YTB's Own J. Kim Sorensen Interview

While YTB ranks among the most controversial companies in the travel industry, J. Kim Sorensen, president of YTB International and president/CEO of the subsidiary YTB Travel Network, offers no apology for its business model. In this interview with Travel Trade senior editor George Dooley, Sorensen details YTB's goals, operating methods and plans for future expansion and growth.

YTB has 135,000 referring agents.   Founded in 2001, YTB International is headquartered in Wood River, IL and is publicly traded (Pink Sheets: YTBLA). YTB estimates $550 million in verifiable sales in 2007 and $226 million in 2006. YTB expects to sell 80,000 cruise packages in 2007 – and booked some $13 million in cruises on Royal Caribbean, which terminated its agreement with YTB last month.    

Travel Trade: Is YTB a multilevel marketing company?  

Sorensen: YTB is two companies. YTB Travel Network is our travel agency and is not a MLM company. It sells travel both online and offline  through outside referring travel agents (RTAs). The RTAs are paid 60% of the agency commissions. YourTravelBiz.com, a sister company, is a marketing company, call it MLM, network or relationship. YTB Travel Network pays YourTravelBiz a commission to find its RTAs. YourTravelBiz pays that commission out through a tiered MLM type pay plan. Some companies spend millions on media advertising to find customers. Network Marketing is an alternative method of finding customers, using word of mouth instead of mass media.    

TT: Is YTB a card mill?  

Sorensen: That would be in the eye of the beholder. If you poll our preferred vendors, most would say no. They see our volume and our commitment to training. If you poll our competition and critics, they would say yes. We do issue our RTAs an identification card. It does not resemble any other industry card. The YTB logo is prominently displayed, it has all of our SOT numbers and a phone number to report abuse. Do some of our reps over promote the value of the card? Yes. We are addressing that issue. Is YTB a card mill? We are booking hundreds of millions of retail travel; we have always hoped that our production would ultimately legitimize our concept.    

TT: Has the RCCL decision impacted YTB?  

Sorensen: Yes, it has impacted YTB. It has been a distraction. It has caused a few to lose confidence. Our sales haven't dropped though, in fact we had a very strong November. RCCL had three booths purchased for our trade show in Orlando and they sponsored our golf tournament.   They had more brochures shipped in than any other vendor and then they just didn't show up. When we got home, we had a letter from Lisa Bauer. I wrote her and asked for a meeting and she didn't even respond. After a 6-year relationship, millions in business and a lot of positive agency recognition for our growth, you would think we would at least get a phone call.   They have stated that they don't like our business model and I can't change that. I am certain, though, that we will sell more cruises in 2008 than we did in 2007. There are many other great cruise lines.    

TT: What about the competitive challenge?  

Sorensen: It is important to understand that YTB in no way tries to compete with high touch, high service "professional" travel agents. YTB is competing for the 80 million travelers who have chosen the Internet as their travel agent. Professionals can and do command $20-$100 service fees for an airline ticket while YTB charges $5.   Our "Referring" Travel Agents (RTAs) simply refer their family, friends, neighbors and associates to their travel Web site, giving them the option of booking with someone they know, instead of the faceless Internet. Orbitz and Expedia refer customers to their Web sites through advertising and YTB refers through relationships. We have gone a long way toward solving the customer loyalty problem experienced by most online agencies.   YTB Travel Network is not trying  to conform with the pre-Internet travel industry of the 1970s and 80s. We are building a new company with new ideas. We are building an army of entrepreneurs. We will continue to recruit and continue to train our RTAs to sell our products.   We will provide our sales force with a powerful E-commerce consumer Web site that sells travel as well as other highly consumed products. Our customers will shop and purchase on the Internet from someone they know and someone they can call. In short, the Internet with a Face and a Personality.    

TT: Is YTB opening new markets for travel sales?  

Sorensen: Yes. YTB is uniquely positioned to capitalize on group business. We place a heavy emphasis on groups in all of our trainings and we teach our folks how to find or be group leaders. We look at every RTA who joins YTB as a group waiting to happen. Each RTA is a center of influence and brings a warm natural market to YTB. We have an infrastructure in place to help them with family reunions, church groups, fundraising trips, etc. Over 60% of our cruise business is groups and we are working on tools to help our RTAs with land groups also.  

TT: Is YTB also making a big investment in technology?  

Sorensen: We have and we are. We are always working to make the booking engine more content rich and user-friendly. Sometime next year, we will be introducing a whole new platform that will move the customer experience to a whole new level. Much of our technology investment has gone to develop proprietary back office systems to accurately track and pay commissions. We always had a goal to compete at the highest level. (Note: REZconnect Technologies is a subsidiary of YTB.)    

