I was working on our Newsletter to our subscriber base this weekend and regrettably had to give them a heads up that cruise “fuel supplements” may be back for another round in the months ahead. When gas prices went through the roof in 2008, cruise lines implemented a fuel surcharge to passengers to cover the rising price of crude oil. A typical charge would be anywhere from an additional $3 to $6 per person – per day to help these large ships stay afloat.

We’ve all noticed the prices at the pump. In January, I saw news about fuel surcharges returning in Europe. Then, last week, Cunard announced that they will be increasing its fuel surcharge from $6 a day to $9 per day for cruises booked after February 28th here in the States.

The cruise industry has held a very special place for me from the moment I first stepped into the Grand Atrium of the Imagination more than twelve years ago. After our first cruise experience I had been telling anyone who was willing to listen that “a cruise is the best vacation money could buy”. The value is one of the best in the industry, with pampering and service that’s hard to match. The reintroduction of fuel surcharges however, could very well put a damper on the value and allure cruising.

While some will focus on higher fuel costs being the problem – frankly, I see an opportunity here to change for the better.

And maybe – just maybe – we’ll find a cruise line that will make it happen.

Back in 2007 Royal Caribbean had an opportunity to become the outright leader in the cruise industry surrounding environmental impact with alternative fuels. RCCL not only had a 7% stake with a company called Imperium Renewables, but agreed to purchase 18 million gallons of biodiesel from the company starting in 2008. Less than a year later however, Royal Caribbean not only pulled the plug on its contract, but sold its 7% share of the plant. Besides completely dropping the ball on this, I can’t help but wonder if the $13 million in sales the company threw overboard by cutting off a Top 50 Host Agency could have made a difference.

Typical of Royal Caribbean at the time – they were more concerned with perception rather than being bold or doing what was right.

Fortunately, there are smarter companies who are willing to invest in our Nation’s future and the need for renewable fuels. Today, Imperium Renewables refinery in Grays Harbor produces 100 million gallons of renewable fuel annually with an emphasis on aviation – not cruise ships.

Which begs the question (for me at least) that if we have the capability to produce 100 million gallons of biofuel for aviation – bunker oil for cruise ships would be a walk in the park – right? Bunker fuel after all, is a waste product. The dredge that remains after all of the refining processes and the high octane fuels have been produced and the diesel products have been extracted from the crude oil.

Which brings me back oddly enough to algae. Algae are not only naturally occurring in many oceans, but they happen to be the main reason we have the fossil fuels we’ve been burning over the last 100 years. Many think it was dinosaurs, but the truth is, it was algae that created this black gold millions of years ago. It not only multiplies at a very rapid pace, it’s capable of producing in excess of 30 times more oil per acre than corn and soybean crops. (On land or water not suitable for crops no less.)

Two companies that have caught my eye in the last year have been Solazyme and Sapphire Energy. Both have been working with the Department of Defense and last month Solazyme provided biofuel for the Navy for field test. According to the report, the Navy couldn’t tell a difference between the biofuel mix and the normal fuel. Within the next ten years, the Navy has plans to power its fleet using 50% biofuel. That means big money is dropping into companies like Solazyme and Saphirre Energy and with the help of Government backing from the DoD, these companies are well on their way.

Now imagine a cruise line that’s environmentally conscious. One Cruise Line who has stepped up to the plate in reducing our overall carbon footprint is Holland America. The cruise line won the 2010 Readers’ Choice Awards as Best Eco-Friendly Cruise Line. The Lines commitment to responsible environmental practices include, waste reduction and recycling, use of cleaner-burning propulsion technology and cutting-edge cleaning solutions. Holland America Line also has a history of embracing new environmental technologies such as shore power while ships are in port which not only saves fuel, but is far cleaner for the surrounding port.

A true Eco-Friendly leader such as Holland America could (or maybe should) jump at the chance to pick up were Royal Caribbean dropped the ball. What I also like about Holland America is they happen to be part of Carnival Corporation, which form the largest fleet of cruise ships out on our oceans today. If a green initiative with Holland America is successful using biofuels, it could spread rapidly to Princess, Carnival, Costa, and Cunard – which in turn will help the entire industry get off bunker crude oil to a much cleaner – renewable form of fuel.

