Guest Post by Greg Boudonck
In today’s post, we are going to review an multi-level marketing company whose service was travel. The name of this company is YTB International, but they have also gone by the names:
Your Travel Biz
and YTB Global Travel
I will just say up front that in many aspects, this business is not in operation in the same format as it was when first started. I will go into that further later on in this post.
When YTB International Was Founded
In 2001, 3 men agreed to start YTB International. These men were J. Lloyd (Coach) Tomer, his son, Scott Tomer and Kim Sorenson. They founded the company in Alton, Illinois, which is within eyesight of the major city of St Louis, Missouri.
At first, the business was slow, but in 2004, YTB International bought the controlling interest in REZconnect Technologies. When doing so, they changed their marketing methods, and YTB International began to grow by leaps and bounds.
The YTB International MLM Method
The MLM method that YTB International used was to allow normal people to purchase their own small travel agency. As a independent representative, a person would pay approximately $450 for their own personal YTB generated travel website, and $50 per month up keep for that website.
There were essentially 2 ways that representatives could earn money through YTB International:
Sell travel in the form of flights, cruises, hotels and rental cars.
Generate a down line in which other people would purchase a website, and you would get a commission from that.
All in all, when a person watched the marketing from YTB personalities, they flashed wads of cash and stood in front of expensive cars stating that they had made it all from having their own YTB International Travel website.
While this seemed great, if a person really examined the possible commissions, and having to pay $50 per month “rent” on a website, it seemed nearly impossible to generate any kind of decent income.
Just to put things in perspective, I own my website which I did have to build on my own. It did not cost me anywhere near $450 to purchase it, actually, I paid approximately $70 for the domain and 2 years of hosting. I do not pay a monthly charge, and if I figured the time I spent building the website, I would estimate that all in all, it was a cost of $225 for 2 years. Oh, and so far, I have made $575 from it with nearly 1 year left.
The YTB International websites did not generate much per person in the form of travel. Just an example, a person buys a ticket through the YTB International Representative’s website from New York to Los Angeles, they would earn around $5 commission. So you would need to sell 10 of those tickets alone to pay your monthly fee, and we are not even considering the amount you paid for the website.
YTB International also claimed they ran competitive prices to online generators such as Expedia and Orbitz, but the fact is, their prices were higher.
Pulling The Rug Out From Under YTB International
Many people with dreams of owning their own travel business “fell” for the YTB International plan. I can understand it, because the investment seemed low, but no matter how hard people worked, they just could not make profits. And others realized the profits were in getting other “suckers” to purchase a website. So, the service was not the main priority, but selling the MLM websites became the priority.
Just to be clear, if you have not studied it closely, the system above falls into the area that is known as an illegal pyramid scheme. Now, all businesses work on a pyramid, but they are focused on selling products or services, so that makes their pyramid legal, but when a company is focused on selling the selling aspect, it becomes an illegal pyramid, because people at the bottom of the pyramid have no possible way to win. It IS that simple. When people at the bottom of the pyramid have the same odds of success as those at the top, it is legal.
The rug was first tugged by Royal Caribbean. The cruise company completely stopped doing business with YTB International.
And The Dominoes Fall
The complaints were rolling in. It seemed that many people who had agreed to purchase the website and the monthly fee now wanted out. They were losing money, but YTB International was still charging their credit cards for the monthly fees.
In 2008, the California Attorney General, Jerry Brown sued YTB International. YTB settled out of court and agreed to change their business structure. This took a toll on the company’s revenues. An audit of the company predicted it would not be able to survive.
In 2009, losses for the first quarter were around $2 million. The company began selling off properties it owned and the business Learjet. They also sold REZConnect which was the technology behind the YTB International operations.
In 2011, they sold the headquarters and another company purchased YTB Travel Network.
It was chaotic in the YTB International offices and then one of the founders, Kim Sorenson died. CEO Robert Van Patton resigned, as did Scott Tomer. In 2013, YTB International filed Chapter 11 bankruptcy in St Louis Federal Court.
What assets were left of YTB International were purchased by Sam Hathi who owns Jamravel, Inc. In Chicago.
Final Thoughts
In many ways it saddens me to watch something such as this happen. Did the founders plan an illegal pyramid scheme? I highly doubt it. It is my belief that they started with what they thought was a great idea, and when the cards started rolling the way they did, they just let them go.
The lesson in this? Be selective when you are giving money to start a business. I installed my cost for building my own website earlier in this post, and if people who signed up to buy a YTB website would have just used some common sense, they could have recognized that this was over-the-top.
For that matter, a person could buy wholesale tickets themselves and start their own website, and probably make a bigger profit than they did using the YTB International system.
When people started “jumping” on the YTB International bandwagon, the MLM company was still quite young. If those who joined it would have researched the whole system better, they would have probably passed.
What are your thoughts about the YTB International MLM? Please share your comments in the area below, and for further reading, you can see the reference articles and websites.
Thank you for visiting.
References
- Business Wire: REZconnect Technologies, Inc., into Which YourTravelBiz.com, Inc. Had Previously Been Merged, Has Reincorporated in Delaware, Changed the Name of the Company to YTB International, Inc. and Now Has YTBL as Its New Trading Symbol
- State of California Department of Justice
- BizJournals: YTB International files for Chapter 11 bankruptcy
- Court Grants Preliminary Approval in Class Action Involving YTB International
- YTB International Wiki
Chuck Holmes
20+ Year Network Marketing Professional
Top Earner & Top Recruiter
Email: mrchuckholmes@gmail.com
P.S. Learn how to grow a successful network marketing business. Secret tips, training, and practical ideas. Free training delivered by email.
I worked at YTB from the rise in 2006, through the crash in 2008, and finally laid off in 2012 right after Kim died. I don’t know if they planned it as a pyramid scheme, but by 2006 they clearly knew it was. I worked in IT and had access to all the algorithms that ran the commission structure. It was clearly set up to funnel the vast majority of all commisions to the person at the top of all other downlines. Who was of course Lloyd Tomer. I remember when they tried to get the CFO to lie on the financial reports. He walked out. That was 2011. Notice how they haven’t filed any reports with the SEC since 2011? Yeah, lol, that’s why. These guys were scumbags.
Sorry to hear that, Matt. I hope you found a great company to work with in your next job. Thanks for the comment. Have a great day.