YTB International

Last updated
YTB International
Company type Private
Industry Travel
Founded2001;23 years ago (2001)
Alton, Illinois, U.S.
FounderJ. Lloyd “Coach” Tomer,
Scott Tomer and
Kim Sorensen
Headquarters
Wood River, Illinois
Number of employees
120 (2010)
Website www.ytb.com

YTB International, known as YTB Global Travel, Your Travel Biz or YTB, is a multi-level marketing business through owner-affiliated websites offering travels, excursions, and lodgings. The company was funded in 2001 by J. Lloyd Tomer, Scott Tomer, and Kim Sorensen. The company is currently owned by Sam Hathi.

Contents

Between 2006 and 2009 the company was the subject of several lawsuits and investigations in California, Illinois, and Rhode Island that alleged the company was a pyramid scheme and had used deceptive marketing. [1] [2] A subsequent decline in revenues led to the company's bankruptcy in 2013, after which it was purchased by Jamraval, Inc. and reorganized under the name YTB Global Travel.

Other YTB subsidiaries include YTB Travel Network, Inc., Zamzuu, Inc., and REZconnect Technologies, Inc. (2004–2009). YTB is based in Wood River, Illinois. International subsidiaries operate in the U.S., Puerto Rico, the Bahamas, Bermuda, and Canada. [3]

History

J. Lloyd "Coach" Tomer, his son Scott Tomer, and Kim Sorensen launched YTB in 2001 in Alton, Illinois.

In 2004, YTB's founders bought interest in a related company, REZconnect Technologies, and increased their marketing budget. Members were then recruited through videos of successful salespeople. [4] [5] [6]

In 2007 Royal Caribbean stopped doing business with YTB. They described the company as a "card mill", an industry term for businesses that sell "travel agent identification cards" to customers, promising travel discounts or other perks and a commission on any sales of these kits to other consumers. [7] [8] [9]

In 2008 the company was sued by California Attorney General Jerry Brown. An out-of-court settlement required changes to the company's business model and generated a decrease in membership attributed to bad publicity. [10] [11] Later that year, YTB laid off 17 employees. [12] In 2008 the company's revenues were $44.8 million. [13] [14] YTB said its independent auditor at the end of 2008 expressed "substantial doubt about our company's ability to continue as a going concern," [15] a sentiment the company later echoed. [16]

In 2009 the company operated at a loss of $1.9 million for the first three months of the year. Revenue in that quarter dropped 49% to $21.8 million [15] and then to $18 million in the second quarter. [16] The number of the company's paying members declined from a high in April 2008 of 138,000 to 60,414 in mid-2009. [17] This decline in revenue led the company to sell several commercial properties, including the company's Learjet. [18] That year YTB also sold RezConnect to company officers. Under the terms of the sale, YTB would indemnify the new owners for any YTB-related liabilities. [19]

In 2011 the company sold its headquarters building and adjoining property for $7.6 million. [20] In October 2011, a newly formed company, Sixth Scott LLC, began purchasing YTB Travel Network from YTB International. [21] [22] The company was relaunched as First Alliance Travel in 2012. [23]

On February 1, 2012, founder J. Kim Sorenson died at the age of 62. [24] In March 2012 the YTB announced a plan to merge with LTS Nutraceutical, another MLM firm. In May, the company began a major restructuring and stated that the President and CEO, Robert Van Patton, had submitted his resignation. In September, YTB called off the merger and announced that founder and chairman Scott Tomer was resigning. [10] [11] [25]

On March 1, 2013, YTB International filed for Chapter 11 protection in federal court in St. Louis. The company filed its last quarterly earnings report in the third quarter of 2011, although the company later announced that the report contained errors. [10] [11] [26]

On October 11, 2013, YTB completed the sale of its assets to Chicago-based businessman Sam Hathi of Jamraval, Inc. Since being acquired YTB has operated as YTB Global Travel. [27] As of March 2, 2015 the company ceased enrolling new agents and representatives but still provides resources for existing members. [28]

Lawsuits

In August 2008 California Attorney General Jerry Brown sued the company for $25 million, alleging it to be a pyramid scheme, among other claims. [29] The Illinois Better Business Bureau and Illinois Attorney General Lisa Madigan joined Brown in investigating the company. [30] [31] Brown's lawsuit indicates that 45,000 sales reps earned an average of about $90 in 2007 and of their 200,000 total agents, some 125,000 earned nothing and 37,000 earned less than $39. [6] On May 14, 2009, California authorities settled their suit with YTB for $1 million. As part of the settlement, YTB agreed to restructure, possibly hastening a transition to a franchise system. That same day, Madigan filed a similar suit in Illinois. [32] Brown said the agreement would end the sale of personalized websites that cost $450 to purchase and $50 per month to maintain. [15]

Around the same time, several former YTB agents filed a class-action lawsuit that alleged the company was an illegal pyramid scheme. The lawsuit says that the company "claims to sell travel services, but said company's main business is inducing others to become travel agents." [33] YTB responded by stating that it intends to "vigorously defend the case," [33] and the case was dismissed in July 2009 on the grounds that non-residents of Illinois could not pursue the matter under Illinois law. [34] Illinois Attorney General Lisa Madigan, after her office and the Illinois Better Business Bureau, received more than 150 complaints about the company, partnered with Brown's office in his state's investigation of the company. The BBB indicated that 80% of YTB revenue came from new agent recruitment, with agents earning an average of $111 per year, almost $400 less than the initial $499 sign-up price. [35] In May 2011, it was announced that YTB had reached a settlement with the state of Illinois, paying $150,000 in restitution. No admission nor denial of guilt was made in the settlement. [36]

In 2007, YTB was also investigated for similar allegations in Rhode Island. [2]