But there’s still the problem of price with biofuels as it stands today. While Sapphire Energy would like to get the price down between $60 and $80 per barrel, the mass production to create a viable replacement isn’t there, and therefore the price is still not as cheap as fossil fuel. But what if a company like Holland America decides to increase its overall edge in Eco-Friendly cruising and uses the impending fuel supplement charges to change over to bio fuels instead of fossil fuel? Even if it’s going to cost more than an average of $3 to $6 per day per person per day?

Obviously, I can’t speak for anyone but myself on this issue, but the idea of paying a fuel supplement when I’m actually helping the advancement of biofuels and helping our environment at the same time brings the meaning of value and allure back to where it should be in an industry I love. The current situation of fuel surcharges actually creates a window of opportunity for a company that’s committed to being more responsible and eco-friendly.

I’ve always liked people and companies that take problems and turn them into solutions. It’s just the way I roll. Anyone committed to making this solution happen would certainly get my business. What about you?

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You know…it’s Super Bowl Week. I had every intention of posting Super Bowl stuff all week because the industry has been very quiet as late. Does the industry not realize my intention for the week?

Sigh…I guess not. ;-P

So, you’ve probably heard by now, and may be a little puzzled over Norwegian Cruise Lines (NCL) and YTB Travel Network (YTB) who have ended their relationship. I actually knew this was coming, and may be able to shed some light on not only why this happened, but fill in how this industry works. I found out last week the day it happened and have already done some research concerning this crazy industry. I only remained silent to see if there would be any type of “news” on this subject. While I knew it would eventually come out into the open, there are others who claim to be well connected in the industry and I set a timer to see how soon any of them would catch on.

As it turns out, it took an actual trade publication to announce more than a week later what happened. There really isn’t much fanfare about it, with the exception of a couple of critics who can now pound their chest after a 15 month long battle producing a measly 4 suppliers who have decided that they no longer book with the industries #26th Largest Seller of Travel, which will evaporate all travel suppliers in the year 3025.

You may be asking yourself just why NCL would discontinue it’s relationship? And my response would be, good question!

If you look at some of the news that has come out of NCL lately, they are definitely shifting their focus. The same day I found out about YTB’s relationship, NCL announced an on-line checkin system for passengers, and the next day they announced they would double winter capacity out of New York City. Even yesterday, we found that NCL felt pretty proud of the new Mega Ship being built, but with all that pumping, they never released any news about it’s relationship with YTB, and as of this writing still have not commented on it. (Although I found comments in the trades interesting concerning these three links and announcements.)

There has been some shuffling of late at NCL at the top, with Kevin Sheehan being appointed CEO, and Andy Stuart appointed as executive vice president back in November. Elizabeth Finn also serves as the liaison between NCL and its online and Home Based travel partners as of December. Often, a new executive team likes to make changes, and this was more than likely one.

Another more important issue that I believe was the catalyst that set things in motion was the decrease in commission levels by 40% to YTB more than a year ago. While NCL elected not to renew it’s relationship, NCL’s 40% decrease could have been an attempt to attract attention and salvage something. Unfortunately, that’s not what YTB has come to expect from our preferred suppliers. Even with the reduced rate, either YTB or NCL could have come together to possibly salvage the relationship and promote their ships more aggressively like Carnival, MSC, and Disney has with YTB.

Instead, neither side did much of anything in an attempt to save the relationship, and it very quietly ended.

I can only speak of my personal preference as a business owner and Travel Agent when I tell you that if I had an opportunity to sell a cruise to a client, with the possibility of making 40% more in agent commission over another, who do you think I would promote?

If you’re thinking or being told that either dropping commission levels or upping commission thresholds are new or reserved for certain MLM’s, I can tell you for certain they are not. I reported here on this blog back in June how Royal Caribbean thanked their “dedicated agents” by upping their commission thresholds which caused a huge uproar in the industry.

