Travel agents concerned about multilevel marketing, card mills as well as the future of host agencies and independent contractors are watching an escalating clash between TravelStar, better known as JoyStar, an Aliso Viejo, CA agency, and host agent Peter Stilphen, Coral Sands Travel, La Belle, FL.
Stilphen, a respected agent and host agency manager, charges in his newsletter that TravelStar is on the verge of collapse. “JoyStar is in the throngs of financial collapse that may result in hundreds of JoyStar affiliated travel agents not receiving their hard earned commissions and giving the travel industry, especially host agencies, a black eye,” he wrote.
He substantiates his warnings by alleging that JoyStar has not renewed its seller of travel licenses in Florida and California, questioning investor confidence (TravelStar is publicly traded), and charging that agents are not being paid commissions, among a host of other allegations.
“The end appears imminent unless the investors can dump TravelStar’s CEO (Bill Alverson), add more capital and find that person who is qualified to operate the company and places its agents first rather than its stock price," Stilphen wrote. "The company has an infrastructure although key employees are leaving or have already left.”
Stilphen, a consistent critic of alleged multilevel marketing and card mills including Wood River, IL based YTB International, warns that if TravelStar/JoyStar fails the industry will be adversely impacted. “We need to clean up our act before a government body does it for us," he wrote. "It all begins with suppliers who have the ability to stop doing business with them with help from all the organizations and the media.”
In an interview with Travel Agent, Bill Alverson disputed the charges and offered a defense of his company and his business model. “The criticisms are unfair, unfounded and in several cases inaccurate," he said. "They are having an adverse impact on our independent agents and on our staff. We intend to correct the record.”
Alverson said that action has been taken to be to comply with California’s state Sellers of Travel law and that compliance with Florida’s law was underway. Non-compliance was one of the charges leveled against the company. He also said that all commissions owed agents would be paid by the 15th. The exception is a disputed claim over a $35,000 commission.
“This is not the end of JoyStar,” Alverson said, admitting that his company has been impacted by the current credit crunch. “There is a crisis in the market.” He believes that TravelStar/JoyStar remains an investment opportunity in the future of travel distribution. He estimated that JoyStar has 1,500 agents. The company was launched in 2004.
Elverson notes that TravelStar/JoyStar is ARC appointed and is a member of Vacation.com and ASTA. He also said that legal action was being considered against Royal Caribbean, who dropped JoyStar last year. He has retained Alexander Anolik a San Francisco-based law firm to represent one phase of the action.
TravelStar Inc is a publicly traded company (OTC PINKSHEETS: TVLS) reporting a net loss of $494,000 in the first quarter of 2008. This was based on revenue of $1.9 million. Cruise sales account for some 70 percent of its income. The listing was changed from JoyStar to TravelStar in June 2007. TravelStar.com, JoyStar and Vacationcompare.com are listed as TravelStar brands.
In TravelStar's most recent posting with the SEC on September 24, the company said it continues to experience significant growth in sales despite a weak economy and volatile stock market. "Sales for 2008 have been substantially higher than we had earlier expected," Alverson said in the filing. "Beginning in the fourth quarter of last year, in anticipation of a slow down, we implemented a major initiative to reduce fixed costs to weather the storm. We also curtailed our advertising spending making the growth we are seeing even more impressive."
Stilphen says that professional host agencies in the industry should be prepared to assist any TravelStar/JoyStar agent should the company fail. ”The biggest challenge we have moving forward is the effect MLMs will have on the professional travel agent and the consumer,” he said.