MLMs and Travel: A Bad Mix

It's Only A Small Hole In The Hull

2009-11-09T04:07:00.003-05:00

When YTB ran into the iceberg several years ago, many (including myself) thought she would go down like the Titanic. There is good news and bad news. The good news is that the damage is done and apparently is unable to be repaired. The bad news, is that it is a smaller hole than originally thought and it will be a slow and painful finish to the pyramid scheme.

A month ago, I predicted the number of RTAs at the end of the 3rd Quarter to be 52,000. I was close. The actual number is 50,421. Many thought I was way off base. The most recent 10-Q was released on Friday (PDF, 159 Pages) and as expected the numbers are not impressive. Just some highlights:

Current RTAs number 50,421 ( a 9 month loss of 41,962)
3 months income comparing this year to last is down by 45%
The 9 month net loss is $3.1 million (versus $3.4 million for 2008) despite having 64,000 fewer RTAs
They have blown through 400K and are down to $800K cash available
Their credit card processor upped their escrow to $3 million
On November 5, 2009. two more Board members quit and required a very complete indemnity contract
Nearly 70% of their business is still from recruiting. 22% from travel (3 months)
78% of of their business is from recruiting and 17.4% from travel (9 months)
Travel Commissions earned this quarter are $3,642,000 (extrapolated that means that they sold $36M in travel. With a weighted RTA count of 53,688, the average RTA sold $670 in travel this quarter)
Commissions paid to RTAs this quarter were $2,069,000. An average of $38.54 per RTA.
Commissions paid to RTAs for the first 9 months of the year were $5,694,000. An average of $86.70 per RTA.
RTAs appear to still be on target to earn just over $100 a year. This number has not significantly changed in several years.
Travel commissions received this quarter have decreased 50.5%
Travel commissions paid this quarter decreased 54.9%
YTB has stated that due to poor sales performance, they do not expect to earn an override
There is still no mention of revenue generated by YTB Cars, YTB Camping, YTB Romance, ShopYTB, etc.
The Illinois suit is still hanging in the balance.
The Class Action suit is still active and awaiting a judge's order for the plaintiffs to resubmit
They have terrible terms on a loan on the headquarters which is rumored to be for sale in order to raise cash
They were stiffed on the property they sold and need to foreclose on the property
The result of the case involving the former Directors is still ongoing

The attrition of the RTAs is particularly interesting over the past year. It shows a decided lack of confidence in the program as well as a lack of results from their vaunted Directors--the ones that remain. While overall, the rate of loss has decreased--they are losing 144 RTAs per day this quarter as opposed to 193, and 289 per day in the prior two quarters. They are not recruiting nearly enough people to remain viable. This quarter, they were recruiting only 33 people per day compared to 45 and 83 in prior quarters.

The numbers suggest that YTB is consistently losing 16% to 18% of their paying RTAs per quarter. If this trend continues, the numbers will be under 20,000 this time next year, and under 10,000 by December 2011. The big question remains how long YTB can keep up the charade and continue to convince people to send in $600 per year for a measly $100 in return. Of course if YTB settles with Illinois for any substantial sum, it will also put another whammy on the picture.

There are a lot of ifs, ands & buts surrounding YTB. But for now, they are still around, and still selling travel (albeit at half the rate they were) and still recruiting people into the scheme.

The Dissatisfaction Continues To Fester

2009-11-05T10:29:00.000-05:00

There is a discussion on the Coach Tomer Facebook Page that pretty much illustrates what I have been saying for many years. You can't make money in YTB selling travel. But this time, it is not me speaking, but those actually in YTB.

I actually do not blame anyone for this not working out for me. I loved what I was doing truelly I did, I would do it full time for my main source of a job if I could, however I just could not make any money at it, and what is worse, being a travel site owner and promoting travel, I really thought some benefit would come to me. I have traveled quiet a bit since becoming a RTA and when I tried to use my credentials, they basically would laugh at me, so I finally got to the point in saying if it does not benefit me, why go on?

Thank you though

Long But Interesting Reading

2009-11-03T04:06:00.000-05:00

If anyone is interested in a long (146 Pages PDF) document, you can read about all the inner workings of YTB as they were transcribed from a hearing in the case against the departed directors--Bill Hoffmann and Kent McLaughlin.