As a matter of fact, (not the spin or fiction you read about elsewhere) Royal Caribbeans separation from YTB has not been all that beneficial for the cruise line. I don’t know if anyone else noticed, simply because so much attention is spent barking at YTB, but Royal Caribbean’s earnings call comes out today. Barkley released news yesterday and “estimates the company [RCL] would become precariously close to facing liquidity issues”. Hendrix, the financial analyst for Barkley’s also stated in another article that “Carnival must access the debt markets for $1.5 billion in 2009 and 2010, although she said the company is not likely to be constrained by its debt obligations. She said Royal Caribbean, on the other hand, must raise $4 billion in 2009 and 2010.”

That’s a hefty chuck of change, and may be part of the reason why Royal Caribbean continues to slash expenses, cutting their cruise capacity by 1/3 in Alaska.

And because of that news, Royal Caribbean stock fell some 13% yesterday in anticipation of the problems to come.

Suppliers terminate relationships from time to time for various reasons. I’ve written about Joystars issues in recent days and weeks. One of the big names we heard about was the Intercontinental Hotel Group (IHG) and the commissions that were stolen by a Joystar Agent. Just cause to terminate a relationship wouldn’t you agree?

But how many of you know that this same company (IHG) terminated it’s relationship with another company you may have heard of before? Back in 2004 IHG removed it’s inventory from the third largest seller of travel back in 2004. Why did IHG make a move like this? Because like YTB, the industry was crying and wanted to take back the industry. Expedia couldn’t provide the service, they wouldn’t last, and they’re not a “real travel agency”.

Where have you heard THAT before?

So what did Expedia do? They didn’t complain, they didn’t file any suits, they didn’t do anything but walk the walk and prove to IHG and the rest of the industry that they are the a real force in this changing industry. IHG did come to it’s senses and realized the huge market shift Expedia created in the industry. Just a couple years ago both kissed and made up and today IHG and Expedia have a multi year deal.

IHG and Expedia is just one example of how suppliers and agencies fall in and out of love. It happens to the best of them. What I suggest you do however, is model your response the same way Expedia did.

It’s really up to you how you want to respond to it. Me…I’ll just keep doing what I do, and that’s sell travel with literally hundreds of vendors and suppliers through YTB. If you need some help figuring out just who and how many, log into your Travel Portal and click the Agent Booking Resources to see for yourself.

I promise, it will put it all into perspective.

Now back to our regularly schedule Super Bowl XLIII programing. Go Steelers!

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“This economic environment is unprecedented, and our travel agent partners need our unprecedented support,” said Vicki Freed, senior vice president of sales for Royal Caribbean International, in a statement. “Like everyone, they are feeling the pain, and we need to help them through this.”

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Are you as tired as I am over all the trash talk about YTB’s stock? Honestly, I’m sick of it. It’s as if YTBLA.OB is the only stock out there that’s down in the dumps. You’ve got to be hiding out in a cave somewhere not to realize that the markets overall are…well, in the toilet.

While the market has many running in fear, others are banking on the fact that the market will eventually turn in an upward trend. Most people would think someone would be crazy to actually be buying stock these days. Yet, that’s exactly what many of the super wealthy would have done in order to make their fortune. It’s times like these that would explain why Warren Buffett bought a considerable amount of stock at the end of the third quarter. (And if you’re thinking he sold a bunch, think again.)

The “Average Joe” simply can’t stomach what’s going on right now. That’s why we’re seeing the selling frenzy that we are, and also why critics appear to be focused on YTB’s stock specifically. It helps give the perception that the company is in dire straights and won’t last. Our third quarter numbers did a significant job is dispelling those rumors after their release. While there is a considerable amount of excuses following YTB’s profitable quarter, it did cause some of the most hardened critics to actually state that the numbers actually turned out better than they expected.

