admit that I would be upset as well. I've actually been on the "short end of the stick" in another industry as a Regional Manager, and simply could not compete with one or two of the giants in that particular industry. In order to get the business, I either had to provide some sort of price match, reducing my margin of profit, or create a level of service to my clients that they felt warranted the extra cost to them.

In both cases, profit margins are created based on volume. While I was able to move our buying levels up several levels with my former company, I was never able to reach the highest levels these giants reached based on the product I and my sales team were able to move. With YTB, I've noticed that most all of the supplier commissions have actually increased over the years, based on quotas and the volume of product YTB has been able to achieve as our level of RTA's increase.

Bottom line is this: YTB has EARNED those commissions. As a company, YTB books a ton of travel with these suppliers.

In addition, YTB does not receive any type of co-op dollars for advertising with any of the suppliers we work with. Many suppliers such as Sandals will help defer advertising costs to an Agency to help them promote their particular product. This type of investment works well with many Agencies and builds Agent loyalty to actually sell supplier product and services. If you were to ask what type of return on this investment a supplier would expect, I wouldn't have the first clue, honestly. Any risk of loosing money on such an investment with YTB is none existent with our model however.

We're all familiar with the Roaming Gnome right? How do you think everyone knows about this goofy munchkin? Because Travelocity pays millions in print, TV, and radio advertising each year to put that character in front of you. I've heard all kinds of numbers as to just how much Travelocity spends per day or per year, and while it's in the multiple millions, it's unimportant exactly how much. It has been stated that companies like Travelocity, (Orbitz, Expedia, Priceline.com) spend at least 60% of the revenue they generate in commissions, back into advertising to acquire more travel customers.

Back in 2005, Priceline.com came to YTB and offered to pay us a commission on everything we booked with them. Now why would they offer to pay a bunch of untrained, unqualified, unregulated bunch of Yahoo's in YTB commission instead of relying on someone like William Shatner?

The answer is simple, they don't pay YTB until after the travel has been sold and therefore control their cost. Priceline pays nothing for our "word of mouth" advertising, and 100% of the money paid to YTB is for actual product sold. You can't guarantee that type of return with any other form of advertising. Not even to Captain Kirk.

In the background during this time, WorldChoice also partnered with YTB for Hotels. (A division of Travelocity) When the contract was up with Priceline.com a year later and it was time to renew, a bidding war irrupted between the two company's as to who would be the "default vendor" of choice. Worldchoice ultimately won out the bid and YTB's relationship with them has been stronger than ever since winning the bid.

Suppliers and vendors pay no advertising, co-op dollars or marketing for YTB to sell their product, paying only for what is actually booked and consumed. But they're being told they aren't getting their money's worth?

I've been given examples from the other side, either through comments or personal e-mails why YTB paying these top commissions to us doesn't work. John gave an example of the nonexistent gas jockeys who use to pump gas. The majority of the lions share was paid from actual gas they use to pump. Or Geico paying local agents a small percentage of the commission for insurance for policies made on line.

John also gave a very good example about Sandals who offers an affiliate program. The local Bait N Tackle shop can put a Sandals Banner on their site. If a Bait N Tackle client clicks on the banner, it tags the source and the booking is handled by Unique. Just like YTB. The difference is that the Bait N Tackle Shop gets (and he's going on memory here so it may not be exact) 1% of the commissionable rate. THAT is the difference.

Now to be fair, I think I first stated that this next quote came from John when we first met here on my Blog. He has since told me that this was not his comment. This statement does however happen to be thrown up in our face by many a "Travel Agent".

"Why would I want to be YTB to earn 60% commission of 13%, when I now earn 80% of 16% and higher? Stupid. Ya'll keep drinking your Kool-Aid."

See how that works? They tease that we only make 60% of the commission, while they make 80% when it services them. But complain that it's not fair we make that commission and we don't deserve it because we don't service our customers the way they do. It's one of those "Catch 22" comments I find all too often from those that oppose YTB or MLM in general.

Maybe the Bait N Tackle shop should leverage itself and become an RTA with YTB? It's not the 80% these Professional get, but it's a far cry better than 1%.