You can see where they did indeed change the compensation plan, the forced acceptance of new terms and more.

You can download it here! Certainly will give some insight!

Settling Down

2009-10-29T04:40:00.001-04:00

After rocketing to 9 cents a share on the news that Coach was fired from the Board, YTBLA has now settled back down to where it was before. It certainly seems like the markets don;t have too much confidence.

Just Some Thoughts

2009-10-26T11:47:00.000-04:00

I had a conversation with a YTB Director this weekend and he was insistent that YTB was travel focused. He chided me about the post about Shop YTB and them proceeded to tell me about all the juices and slimming clothes that were sold out as a result of Shop YTB. Not too much mention about travel.

As he was explaining the Shop YTB mall to me it dawned on me that indeed YTB seems to have just shuffled the deck chairs once again. His comment which was my "aha moment" was "with the money you can save in your own personal shopping, it more than pays for your monthly YTB fee."

There you go! A few years back, YTB was using travel as the hook to get people to sign up into the recruiting/pyramid/endless chain scheme. They portrayed jetting across the globe at pennies on the dollar and travel suppliers fawning over them. Well, we all know how well that worked out as is evidenced by the lawsuit in California, IATAN, RCCL, NCL, Illinois lawsuit, million dollar fines, etc.

So what does YTB do? They get involved with one of the multitude of online "shopping malls". Initially it was Aisle 19 and now they are partnered with someone else but privately branded. This is no different than Market America, Aisle 19, and many others.

So what is the hook? How does YTB convince people to pay them $49 a month for something that they can get for free almost anywhere else? They promote the personal savings and the "incredible commissions" when people buy from your mall. And I am sure that very little non-selfsold merchandise is purchased through the portals.

But to get these wonderful discounts/cash back and commissions because your friends and family will want to buy from you (that worked really well in travel didn't it?), you MUST have a YTB travel site at $49 a month. The pitch is that it will pay for itself with cash back. The hook is that you will have a travel business.

Once again, YTB has found a way to make a whore out of the travel industry!

What Happened To Aisle 19?

2009-10-23T10:50:00.000-04:00

Did Aisle 19 fire YTB? It sure seems so according to their CEO who set the record straight on this forum on October 8, 2009. So, Aisle 19 is no longer the power behind YTB? Can someone explain?

Hello All, maybe I can set the record strait. I am the CEO of Aisle19, Inc. Aisle19 is not a MLM or network marketing company. However, Escape, a company that markets for Aisle19, is a network marketing company...a darn good one. Escape and Aisle19 are owned by the same parent company, thus the confusion sometimes.

However, Aisle19, is not an MLM company it is simply an online savings portal. Of the 600,000 plus members of Aisle19, only 50,000 of them are involved in the partner company- Escape International, Inc.

Aisle19 provide its FREE members with a FREE saving's portal where they can shop at their favorite stores. When they do, they get exclusive sales (about 15% of time) and Cash Back on their purchases (avg. 5% cash back).

They pay the same price as they would by going to Target, etc. direct-but they get cash back and sometimes better prices than target direct.

If someone is simply a customer, they never join Escape. If someone wants to earn money by giving Aisle19 away. Then they can join the Escape income opportunity. When they do, they become Escape IBO (independent bus. owners) as well as Aisle19 members.

If part of Escape, an IBO also gets paid a percentage when one of their customer shops online via Aisle19.

Pretty simple! A customer uses Aisle19 and saves and gets cash back. An Escape IBO also earns for giving that Aisle19 membership away.

Scam? No.

So, to answer the original questions. Aisle19 is not a scam, and Escape is the finest Income opportunity in the home based business world.

Also, as an answer to another question: Aisle19 is no longer providing YTB with access to the Aisle19 online mall.

If you have a question and want facts by someone who is liable for what they write. Write my offices directly at david@aisle19.com. I'd be happy to have someone (or myself) answer your questions directly.

Thank You,

David Rutz
CEO
Aisle19, Inc.
Escape International, Inc.

Plagiarism 101

2009-10-20T04:43:00.000-04:00

Even if you don't write for The Examiner, you too can plagiarize right on Coach Tomer's Facebook Page. Go ahead, they won;t care!