I would assume that’s why the focus has been shifted so quickly to the stock. It’s the one thing critics can point to that doesn’t look all that rosy, nor is bouncing back. The picture they’re painting is as if all other sectors are doing just fine, and it’s only YTB that’s having the difficulty holding on to its price. (Even with a profitable quarter.)

This attempt to spin the stock got me thinking how YTB compares to other stocks, more specifically, the travel sector since YTB of course knows nothing about travel. (Even after our 8 year run in this sector and being named in Travel Weekly’s Power List the last two years.)

By no means do I claim to be some type of stock expert. Far from it. But anyone with a pulse should realize that the markets, even after the election, continue to tank.

After pulling up various stocks to compare with YTB’s I started noticing that the broad brushed picture being painted isn’t what our critics claim it to be. (Big surprise, I’m sure.) Nor did any one sector in our industry lead in the categories I checked. About the only sector I was not able to check thoroughly at this time were other Brick and Mortars. (Most according to the Travel Weekly Power List are privately held.) I also tried to pick stocks that most everyone would know, even if you’re not “in” the industry. (Hogg Robinson Group, being probably the one exception.) Since there were so few public Brick and Mortar Agencies, I did use both American Express and Boeing who do own “Agencies” but obviously have diversification which neither look to either help or hinder their performance over the last year.

Here is an overview of the industry representing Airline, Cruise, Brick and Mortar, and On-line Agencies.

YTB (as noted by the blue dot) ends up pretty much “average” compared to the other stocks in the industry. Since there are so many in this sample, I’ve taken each industry and broken it down into segments for ease of reading.

Our first sector is how YTB compares to the Airline Industry. Companies are color coded and YTB will remain blue. Companies sampled with YTB are Continental, Delta, US Airways, and Northwest Airlines.

Next is a one year snap shot of Brick and Mortar Travel Agengies, which include American Express, Boeing, and Hogg Robinson Group.

Would a one year snap shot of on-line agencies look any better? Take a look at how YTB compares with Expedia, Priceline, and Orbitz.

And our last sector is the cruise industry as we take a look at both Carnival and Royal Caribbean.

After looking at this again, maybe Royal Caribbean should be the one in red…

So what gives? Why all the focus and fuss over YTB’s stock when obviously YTB appears to be on par with all the other companies in the market?

Because that’s what critics do. It’s something for them to talk about to give the perception that the Network Marketing business model is flawed or inferior to what they consider a tradition business plan. It’s all about perception to add fear and doubt about your choice in the industry.

They want you to go back to something more “legitimate” or “secure”.

So let me ask you. When it comes to the stock market, which one of these stocks above look to be more secure to you?

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Somehow they have this perception that because I associate and work with a Travel MLM that I damage their reputation as a Travel Professional. I’ve seen these folks do and say just about anything to warn you that I’m up to no good, my only interest is picking your pocket by recruiting you, and I couldn’t possibly have any interest in selling and servicing travel.

If you happen to be one of the ones reading this making those claims about me, I would argue that you are doing an outstanding job of damaging your own reputation and you certainly don’t need any help from me in that regard.

We also hear all too often that suppliers are cutting YTB off left and right. They hate us in much the same way they do. The vendors and suppliers appear to side with these overzealous Travel Agents and also want to rid the industry of our like.

I had an interesting post sent to me last week, and while I know very little about this individual, his quote speaks volumes about how the suppliers really feel about YTB but more importantly how they feel about these overzealous Agents and what they REALLY want to tell them.

Responses to this individual’s complaining to his employer were as follows:

“The MLMs don’t bring in enough business to worry about them.”
“We don’t treat them the same way as our traditional agencies.”
“We will take their bookings (money) and supply them our product.”
“Stop worrying about them.”
“You are not to discuss the MLMs with the agents or agencies.”

Of course these answers from the overzealous employee aren’t what he wants to hear and this cat can’t seem to get out of his own way to relieve his fears and misconceptions about Network Marketing. Thus you find this employee hanging out on a forum with other zealots that support his views. All while the employer remains unaware the employee refuses to abide by the employers wishes.

