Lloyd Tomer is chairman of YTB International, a multilevel marketing company that has signed on 61,000 "referring travel agents" since its inception in 2001. Critics see a pyramid scheme, a card mill or both. Nadine Godwin, Travel Weekly editor at large, talked to Tomer about these issues.
Q: Your Web site refers to reps. Who are they, and how many do you have?
A: They sell our Referring Travel Agent (RTA) package; they don't sell travel. There is no entry fee for this. Probably 100,000 have said they wanted to sell the package. Usually, each month about 10,000 people get checks for RTA sales.
Q: I found a Better Business Bureau report issued out of Los Angeles in summer 2005 that concluded YTB's advertising is misleading. It also said your company may be a pyramid marketer "because of its apparent emphasis on recruiting rather than selling travel." What is your response?
A: With network marketing companies, people call them all the same thing, pyramid schemes. You beat that by proving yourself. We just keep doing the right thing. The business is growing, but travel sales are growing per RTA, too.
We say here: "If it ain't right, don't do it. If it ain't true, don't say it."
Q: With a $450 entry fee, an ID card, the offer of travel benefits and low productivity per RTA, this business looks like a card mill. How do you counter that image?
A: That's right, we have features that look like a card mill. We are leaning toward not even using a card. Travel benefits are not our main attraction. Now might be the time to drop the card.
Q: As the name suggests, your referring agents are not travel agents as we know them. How do you deal with the customer who wants to talk to someone?
A: About 100 people on our staff work in the call center. Most are travel agents.
Q: As for the RTAs, how many qualify for CLIA cards? How many for IATAN cards?
A: Several hundred apply for CLIA cards each month. Fewer meet IATAN's productivity requirements; we add about two or three a month for IATAN.
Q: What are your growth goals?
A: Our goal is to reach $1 billion in travel sales in 2007. The company has been quadrupling its business each year. Our goal is to be the largest travel company in the world by 2011.
Q: In your early days, you bought technology from what is now a division of YTB International, Rezconnect Technologies. You also opted in to its supplier incentive programs. What about now?
A: Rezconnect got us out of the gate, but we have outgrown our first arrangement. We now have seven or eight people in our own high-end IT department. As for the incentive programs, we lump our volume together.
Q: You are publicly traded. Your 2006 financials have not been filed. Why?
A: The company is growing fast. We did $2 million in volume in 2003. We did a reverse merger two years ago. We moved to new headquarters 18 months ago, then moved again last month. We bought a 120,000-square-foot building and moved into 20,000 square feet. Our auditors were people who had done our bookkeeping; they were not qualified to be our auditors. We got new auditors, UHY. We had to redo numbers for 2004, 2005 and 2006. We expect the new financials this week.
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