On Saturday, ~~disciple~~ Independent Marketing Representative Andre Hackley came up with this gem:

No other city comes close. It may no longer be caput mundi (capital of the world), but Rome is an epic, bubbling-over metropolis harboring lost empires. One visit and you’ll be hooked. Rome has a glorious monumentality that it wears without reverence. Its architectural heirlooms are buzzed around by car and Vespa as if they were no more than traffic islands.

Funny but that seems very close to this gem published here:

No other city comes close. It may no longer be caput mundi (capital of the world), but Rome is an epic, bubbling-over metropolis harboring lost empires. One visit and you’ll be hooked. Rome has a glorious monumentality that it wears without reverence. Its architectural heirlooms are buzzed around by car and Vespa as if they were no more than traffic islands.

A Cult? You Tell Me.

2009-10-15T10:56:00.000-04:00

Too Funny!

2009-10-12T04:25:00.000-04:00

Tony Ytb

Coach Is In Italy Eating Great Italian Food, But Still Thinks About Us & Want's Us To Eat Good Food Too!! Monge!! Monge!! Everyone!!

The RTA Attrition Continues

2009-10-09T20:29:00.001-04:00

If you will recall, for the last quarter, YTB was losing a net of 149 RTAs per day which showed some improvement over their full year attrition of 178 RTAs per day.

It seems that the 3rd quarter is continuing the trend of losing less RTAs per day than the previous quarter, but the attrition is still very alarming.

At the end of the 3rd quarter, YTB has only 52,000 RTAs. This represents a net loss of 95 RTAs per day. Moreover, any decline has a direct impact on the income since most of the income is derived from the RTAs paying their monthly fees.

To illustrate, at their peak of 138,000, at $49.95 per month, this scheme was generating $6.8 million dollars per month. Now at 52,000 that income has been reduced to $2.5 million dollars per month.

Of course the latest push has been to Shop YTB and not travel. YTB is making a decided push to other retail outlets to make up the money that they are not earning selling the travel websites.

It is only a matter of time until travel will leave the portfolio entirely. This will get the travel professionals off their backs, it will get the attorneys general off their backs, and quite possibly may give YTB as a corporation a chance at survival.

I have said many times that MLM and travel do not mix and one of the main reasons is the narrow margins in travel. You can only split a penny so many ways.

More info on the upcoming 10Q as it becomes available.

No More Sweetheart Deals

2009-10-09T11:32:00.000-04:00

It is interesting that only now that Coach Tomer has been ousted that Travel Pro admits that under the Tomer's guidance, the Board was stacked with cronyism and neoptism.

All in all, it’s a great move for YTB, especially with the way this all this developed. This isn’t some band aid or hasty move that didn’t have input or thought put from everyone involved. Not with the Board of Directors YTB now has. Gone are the “good ol’ boys” and “buddy system” and in with some very promising and talented executives.

Wow, it was not too long ago that he was cheering on the same Board filled with "good ol' boys" and "buddys". What has changed? Is this an admission of a complete failure of corporate governance?

But be clear, the deal Van Patten got was not the same deal that Tomer got. The base salary was slashed by nearly 15%. Tomer still is the Top Director in the company and earns off of every recruit. Tomer still retains the overrides on sales from the IBCs (Internet Business Centers). But look at the two base compensation programs:

Van Patten:

The Company and Mr. Van Patten have executed an employment agreement with a term of twelve months, beginning October 6, 2009 and expiring October 4, 2010. The Company has agreed to pay Mr. Van Patten an annual base salary of $300,000. Mr. Van Patten will be eligible to receive an annual performance bonus equal to 2% of the Company’s annual earnings before taxes if the earnings are greater than $500,000 but less than $1.5 million, 2.25% if the earnings before taxes are greater than $1.5 million but less than $3.0 million, or 2.5% if the earnings before taxes are greater than $3.0 million. The Company has also agreed to provide Mr. Van Patten with a monthly car allowance of $1,000, and he will be eligible to receive management-level employee benefits. Either party can terminate the agreement at any time without recourse.