I’ve heard for a number of years that suppliers and vendors would cut YTB off. It wasn’t until last year, almost to the day, that one supplier decided to side with PATH (Professional Association of Travel Hosts) and terminate its relationship with the largest of the Travel MLM’s. Other than Royal Caribbean, I’m only aware of a Perillo Tours and another company called Celtic Tours, both of which never really did any business with YTB to begin with. (Neither were listed in our back office as a supplier.)

I find it difficult to terminate a relationship when there wasn’t a relationship to begin with, but that’s just me.

As I look back at the one public company who did side with the overzealous Agent Associations and this termination, the VP of Sales was moved over to Hotel Services, and shares of RCL stock has fallen from $42.24 this time last year to a 7 year low of $14.00 at the close of business Friday.

Not a very auspicious move for the company.

During this same period of time we have seen another cruise line come up with a very solid solution in minimum booking requirements concerning FAMs while maintaining its relationship with the 26th largest travel company in the country.

If you take a look at Carnival, they just announced they’ll be dropping their fuel surcharges moving forward, and provided a HUGE jump in Net Income for its 3rd Quarter results.

Hmmmmmmm, interesting.

I’m well aware of all the personal views and opinions that are circulating out there on the Internet about YTB and Network Marketing in general. Fortunately for the vast majority of the suppliers and vendors out there it’s not personal.

Its business.

For the overzealous and obsessed agents out there that read this blog on a regular basis, you may want to take note of how obnoxious YOU appear to the suppliers and vendors you’re attempting to recruit to your side. Based on how few have actually pulled the trigger and terminated their relationship with YTB and other travel MLM’s it appears that your concerns and misgivings about YOUR industry are falling of deaf ears.

While I’m sure they take the time to listen to you, and provide the lip service you’re looking for, behind closed doors they only care about their bottom line.

Don’t they?

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Every once in a while I do “The Dance”. My kids think its funny (just wait til they get older) and yesterday we had a lot of fun. I had a couple of reasons for doing the “The Dance”, and the kids pulled out “Evan Almighty” yesterday afternoon while I was busy on the phone and outlining the post for today.

Do you remember back in January when Carnival made the announcement concerning minimum booking requirements? It was speculated back in October that suppliers would follow Royal Caribbean’s lead and pull the plug on Travel MLM’s. Now almost a year later, it looks as if throwing “the problem” overboard proved to be costly. While another Cruise line solved “the problem” on January 9th when new CEO Gerry Cahill eliminated the abuse yet saved the account for future growth and profits.

Now it’s important to keep the supplier problem verses solution in mind as we move on to today’s topic. (Success leaves clues.)

Yesterday afternoon, CLIA stepped up to the plate and offered a very solid solution which I believe will have long lasting and very beneficial effects for everyone in the industry. (Well, almost everyone, but more on that in a minute.)

I first caught the story in Travel Weekly, and after doing a little research I found the new policy directly off CLIA’s web site. I’ll let you read both stories on your own, but I want to get to the meat of what this is all about.

“2009 ID Card applicants are required to be enrolled in, or to have achieved a designation (ACC, MCC, ECC, ECCS) in CLIA’s Cruise Counsellor Certification Program. Attainment of an ACC designation requires a program of mandatory and elective training options as well personal cruise experience, shipboard inspections and 25 cabin sales within the two year enrollment period.”

How do you like them apples? Just think. Nobody has to double dog dare anyone any longer about whether or not they actually know what their doing, if they are taking unfair advantage of the industry without giving back, or pretend that we’re only referring people to a simple web site to book a cruise without any support.

This solution clearly separates the pretenders from the players in the Travel Industry, and with the new Certification requirements that everyone will be able to follow and understand, suppliers will be able to tell exactly who is serious and who is not.

We’ve gotten to know CLIA or rather The Academy quite well since October of last year when YTB launched E-Campus with Dr. Marc Mancini, one of the most respected and admired trainers in the Travel Industry. I’d also like to point out that the minimum booking requirements in California in 2007 worked so well, that YTB Travel Network rolled these same requirements out for the entire company earlier this year.