Just part of the things that make you go "Hmmmmm".

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Doug & Ronda Bauknight
AKA: TravelPro
Travel Agent / Networker
Phone: 678.458.5812

Learn How To Become A Travel Agent

Book Your Travel & Vacations With

Travel Reservations: 1.800.243.4450
RTA #24635

Labels: Agent Discount, John Frenaye, Sandals, Travel MLM

Posted by TravelPro at 3:41 PM | Permalink | Comments

Tuesday, December 18, 2007

How To "Spin" a FAM...

I've gotten plenty of calls, e-mails, and a few comments on my Blog about John Frenaye's latest posts with claims that YTB is all about industry perks. While I can understand why he's upset about this, and to a point he's rightfully upset with us about this issue. It's been a closely guarded secret in the industry for decades and for a company like YTB to announce to the world how the industry works is upsetting.

He's even gone as far as directing us to a couple of presentations (found here and here) that explain how FAM's work and what we as "Insiders" can take advantage of. While I personally don't use these presentations, I've known about them for quite some time and I've even had them forwarded to me on several occasions for my review.

I'm going to attempt to be as far and as partial as I can about this issue because I happen to like John and we've developed a good rapport even if our introductions to each other were on totally opposite sides. I also happen to believe that to a certain extent he has a right to be upset. What we are exposing as a company has been closely guarded by the Traditional Industry and it's very unsettling to have anyone divulge insider secrets such as these.

I also believe his positioning that YTB and these presentations about the FAM's and perks are highly exaggerated. In both presentations, the presenters express what FAM's are which are as follows:

"Many resort areas, cities, tourism boards, properties and vendors offer deeply discounted trips to Travel Agents to Familiarize them with their location. These trips are offered as “Perks and Courtesies” to Travel Professionals at the sole discretion of the host and are usually limited in availability."

In both presentations, the presenter clearly states, (as I do) that these same properties do this in hopes that you will refer your friends and family to these properties. One of the presenters also went as far (as I do) that these same properties will not kick out a full paying fair just to put YOU in at half price, but if space is available, these properties would much rather get something rather than nothing by letting you as a Travel Professional stay at a reduced rate.

Both presentations present FAM's as an "Industry Tool" to familiarize yourself with the property so we can talk intelligently to clients about the property. One of the Presentations done by James Prewitt (Level 3 Director and one of the GROWING number of Circle of Champions with YTB) even points out YTB actually sells Carnival Cruises, earning their Pinnacle Award the last 3 years in a row.

John's statement concerning both Presentations that "YTB is selling them as if they are a guarantee." is simply his perception, and clearly false. (Sorry John.)

I stated in a previous post last week, that it's clear that John's issue about discounting is not solely YTB's. It was noted in an this article that Mr. Kelly with MyCruiseBookings.com did a little ghost-shopping of his critics posing as a prospective client with an offer from another agency for a discounted cruise, and in every case these agencies were willing to offer a 10% discount. I've been to enough seminars and supplier trainings to know that this is a HUGE problem for suppliers, and it's not limited to just YTB.

John and others also need to keep in mind that the $226 Million in Travel Sales was gleaned from the same suppliers he's now trying to pitch with his new found documentation. While his numbers don't jive with what he finds from us concerning the SEC filings, these same suppliers and vendors numbers don't jive with what he's trying to tell them about all the "FAM's" YTB actually takes advantage of.

John and the other Travel Agents out there that are reading this Blog, I'm going to try to appeal to you as a business owner and as someone who understands big business. It's not about FAM's, it's about volume. I'm not saying that we don't need to concern ourselves (YTB) with the way these FAM's are being presented, because I DO understand your concerns, and I do believe that less emphasis needs to be placed on the industry perks and more about running a Travel Business. It a valid, noble, and very ethical point.

I want to direct you to the middle of Johns commentary and a question poised to the vendors.

"Does Carnival tell its employees that they can take a 50% discount at WalMart? Does Collette Vacations market their product and offer a discount on Hallmark Cards? Do Apple Vacations, NCL, and the others dictate the level of discounts for OTHER companies? Hell no! So why are you allowing it now?"