And Tomer:

Under their employment agreements with the Company, each of Messrs. J. Scott Tomer, J. Kim Sorensen, J. Lloyd Tomer and Michael Y. Brent will serve in their positions for five-year terms, earning starting annual base salaries (in fiscal 2008) of $325,000,which shall increase in increments of $25,000 for each successive year under the agreements. Each employment agreement automatically renews for additional one year terms at the then-current base salary upon the expiration of the initial term or any successor term if either party does not provide notice of non-renewal at least 90 days prior to such expiration. Each of Messrs. J. Scott Tomer, J. Kim Sorensen, J. Lloyd Tomer and Michael J. Brent will be eligible for a cash bonus equal to a percentage of the Company’s net pre-tax income for each year in which such income surpasses certain thresholds, in the following percentages:(i) 2.0%, if net pre-tax income is at least $500,000, but less than $1,500,000; (ii) 2.25%, if net pre-tax income is at least $1,500,000 but less than $3,000,000; and (iii) 2.5%, if net pre-tax income is at least $3,000,000.

And one other item the press release did not address was that Andy Cauthen was also forced from his President and COO position within the company (YTB International) and will remain as Secretary of the Corporation as well as COO and President of the subsidiary YTB Marketing reporting to Scott Tomer.

Coach Fired From His Own Pyramid Scheme

2009-10-09T10:07:00.000-04:00

COACH IS FIRED!

According to a press release issued this morning, it appears that our sources yesterday were indeed correct.

Coach Tomer no longer has a position in the Corporation and is now the the top Rep in the Pyramid and has been replaced by "Consultant" Bob Van Patten.

It will be interesting to see how this impacts the issues facing YTB including their cash flow situation, their declining enrollment and more importantly the civil lawsuit filed by Illinois Attorney General Lisa Madigan.

I suspect that with Coach out of the corporate picture, YTB may be in a better position to negotiate a settlement with Illinois. But, then again, the suit charges Tomer individually and corporately. And one wonders how and if the insurance will cover him.

Watch the stock carefully!

Big Discussions In Wood River

2009-10-09T04:10:00.002-04:00

UPDATE: From a comment, there is speculation that Coach Tomer has been forced from either the Board of Directors of YTB or forced from his seat as the Chair. We are trying to get some verification of this and we are reporting it because it may make sense with the discussions of taking YTB private once again.

I am the first to admit I have no idea of the full ramifications of this, but there are rumblings that YTB may indeed be moving to take itself private once again with an open share buyback program.

Certainly the big plus of being a private entity is that 100% of your business dealings can be held private. There no longer would be SEC scrutiny and to a great extent, no more fodder for critics.

The downside is that the Reps will no longer be able to use "publicly traded" as a "guarantee" that it is not a scam.

I also have no idea how a buyback will work. At what price do they buyback shares? Current market value? What if I was awarded 100,000 shares at $1 for a Director bonus--am I expected to just accept the $5000 and be happy? If it is not at market value, where will the money come from? Their cash position was very weak at the last 10Q and they just refinanced a loan with not so tremendous terms. I doubt there is a line of Venture Capitalists queuing up behind all the travel vendors to become involved with YTB. This also makes more sense with all of the SEC background that Bob Van Patten reportedly has under his belt.

I also imagine that we will see the release of the 3rd Quarter 10Q to see if it is even feasible and maybe it will happen in the Fourth Quarter...you don't suppose.....

YTB Goes To A Consumer Show

2009-10-08T04:19:00.000-04:00

Caption: My YTB Outdoors sign. The brown papers are ShopYTB stores and the black and brown writing on the board are some of the MANY trips YTB Outdoors can offer.

Congratulations To YTB

2009-10-07T04:45:00.000-04:00

1,014 / 60,414 = .017

Congratulations to YTB. 1.7% of their Travel Store Owners have decided to complete the Mancini E-Campus Modules. That means that 59,400 have not.

A special congratulations goes to Doug "TravelPro" Bauknight who paid for and completed the curriculum. Notably absent was another "Travel Pro", Candy May. And also absent were some of our old friends who claimed to be serious about selling travel--Regina and Gail.

But, it does appear that there are at least 1000 people in YTB that are indeed interested in learning the industry. Now imagine the productivity these 1000 could do if they aligned with a legitimate host? One where they could make a lot more than a 75% split--which they had to pay to obtain.