In defense of YTB, chief executive Scott Tomer said, "We are wholly confident that our business model will withstand scrutiny, and look forward to setting the record straight in court." [37]

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References

  1. ↑ Logan, Tim (July 31, 2009). "YTB sales rep meeting is here". St. Louis Post-Dispatch . Retrieved 2009-08-12.
  2. 1 2 George Dooley. "RI Agency Investigates YTB Business Model". Archived from the original on 2008-05-14.
  3. ↑ SEC Info - YTB International/Inc - 8-K - For 1/12/08 - EX-99.1
  4. ↑ "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". Business Wire. January 5, 2005.
  5. ↑ "REZCONNECT TECHNOLOGIES, Inc. MERGES WITH YTB TO CREATE MEGA TRAVEL ORGANIZATION". PRWeb.
  6. 1 2 Logan, Tim (August 31, 2008). "YTB sells dream of prosperity, but some say it is a nightmare". St. Louis Post-Dispatch .
  7. ↑ Jainchill, Johanna; Godwin, Nadine (15 October 2007). "Royal Caribbean throws 3 'card mills' overboard". Travel Weekly. Retrieved 10 August 2014.
  8. ↑ "YTB defends its business practices". www.travelweekly.com. Retrieved 2023-03-01.
  9. ↑ Biesiada, Jamie (February 10, 2016). "Ghosts of card mills". Travel Weekly.
  10. 1 2 3 Logan, Tim (1 March 2013). "Long slide lands YTB in bankruptcy court". St. Louis Post-Dispatch. Retrieved 28 May 2014.
  11. 1 2 3 Barr, Diana (5 March 2013). "YTB International files for Chapter 11 bankruptcy". St. Louis Business Journal. Retrieved 29 May 2014.
  12. ↑ "YTB cuts 17 positions". St. Louis Business Journal. August 29, 2008.
  13. ↑ PRNewswire-FirstCall (August 15, 2008). "YTB International Announces Financial Results for the Second Quarter of Fiscal 2008". Reuters. Archived from the original on 2012-09-07. Retrieved 2009-07-18.
  14. ↑ "SEC Info: Annual Report" . Retrieved 1 June 2014.
  15. 1 2 3 Lifsher, Marc (May 15, 2009). "California settles with Internet travel business it accused of running pyramid scheme". Los Angeles Times . Retrieved 2009-05-15.
  16. 1 2 Tritto, Christopher (August 7, 2009). "YTB loss widens, sales plummet". St. Louis Business Journal . Retrieved 2009-08-12.
  17. ↑ Logan, Tim (August 11, 2009). "Earnings". St. Louis Post-Dispatch . pp. Business, p. A10.
  18. ↑ Logan, Tim (2008-11-17), "YTB growth stalls in Q3, sells assets", Blog Zone, St. Louis Post-Dispatch, archived from the original on 2009-06-03
  19. ↑ Godwin, Nadine (July 9, 2009). "YTB sells RezConnect to executives". Travel Weekly. Retrieved 2009-07-18.
  20. ↑ Volkmann, Kelsey (25 March 2011). "YTB to sell Wood River headquarters for $7M". St. Louis Business Journal. Retrieved 29 May 2014.
  21. ↑ Jainchill, Johanna (2 November 2011). "Travel veteran Jeff Scott is YTB's new owner". Travel Weekly. Retrieved 10 August 2014.
  22. ↑ Jainchill, Johanna (27 October 2011). "YTB's travel operations purchased". Travel Weekly. Retrieved 10 August 2014.
  23. ↑ Rice, Kate (8 October 2012). "Company launches host agency with YTB assets". Travel Weekly. Retrieved 10 August 2014.
  24. ↑ "YTB Travel executive Kim Sorensen dies". Travel Weekly publication. Travel Weekly. Retrieved 2012-02-02.
  25. ↑ Barr, Diana (5 September 2012). "YTB calls off LTS merger, Chairman Scott Tomer resigns". St. Louis Business Journal. Retrieved 29 May 2014.
  26. ↑ SEC filing w.r.t. to Chapter 11 protection
  27. ↑ Brown, Lisa (11 October 2013). "Chicago investor acquires YTB business". St Louis Biz Journals. Retrieved 11 February 2014.
  28. ↑ "Ghosts of card mills". www.travelweekly.com. Retrieved 2023-06-06.
  29. ↑ "YTB: What's true and what isn't". www.travelweekly.com. Retrieved 2023-03-16.
  30. ↑ Steve Gonzalez. "YTB targeted in federal class action lawsuit". Madison County Record.
  31. ↑ Volkmann, Kelsey (5 August 2008). "Brown sues over alleged pyramid scheme". L.A. Biz (St. Louis Business Journal). Retrieved 28 May 2014.
  32. ↑ Logan, Tim (May 15, 2009), YTB settles with California, promises big changes, St. Louis Post-Dispatch, archived from the original on May 20, 2009, retrieved 2009-05-15
  33. 1 2 Kelsey Volkmann (August 11, 2008). Former agents sue YTB International. St. Louis Business Journal .
  34. ↑ Nadine Godwin (July 21, 2009). "Judge throws YTB complaint out of court". Travel Weekly.
  35. ↑ Kelsey Volkman (August 8, 2008). UPDATED: BBB received 90 complaints about YTB, Ill. AG received 70. St. Louis Business Journal .
  36. ↑ "YTB settles deceptive marketing charges by Illinois". StlToday.com. May 4, 2011.
  37. ↑ Logan, Tim (8 August 2008). "Travel company faces additional investigations Illinois and the local Better Business Bureau are also looking into YTB, which California is suing as a 'gigantic pyramid scheme.'". St. Louis Post-Dispatch.
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