Now, I want to direct you to a new program YTB has with Sprint, Staples, Dell, and Tom Tom. It's called the "RTA Advantage". Based on YTB's shear size of 136,000 RTA's these companies are offering us discounts of anywhere from 10% to 29% off services they offer. Based on your reasoning that YTB is costing vendors money by offering us Top Commissions why would a company like Sprint offer up to a 29% discount if it's going to cost them money?

The same reasoning should apply to them as well shouldn't it? Should Sprint, Dell, Staples and Tom Tom cut YTB off based on the fact that it costs them money to do business with us? Why sell at a 10% to 29% discount to YTB when you have a gazillion other people in the market using Sprint, Staples, Dell and Tom Tom paying full price?

Before I divulge the answer to this question, I'd like to hear some of your responses. I'd like to know just how and why this practice from any supplier, (Travel or Otherwise) is just bad business costing them money.

Should be interesting...

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Doug & Ronda Bauknight
AKA: TravelPro
Travel Agent / Networker
Phone: 678.458.5812

Learn How To Become A Travel Agent

Book Your Travel & Vacations With

Travel Reservations: 1.800.243.4450
RTA #24635

Labels: "Card Mill", Agent Discount, FAM's, John Frenaye, RTA Advantage

Posted by TravelPro at 11:32 AM | Permalink | Comments

Saturday, October 13, 2007

Travel Retailer's Taking Aim At YTB

From day one, YTB's goal was to become the number one Travel Agency in the industry. That goal was created by three men, J. Lloyd Tomer, AKA: Coach, his son Scott Tomer, and J. Kim Sorensen back in 2001.

Fast forward a few years to the summer of 2007 and we see that YTB starts popping up on the radar in a publication called Travel Weekly in what's known as a Power List, and the industry was given a glimpse of what a Travel MLM can not only accomplish, but how quickly it is rising. What was written off as a joke by many of the traditional travel professionals in the industry suddenly becomes a major threat.

Thursday (below) I posted on the news the Royal Caribbean has terminated it's relationships with Travel MLM's which by our "professionals" are deemed nothing more than "Card Mills". Knowing what kind of numbers YTB is producing, and being able to verify more than $13 Million in sales with Royal Caribbean by YTB in the first 9 months of 2007, I boldly stated that there was no way Royal Caribbean would terminate the YTB relationship. They simply wouldn't throw that kind of money out the window.

While it certainly looks like I have egg on my face due to news and events of the past 24-48 hours, and I certainly missed the mark on my theory that Royal Caribbean didn't want to alienate over 100,000 RTA's who were pointing people to their ships, I'm gathering information currently that certainly supports that our "Travel Professionals" not only know what YTB is doing, but these same professionals are taking dead aim at yet another major threat to their livelihood. Make no mistake, YTB has their attention and history has taught them from lesson's they have learned from the Airline industry in the late 1990's, and the growth of on-line travel agencies during the turn of this current century, that another major threat is on the rise.

And Royal Caribbean is caught in the middle of the cross fire.

As much as I am dieing to spend the day collecting information and linking to facts to support these statements today, oddly enough, I need to head to a YTB Certification Class to help train hundreds of new YTB RTA's here in Atlanta on how YTB sold $226 Million in Travel in 2006, and more specifically $13 Million in Cruise sales with Royal Caribbean our first 9 months of 2007.

In the meantime, one word comes to my mind..."Irony".

While our "professionals" over at the ARTA are giddy over the news that their collective efforts have scored what appears to be a major victory, this story is far from over. And because this story has peaked the interest of so many in the industry between the "Brick and Mortar" vs. "Click and Order" I have some really juicy content for the next few posts.

