YTB Convention Opens: A Viewpoint from YTB Defender

YTB International’s annual convention opens this week at the America’s Center in St Louis, with 5,800 plus YTB agents and representatives expected. Among them will be Doug Bauknight, one of YTB’s most articulate defenders who has stood by YTB in good times and bad. Bauknight’s web site, www.justpictureitnow.com, is available to help interested parties understand the ever-controversial YTB and its future.

“Its frustrating for YTB’s critics,” Bauknight said in an interview with Travel Agent. “But YTB is still standing with $425 million in sales and a loyal cadre of travel selling agents. Worse, for our critics, YTB is growing despite the economy and despite its critics. Even at 5,800 attendees, the convention—our fifth—represents the largest gathering in the travel industry.”

YTB’s convention agenda includes training in group cruises, booking procedures, making websites work, understanding cruise pricing, student travel, travel insurance, selling Alaska, golf vacation sales and more including training on YTB’s program.

“I speak as an individual YTB agent, not for YTB," Bauknight said. "My view is that of an entrepreneur who has benefited from YTB’s program personally and professionally. I am both a seller of travel and a YTB Representative. I get two 1099 [forms[: one for travel sales and one for rep sales. I am one of thousands of YTB agents who benefit from YTB’s program.”

Bauknight sees a new YTB emerging or YTB 2.0. “The California Attorney General’s legal action hurt," he said. "It cost YTB money and we lost some good agents. And it cost us momentum. But we are going to emerge stronger. We have strong, visionary management and we have the power to learn and adapt. The Convention will help clarify and define our goals.”

Earlier this year YTB settled a lawsuit brought brought by California’s Attorney General Edmund G. Brown Jr., who called YTB “an elaborate pyramid scheme.” The agreement ordered YTB to stop what the state said was “deceptive marketing of its largely unprofitable travel websites” and hit YTB with $1 million in penalties. The decision forced changes in how YTB was organized and promoted membership.

The core of California’s complaint argued that the annual median income for those selling travel was $39.00, less than one month's cost to operate the website. Brown said the majority of consumers who purchased YTB websites made no money through the sale of travel as many lost money through continued website operations, but those who recruited others to buy websites were much more profitable.

A New YTB?

One key to YTB’s future will be adopting a franchise model. YTB Franchise Services, Inc. was formed in March 2009, to serve as the corporate entity to offer the proposed/contemplated franchise offerings for YTB. “We see franchising as one way to expand business and compete for quality agents," Bauknight said. "Franchising will be the core of the new YTB.”

Bauknight admits that franchising is a tougher sell and that franchise offers are closely regulated both at the state and federal level. “I am confident that YTB’s offering will be innovative and rewarding to franchisees. And yes, I think we can compete head on with other travel franchisers," he said.

Bauknight does not believe the recent spin off of YTB’s REZConnect technology subsidiary will adversely impact YTB agents or reps. “We will have state-of-the art technology essential to booking travel via agreement with World Choice, Trav-Tech, and direct access to other vendors and suppliers," he said. "We are also currently beta testing new technology in Canada with Convergentware. It’s my understanding that YTB has agreements in place to provide support for agents.”

The new YTB 2.0 will have three—rather than four— distinct, wholly-owned subsidiary divisions, including YTB Franchise Services.

YTB Marketing, Inc. (formerly known as YourTravelBiz.com, Inc.) does the marketing, training and support of its rep sales force, who are responsible for marketing and selling websites to TSOs, formerly known as referral travel agents (referring travel affiliates in Canada).

YTB says its reps are independent contractors who primarily work from their homes. In addition to earning compensation on personal ITC sales, reps may also build a sales force from whom they receive override compensation on ITC sales.

Under the new plan, post-California decision, reps may utilize a number of methods to sell ITCs including the use of informational meetings and events, local advertising, and one-on-one meetings. It is a referral marketing compensation program, YTB says. YTB Marketing charges an initial fee of $449.95 for the setup of an ITC plus $49.95 per month for web-hosting fees.

The second unit is YTB Travel Network, Inc. which operates home-based travel websites which book online travel transactions, collect payments, collect licensing fees, and pay travel sales commissions to the approximately 73,801 (as of 3/31/09) TSOs’ ITCs that it hosts. TSOs are educated through travel training courses via conference calls, e-training modules and hands-on certification seminars. TSOs earn transactional compensation from travel purchased from their respective ITC’s.

YTB Continues to Impact Industry

Bauknight believes YTB has been subjected to a lot of unfair criticism and has been singled out more so than other marketing firms. “This is regrettable," he said. "YTB offers income opportunities to individuals that make a difference in people’s lives. Critics dwell not on the opportunity YTB offers but on the negatives. In my view we compare favorably to other host agencies and compete fairly. There have to be new approaches to how travel services are sold. To me YTB has and is breaking new ground.”

The recession is a worry for Bauknight who, like other agents, sees eroding yield on cruise sales and sluggish consumer demand. Supplier support remains strong, however, and he believes YTB agents are delivering sales in sufficient volume to gain suppliers support and encouragement. “As with any host agency the drive and determination of the individual agents make the difference," he said. "No one can take this market for granted. YTB agents have to promote themselves and travel.”

Year-to-date, Bauknight admits that YTB has had some tough going. But he believes that YTB’s management is backed by quality agents and representatives and has an evolving, dynamic and rewarding program in place. “We have a settlement in place in California, the class action in Illinois has been thrown out, and we expect new initiatives to be announced at the Convention that will build momentum to help us realize what we can achieve,” he said.

Bauknight believes that the roll out of YTB’s Franchise program will start in California as allowed as part of the settlement with the Attorney General and follow in other states. “Our key weakness has been the perception of our being a multilevel marketing plan," he said. "They are nothing more than common misconceptions and stereotypes. But by complying with the California state judgment we have learned how to change that perception and better mange ourselves.”

For Bauknight, the downside to being a defender and advocate of YTB it is the often angry, "poorly informed" and sometime "malicious" criticism that a YTB champion such as Bauknight attracts. “Many are very sensible," he said. "But some commentaries are obsessed and verge on the irrational. YTB has struck a nerve in the travel industry. One such indication of its success is the anger and frustration directed at both myself and the company. Time will tell. But my guess is that YTB will be here next year; bigger and more successful.”

Travel agents can learn more about YTB at www.ytb.com, the company’s official site that includes YTB’s reports to the Securities and Exchange Commission. They can also visit Bauknight’s website at www.justpictureitnow.com.