Independent home-based travel agents must use extreme care before they affiliate with a host agency, while the travel agency industry must increase its enforcement and policing, Peter Stilphen, president of Coral Sands Travel in Labelle, FL, believes.
In an interview with Travel Agent, Stilphen warned that multilevel marketing firms and card mills are going to put a “world of hurt on this segment of the industry sooner rather than later.” He also urged agents to be more active and vocal when confronted with problem companies, and encouraged industry associations to be more aggressive in enforcement.
“I doubt that creating chat rooms where you can call Joystar names and write about how much you have been hurt by this and filing small claims actions in your local court or just doing nothing will get your commissions paid,” Stilphen said.
Stilphen, widely respected for his persistent warnings about Travelstar/Joystar’s solvency, feels vindicated by the recent events. While applauding the decision by Carnival Cruise Lines and Norwegian Cruise Lines and others to stop doing business with Joystar, he notes the actions came only after a group of Joystar affiliated agents filed a Chapter 7 Involuntary Bankruptcy petition in Federal court.
Stilphen remains concerned with what can be done to prevent another Joystar debacle. Often a lonely voice warning of Joystar’s weaknesses and faulty business model, Stilphen is seriously concerned about other companies whose business models seem out of touch with industry realities— especially in an economic downturn.
“The straight, simple answer is that we can't do much to prevent another Joystar," Stilphen said. "However, we— as agents and as an industry— can all take steps to reduce our exposure. No matter how agents feel about Joystar or other multilevel marketing and card mills, must not simply ignore them or hope they just go away. Organizations like IATAN and CLIA should review their requirements for host or similar agencies. More, earlier action is needed by the associations, consortia leaders, suppliers and host agencies to identify problem companies.”
Stilphen notes that Travelstar/Joystar has claimed, at one time or another, to be members of such organizations as IATAN, ARC, CLIA, OSSN, ASTA and Vacation.com. “These groups should have reviewed their requirements and terminated Joystar's accreditation or membership much sooner," he said. "They have bylaws and codes of ethics in place. We need effective enforcement. Waiting to see how the legalities pan out is just the wrong approach. What has really hurt many travel agents has been the terrible attitude of most suppliers to help to transfer future bookings and holding back commissions to Joystar. With a few exceptions, the suppliers have abandoned these agents. I believe that some of these suppliers may face legal action because they knowingly paid commissions to an insolvent JoyStar which was not, in turn, being paid to their agents.
“This is similar to the Mechanic's Lien Law where the main contractor should be obtaining releases of lien from the subcontractors," Stilphen continued. "In this case the suppliers should have asked Joystar for some proof that they were paying their agents. Perhaps the suppliers could be held responsible and be forced to pay the travel agents directly. Not likely, but a good thought. I know of travel agent groups that are currently working to boycott these suppliers. I will name them once the smoke clears a little.”
Stilphen also says that former Joystar employees should come forward to do the right thing. “We know many of them were also told up to the last minute that these unpaid commissions would be paid," he said. "We have all heard the rumors that payroll taxes, unemployment and social security earnings were not paid or reported. We also have heard that commission override funds bypassed the corporate checking accounts. You owe it to these agents to come forward and either dispel or confirm these rumors.”
As easy as it is to point fingers, however, Stilphen believes many can share the blame for this situation. "The travel industry has changed so much in the past few years that it takes people like me to take the time to sift through all the nonsense," he said. "I've blamed the same people over and over again, however, what we now need is better changes for the good of this industry or else we face regulation from the politicians. Suppliers have their organizations where they work together, make the rules for their members and market their products. The obvious examples are CLIA for cruise lines and the USTOA for many tour operators. So who represents travel agents? ASTA works with the political problems. OSSN and NACTA are primarily training and networking organizations.
“Who works on behalf of and the betterment of the selling travel agent?" Stilphen asks. "Absolutely no one. I believe it's time that the professional travel agent has it’s own representation; enacts requirements that bring professional status to its members; markets its membership to the consumer and the rest of the travel industry and works to protect their rights.”
On a positive note, Stilphen has formed STARS, a nonprofit group he hopes will assist to build professionalism among agents and to offer travel agents the opportunity to control and operate their own organization. He was also a founding member of the Professional Association of Travel Hosts (PATH).