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Doug & Ronda Bauknight
AKA: TravelPro
Travel Agent / Networker
Phone: 678.458.5812

Learn How To Become A Travel Agent

Book Your Travel & Vacations With

Travel Reservations: 1.800.243.4450
RTA #24635

Labels: Agent Discount, ARTA, Association of Retail Travel Agents, Card Mill, Royal Caribbean

Posted by TravelPro at 7:02 AM | Permalink | Comments

Thursday, October 11, 2007

Royal Caribbean Terminates "Card Mills"

On Tuesday I posted about some of the YTB upgrades from last weekends Funshine Trade Show in Orlando. In this post I commented that as a result of the tremendous group volume YTB is generating for Royal Caribbean Cruises, our own YTB Travel Network staff will begin processing group reservations for Royal Caribbean. The Home Office staff will be using the same systems as the Royal Caribbean group desk, but will be able to give RTAs more personalized service.

Imagine my surprise today when I found out through Rod Cook's site MLM Watchdog that The Association of Retail Travel Agents (ARTA) have been pushing major travel vendors like Royal Caribbean and state legislatures to cut off travel agent cards for MLM Companies. Rod is Pro MLM and while I respect what he's done for Network Marketing industry as a whole, he's been slightly off mark when it comes to Travel MLM's. Rod, as always was nice enough to post a link to the finding which I have to admit, I was VERY interested in.

According to the Travel Daily News Article The Association of Retail Travel Agents (ARTA)applauded the announcement by Royal Caribbean International (RCI) that it will terminate relationships with multi-level marketers (MLMs) which provide travel agency credentials and identity cards to consumers for the purpose of becoming would-be "travel agents." Barry Richcreek, ARTA Chairman was also quoted as saying in the report ""This announcement by the RCI family of cruise lines is welcome news from a respected supplier to curtail the growth of the MLM/Card Mill business, a scheme which denigrates the stature and role of the legitimate travel retailer."

Two words come to mind: "Good Grief"

I wonder if Barry would welcome the news that YTB International, Inc. who markets booking engines and Travel Agency opportunities through MLM just strengthened their relationship with Royal Caribbean the weekend before in Orlando Florida? (Hint: Probably not) What the ARTA, led by Mr. Richcreek has failed to let go of are the days when a "legitimate travel retailer" was actually needed to book a airline ticket, hotel room, car rental, or Royal Caribbean cruise. Based on Travel Weekly's published numbers in their 2007 Power List over $40 Billion dollars were spent via the internet with on-line travel agencies. Out of the Top 10 Travel Agencies on this list, 4 were not a brick and mortar travel agency, but instead, conducted business on-line. (You may have heard of them, Expedia, Travelocity, Orbitz, and Priceline?)

Now that technology has made it possible to give you, me, or anyone the opportunity to sell these same services, the ARTA is up in arm's with claims that the only reason any of us would want to join such a company would be "to procure questionable travel agency credentials and attempt to portray themselves as legitimate travel sellers" simply to get the discount they have been enjoying for decades.

In the years I have been involved with YTB, I can appreciate to a certain extent what the ARTA is trying to accomplish in regards to what are known in this industry as "Card Mills". Knowing some of the Travel MLM companies that have come and gone over the years, and even a few that are currently starting to take shape in our industry, there are certain Travel MLM's in our industry who promote the "Agent Discounts" and "FAM" trips without producing the retail sales back to vendors like Royal Caribbean. A "FAM" in our industry is short for "Familiarization" in which vendors invite Travel Agents to their property at a reduced rate in order to "familiarize" ourselves with their property. (You can't sell what you don't know.) In return for this discounted rate, we as travel agents are better equipped both in knowledge and excitement to promote their property to full paying customers.

What's been happening to vendors like Royal Caribbean is they offer these discounted rates to certain MLM companies, but are not seeing any return on this investment by these same companies in regards to full paying customers. Furthermore, many of these MLM's promote their Agency Cards as a "right of passage" to receive these discounts simply by flashing their card. It's not a right, it's a privilege and perk given to those of us who are professional and courteous. Even then, there is no guarantee.

Last year when Freedom of the Seas was launched, I had to get on this ship. The problem was, the ship was booked solid through the rest of this year. Royal Caribbean was not about to throw a family overboard just to put our family in at half price. As a professional, I also needed to get on this new ship so I could speak intelligently to my clients about what to expect and what they could do. (And there was a lot to do on this mega ship believe me!) So I booked this trip just like any other customer and had a blast! (See for yourself!)