TT: What is the importance of education and training to YTB? How quickly can you get agents up to speed?  

Sorensen: Training is very important at YTB. An RTA can refer customers to their main travel Web site or one of their four niche sites (YTBGolf, YTBRomance, YTBFlowers, YTBCars  or soon to come YTBOutdoors) a minute after they join YTB. No more training is required to do that than is required when an online agency runs an ad. So an RTA can get started immediately and can remain at that Web referral level if that is their choice. For the subset that wants to do more, YTB offers a myriad of training opportunities.   In 2007, we held two trade shows with over 9,000 attendees. These events, one in San Diego and the other in Orlando, had 40 vendor booths with nonstop seminars. In addition, we have weekly vendor – specific training calls, vendor Web sites within our Web site (some with video trainings), tutorials, reference manuals and outside training seminars. One major cruise line estimates they have exposed over 15,000 of YTB's RTAs to their 3-hour training. We have just introduced our YTB E Campus, an online Travel Agent Certification program being written and administered by an industry – leading curriculum developer.   Our critics always focus on the large number of untrained people at YTB. What they fail to see is the growing number of trained RTAs who will some day outnumber the rest of the industry. Rome wasn't built in a day.  

TT: What does YTB deliver to industry suppliers?  

Sorensen: We have a large distribution channel and we can communicate rapidly. This was evidenced by our recent one-day cruise sale. We mobilized our army within two weeks and sold almost 13,000 cruise passengers on Nov. 8. This was an effort to focus our sales force in a positive direction after the RCCL issue. Our motto was, "We don't get mad, we book travel." This ability to communicate with a large number, with virtually no advertising cost, can be very valuable to suppliers. Aside from regular volume, we can be a cost-effective way to move distressed inventory.    

TT: Do you have preferred suppliers as most consortia do?   Sorensen: Yes. We have about 30 that we concentrate on. We outsource our air sales through an industry giant partner. This allows us to focus resources that would otherwise be needed to process zero commission airline tickets on our groups department.  

TT: Does YTB measure client satisfaction?   Sorensen: We don't measure satisfaction as well as we should because we pass many of our customers over to our air, car and hotel partners. We do, however, manage dissatisfied customers very aggressively. No one is perfect when it comes to customer service but I am very proud of our customer service.    

TT: Do agents have E&O insurance?  

Sorensen: Yes. We have a master policy that covers the company as well as all of our outside RTAs.    

TT: What changes do you anticipate in the travel industry?  

Sorensen: I think the Internet is getting better and better. There are already about 80 million people booking their travel on the Internet and it is getting easier and easier. When the teens and 20-somethings start earning enough money to travel, I think the percentage of Internet bookers will grow even higher. YTB has bridged a gap between the faceless Internet Web sites and the brick and mortars. We offer an Internet experience but you can also talk it over if you want to.   We have also, to some degree, solved the customer loyalty problem that the Internet sites face, since most of our customers are family, friends and acquaintances of our RTAs. I think there will always be a place for traditional agencies but they need to find a way to bring a new generation into the industry.  Travel agent schools have been closing because of a lack of student applicants. I think companies like ours will learn how to work within the industry without rubbing it raw and begin to get along better. I believe suppliers will begin to warm to nontraditional companies that have large, loyal customer bases. I also think that more and more suppliers will join the airlines and compete directly with travel agents.    

TT: Do investors and Wall Street analysts understand the challenges and opportunities in travel?  

Sorensen: They certainly should. If they are investing or analyzing, they should be doing their due diligence. YTB is a small speculative growth stock. There is always a lot of risk in that sector.    

TT: Are there examples of successful agents? Sales growth, for example?  

Sorensen: Yes. Tina from Houston, TX. Her total earnings for 2007 are $18,777.88 or an average of $1,707.08 per month for 2007.   Ruth & Floyd from Frontenac, MO. Total earnings for 2007 are $12,995.65 with an average of $1,181.42 per month for 2007.   Carol from Fort Lauderdale, FL. Total earnings for 2007 are $11,480.89 with an average of $1,043.72 per month for 2007.   Lenore from Pearl City, IL. Total earnings for 2007 are $14,044 with an average of $1,276.72 per month for 2007.   Each of these RTAs had a nice group cruise in 2007 but are also consistent producers. We have thousands and thousands of part-timers. Many are satisfied with a few bucks every now and then. Many are very consistent producers. We have no quotas. Our concept of a large number of people doing a little bit adds up to a large amount of business.