YTB Refinances Loan

2009-10-06T04:34:00.001-04:00

When the bank used by YTB (and owned by YTB Board Members) was seized by the FDIC, the loan on their office had to be renegotiated or paid in full. They could not pay it so they renegotiated it and were able to do so at 8% interest according to the SEC Filing. Alternately, with a $200K payment they can get Prime +4%. Wow, quite a difference from the sweetheart rates they had when they were dealing with a bank controlled by their Board members.

But 8% is certainly on the high side of commercial interest rates according to RealtyRates.com. I am not familiar with commercial loans, but I imagine like a consumer loan, the interest increases with the risk. Hmmm.

Whoops!

2009-10-05T19:13:00.000-04:00

Statue Still Homeless

2009-10-05T04:16:00.001-04:00

On September 27th, our DAD Member TravelCop informed me that YTB was in talks with the Olympic Committee to provide the statue for the 2016 Olympiad. The actual news indicated that Beryl-Martin (Coach, Scott, and Kim's little tax shelter) was willing to offer it to Chicago. But that did not stop TravelCop from his spin.

Well, now that the Olympiad will be held in Rio, it seems that the FLL is still nothing more than an expensive stage prop purchased on the backs of the naive.

Funshine Reports Trickling In

2009-09-30T04:38:00.002-04:00

Well, in a recent comment, TravelCop stated:

Fact is- YTB isn't going away..
Did you count how many people were at FUNSHINE this year??
I was astounded! The numbers were up- the vendors were up- and I am pretty sure that we had more vendors at our travel trade show than any other...again. If they hate us why do they come? ( And they sure did show out with colors a blazin!)

But from someone who was actually there, I received this:

Hello John,

This was my fourth year in a row to attend Funshine. As expected, it was different this year. The crowd this year was the smallest I have seen in 4 years. All the people attending were enthusiastic about YTB so there is a new breed of YTB agents coming up to replace those that quit.

There was only one 2 hour general session for announcements and awards. There were no numbers with the awards which I was disappointed about. The only travel award given was the top 10 referring travel agents who received the highest travel commissions for the year and they had to receive a travel commission check every one of the last 12 months. That was it, no numbers on how much was earned or booked.

There were coincidently fewer suppliers coinciding with the fewer number of RTAs. The training sessions were well attended, meaning the seats were 3/4 full to full capacity at every meeting. There were several YTB Preferred vendors there. I don't want to go into detail which companies were there. It was well worth my time and money.

And judging from the empty booths in Coach's Facebook video and the 11 people waiting in line to get it signed, I have to think the second report is more believable.

What is particularly amusing is that the criteria to win a "travel award" is to receive a check each month from YTB regardless of the amount. Keeping in mind:

In 2008, 43,670 (49%) of all TSOs received no income at all.

And then there is this little tidbit:

The average annual income for all TSOs in 2008 was $111.26.

But seriously, even the top travel producer in YTB only earned $2000 a month. Honestly, it is a joke! And something even more ~~amazing~~ expected is that YTB's very own TravelPros were not hailed as leaders in selling travel. Yes, neither Doug Bauknight nor Candy May made the cut. I guess they were too busy faking it till they make it!

WWJS?

2009-09-29T12:53:00.000-04:00

No, not "What Would Jesus Do?" but "What Would Jerry Say?" if this happened in California and not Georgia!

I hope you've had a chance to carefully view our informative presentations. If so, you've learned a lot about Your Travel ... I hope you've had a chance to carefully view our informative presentations. If so, you've learned a lot about Your Travel Biz and how it can help you EARN THOUSANDS PER WEEK. If not, please don't pass up this amazing opportunity to change your life! * Are you tired of your 9-to-5 job? * Would you like to make more money? * Are you sick of just getting by? * Do you wish you could get paid what you're worth? * Would you like the freedom to work in your pajamas and travel whenever you like? YOUR TRAVEL BIZ LETS YOU HAVE IT ALL! And, it's easier than you probably think! With our super EASY marketing system already in place, YOU could easily earn THOUSANDS PER WEEK, just like I do. And I'm not joking! I have the freedom I want, the income I love, and the career that makes it all possible. There is no obligation, and you'll learn everything you need to know about YTB! ** NO cold calling! ** Your own personal mentor to assist you in making sales! ** Work your YTB business from anywhere; home, the office, or the beach! All you need is access to a computer & phone! ** You'll have a GREAT TIME traveling & taking dream vacations to exotic locations all around the world...at COST!! What are you waiting for? Like I said before...there is NO OBLIGATION to join after viewing the presentation, and it could change your life! LEARN HOW YOU CAN GET THE FREEDOM YOU DESERVE!