With all this being said, you might be wondering why Royal Caribbean would not only give YTB a pass, but actually strengthen their relationship with YTB while at the same time supporting the ARTA?

Good question, and I'm glad you asked!

Not all Travel MLM's are created equal. There are very viable, profitable, and respectable Travel Agencies who simply use the Network Marketing model to promote and build their business. How can YTB claim that they are a Travel Agency first and foremost? Anyone looking at any Travel Agency should first verify both IATAN/ARC numbers and also check to see what the gross yearly travel sales are. (Unfortunately, no other Travel MLM can produce gross sales numbers.)

What's even more revealing concerning Royal Caribbean specifically as why they would not terminate a partnership with YTB is the actual business we do with them. Fully 30% of YTB's leisure business are cruises and large part of that business are done in groups. I just checked our groups cruise page and out of the several hundred groups with 30 or more cabins being booked at this time I went down half the list and found the first 50 with Royal Caribbean.

Please note: These are clickable links, but some may expire due to groups being closed and taken beyond November of 2007.

1. HBCU Alumni & Friends Fantastic Voyage
2. Superbowl Party Cruise
3. Friends and Family
4. Re-Union of Friends
5. 25th Garrison Anniversary Cruise
6. 2nd Annual Contours Express Getaway
7. 40 - Anniversary Cruise
8. A Family and Friends Getaway
9. A Siesta Cruise with Tara
10. ACTC Cruise
11. Adams/Karlavage
12. Adorando en Alta Mar con, Hnas Meléndez
13. Amie Jo & Esperanza's Fiesta
14. B and B's First Cruise
15. Bermuda Family Travel
16. BJ's 2008 Fun Fest Cruise
17. Briscoe, Manly, Atcherson, Gross Family Reunion
18. Candy's Fun Group
19. Chambers Family and Friends Cruise
20. Chanel & Drew Wedding Cruise
21. Cindy's Group
22. Circle of Friends
23. Claude and Yvonne Anniversary Cruise
24. Clayton Valley 78
25. Cool and Fun
26. Crawford Wedding Cruise
27. Cupid's Cruise
28. Dayton's Finest Travel Club Hawaii Cruise
29. Derby 50th Anniversary Celebration (Celebrity)
30. Desert Hills Presbyterian Church (Celebrity)
31. Dockery Family & Friends
32. Donald & Sheryl Stanley's Super Bowl Cruise
33. Doris Carter 08 Bahamas Cruise
34. Dumas Family Reunion
35. Family and Friends
36. Family Unity
37. Family Unity II
38. Fauntleroy Travel & Friends
39. Friends & Family of Mercedes
40. Fun In The Sun
41. George & Roslyn Group
42. Go Mexican With the Sanders
43. Harrison/Greenhill to Suns Sail
44. Haworth Birthday Group (Celebrity)
45. Hemet Alaska Cruise
46. Hope On The Move!
47. House of Prayer 2nd Annual Men & Womens Conference
48. Hubbard Anniversary
49. ICC New Year's Kickoff Party
50. It's My Party

With a list like this, do you really think Royal Caribbean would want to terminate our relationship? I can promise you that Royal Caribbean is looking at the bottom line and they know very well what all these groups of 30 or more cabins will do for their business.

In closing, based on what we have just learned about Royal Caribbean's relationship with YTB and the group bookings department and all the groups we currently have, I would have to agree with the ARTA Chairman, although he doesn't realize he's talking about YTB when he was quoted "RCI has taken a major step today to add teeth to its support for the legitimate travel retailer"

They most certainly have.

Subscribe to Just Picture It Now for additional announcements and details!

Doug & Ronda Bauknight
AKA: TravelPro
Travel Agent / Networker
Phone: 678.458.5812

Learn How To Become A Travel Agent

Book Your Travel & Vacations With

Travel Reservations: 1.800.243.4450
RTA #24635