YTB and Multi-Level Marketing Travel Agencies

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A recent post on the Amateur Traveler discussion boards about becoming an online travel agent through a company called YTB led me to look into the company more. I have heard a number of things about them on the web and much of it sounded like too good to be true hype.

It is very hard to do real Internet research on YTB (YTBLA.OB) and a competitor Travelus. It you do a google search on YTB you will probably find some non-authoritative site put up by someone who is affiliated with two of these companies. The information in all of these sites is very suspect in my opinion. The people who setup these sites are doing some very clever SEO (Search Engine Optimization). That does not make what they say true.

The good news is that YTB is not a publicly reporting company so facts about it are available from more reputable sources if you dig deeply enough.

YTBLA on Yahoo Financials

So here is what I have been able to find:

1) It is a multi-level marketing company. That is you get paid more if you sign up other agents. That is not illegal. Avon, Amway, etc are also multi-level marketing companies. But it does mean that it benefits those who get in early versus those who get in now.

2) It just posted a loss in the most recent quarter.

3) Their board of directors does seem to have some people with real experience.

4) They are the 35th largest seller of travel in the U.S. in 2006 by Travel Weekly. source Yahoo

5) In May 7th of last year they reported having 178,000 RTAs (Referring Travel Agents) (SEC filing) against which they paid marketing commissions of $16,136,795 and travel commissions of $1,608,688. That says that the average RTA made $90 in that quarter on the marketing (MLM) commissions and $9 in commissions for travel. Granted we have to assume that some of these were very new agents and that the spread between the best and worst agent was pretty large.

The vast majority of the revenue of the company is the fees paid by the RTAs $17,965,361 in that period vs travel commissions of $2,537,694. So the money coming in is from the agents more than it is from people selling travel.

In the most recent quarter the company made $33,959,388 from the RTAs and $5,328,627 from travel commissions. In addition it made another $3,009,505 form the RTAs in the form of marketing materials.

My conclusion is that it pays to be YTB more than it pays to work for YTB.

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by Chris Christensen

I am the host of the Amateur Traveler. The Amateur Traveler is an online travel show that focuses primarily on travel destinations and what are the best places to travel to. It includes both a weekly audio podcast, a video podcast, and a blog.

3 Responses to “YTB and Multi-Level Marketing Travel Agencies”

Marc

Says:

Hi Chris, found you on my blog via Blogrush. You did a great review on YTB. I agree that YTB is good and it was one of the companies that peaked my interest.

I am currently involved with another company and just placed the comparison between the two on my site. It was written by the company so obviously the angle is a bit one-sided, but the information and facts was solely derived from both companies’ websites.

I will be doing a report on the Income Disclosure Statement for both companies soon. As well as placing comparisons among the “other” companies out there.

chris2x

Says:

Since I wrote this article California’s Attorney General has filed suit against YTB as an illegal pyramid scheme.

http://ag.ca.gov/newsalerts/release.php?id=1596

belotenia

Says:

Hi Guys, I’ve found this interesting! Check it out! http://www.worldprelaunch.com/belotenia

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