I have to guess that Jerry Brown's reaction might be to make a contempt of court filing.

Did You Read This?

2009-09-25T04:28:00.000-04:00

Did you read this in Travel Agent?

Your Travel Bard Strikes Again

2009-09-24T04:04:00.001-04:00

Back in June, a reader of this blog only identified as "Bob from NJ" sent a poem entitled "An Ode To YTB". Well, it appears he has branched out from poetry to song and has just submitted this remake of a Beach Boys classic.

RONDA

Well since Doug put her down she has doubt filling up her head;
She comes in late at night, in the mornin' just cries in bed.

Well, Ronda you looked so fine
Til YTB did not make a dime
So we must help out Ronda
Dougie threw her under the bus.

Help help Ronda
Help, help help Ronda
Help help Ronda
Help, help help Ronda
Help help Ronda
Help, help help Ronda
Help help Ronda
Help, help help Ronda
Help help Ronda
Help, help help Ronda
Help help Ronda
Help, help help Ronda
Help help Ronda yeah
Dougie's driving the bus.

She was gonna have a life, YTB was gonna be her plan;
But Tomer's scam is cruel, and it ruined her and Doug her man.

Well, Ronda we see you cry
And I can give lotsa reasons why
We gotta help help Ronda,
Dougie threw her under the bus.

Help help Ronda
Help, help help Ronda
Help help Ronda
Help, help help Ronda
Help help Ronda
Help, help help Ronda
Help help Ronda
Help, help help Ronda
Help help Ronda
Help, help help Ronda
Help help Ronda
Help, help help Ronda
Help help Ronda yeah
Don't let Doug drive the bus.

Yours truly, Bob
(Your Travel Bard)

Expert Travel Advice From YTB (Not So Much Spelling)

2009-09-23T04:36:00.013-04:00

Valerie I hope this helps you, 1. This is not a pyramid because it is a publically traded company so learn a little more about your company to combat that objection from people. 2. We don't guarentee the lowest prices we guarentee one stop shopping at competative prices and sometimes the prices are lower. Remember the prices you are quoteing inculed taxes and fees, many of the other companies do not do that then the customer is shocked at the end of their transaction. The best way to sell travel is directly through the vendor so if you have taken your first class training and have all of your creditientials you should have better results. Also you may want to specialize in an area of travel. I make most of my travel revenue from group crusies and travel. 3. Just another tidbit. When people jump from site to site looking for the lowest airfare prices it acually increases the price. Airline prices are based on demand and the more hits for a flight creates a demand unfortunitly it's a false demand because it's one person all over the internet. That's the beauty of your muilti million dollar booking engine. It searches for the lowest available price from all of the airlines. Hope this helps, if not there is a ton of free travel training in your back office to arm you with the knowledge you need to sell travel.

And our "Fake It Till You Make It" man chimes in as well.

Valerie, what Cheryl wrote is 100% factual.
We can discuss this all day on here..But the basic bottom line is back to my original post. Plug into a leadership call, training etc. This is an awesome tool in your back office called "The YTB System" It will help and guide you.
Your in prime location especially if no one as heard of YTB back there. That means you could become a National director in less that no-time with that market. WOW Do I need to fly that way? :-)
Remember Point and Click..U don't need to know it all. I don't!!! earn as you learn.
Send some1 to your marketing or associate presentation. Let the "system sort" them out..them follow up with 3-way call. Give me a call if you need assistance. Be Blessed..

Fake It Till You Make It

2009-09-22T04:31:00.000-04:00

My reccomendation is STOP Selling and just start telling the story.. Become a artist at story telling the YTB story. If you don't have a story yet borrow your Directors until you get one.

An Outstanding Business Plan

2009-09-21T04:25:00.002-04:00

One of the things we are doing in UT is meeting as a group, although we are from several different teams, and planning group travel. It's a good way to get some cash flowing. We are each planning our dream vacation, then meeting together to share the information and help promote one another's groups for those vacations.

The plan is that we will all advertise and hopefully then all get to go on each other's trips by selling enough "seats" to go free.