The emphasis on actually training the RTA field is apparently working, and to see an association such as CLIA roll out a solution like the one yesterday should put an end to this illusion that someone like me or you embarrass and anger those that admittedly earned their rights and privileges in this industry.

These new requirements do raise a couple of rhetorical questions for me however. (Remember, comments here are now cut off to those who couldn’t communicate in a civil and respectable manor concerning their views and opinions.)

What will the few Traditional Travel Agents do when these requirements have been met? They can no longer claim that we are untrained and uneducated. They can no longer claim that we don’t support the industry. With all the time and energy now wasted in posting day after day, to have the major beef pulled right out from under them, what will they do with all the extra time on their hands?

Second, now that there will be whole new crop of trained agents in the field, how will that affect their bottom line? MLM’ers will have the same knowledge and Certifications most of them boast about. There will be far more of these new, hungry, and educated Certified Agents in the field who can now compete at the same level. Will this take away even more market share for them?

Third, how will this be viewed by suppliers? Can you think of any suppliers who are in a bind right now that need some extra revenue coming their way? If just 20% of YTB’s RTA’s go after this Certification requirement it will produce close to $100 Million in revenue and that’s just to qualify for the Certification. What happens when a company the size of YTB is moving that type of revenue to only 21 of the 24 Cruise Line Members?

This is a HUGE step forward in eliminating the illusions and myths out there concerning “Card Mills” and “MLM’s”, and I’m thrilled the CLIA came up with a solution to clean up it’s good name, much like Carnival did. From what I could tell, the Carnival move back in January certainly curbed the accusations against them for supporting a company like YTB.

From what I can read at this early stage, it looks as if the few boisterous Traditionalists who are bitter, angry and shamed right now also think this is a good move. (They are however having a difficult time in expressing their view without belittling those who will be helped most in this move.) It may not keep both sides happy, since one side never appears happy, but it does take away at least one of the excuses they use to attack an industry and people they clearly know nothing about.

I’m quite certain more about these new requirements will be discussed during some of the YTBU courses, (my first course is with Ann Sedgwick first thing next Wednesday morning) and also during Friday and Saturdays National Convention when new features and announcements will be made.

Which reminds me; my second reason for doing “The Dance” yesterday afternoon happened when UPS came to the door with my documents for the National Convention. It’s almost like
doing “The Doc Dance” when boarding docs arrive for a cruise!

Care to join me?

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I just saw this in Travel Weekly and wanted to make sure all of you are aware of this.

Remember back in October when Royal Caribbean said they were only going to support the traditionalists? I wonder what the 472 Agencies currently at 16% are thinking about RCCL now when they find out their potentially in jeopardy of dropping below 16% because Royal Caribbean is raising their sales quotas to maintain the commission levels these “supporters” currently enjoy?

In the Travel Weekly report it gives an example of an Agency now having to pull in another $500K in sales, otherwise Royal Caribbean is going to cut their commission starting in 2009. (The example being $1 Million in sales to $1.5 Million in sales.)

For these small time Agencies who are already suffering and finding it harder and harder to compete with market share this is a huge slap in the face to the supporters of PATH and other organizations who convinced them that terminating MLM’s was going to fix the illusion they have about why things are so bad for them.

I guess not.

I have to wonder at this point if these Traditionalists are owning up to the promises THEY made to Royal Caribbean to support them.

In another Travel Weekly Report it’s documented that Carnival is still making more per berth than Royal Caribbean, and while I don’t know if this switch to supporting Traditionalists is tied directly to these numbers, it has been mentioned before from the Traditionalists that they increase sales, and add bigger profits as a whole in the industry.

Again, guess not.

It’s also noted that Growth Fund threw overboard some 4,270,000 shares of RCL stock on Friday May 30th, which may or may not have been related to reports of this news circulating. My guess is however that this move is more related to RCL shares hitting new lows than any “Agency Issues”.

There is already speculation that other cruise lines will follow Royal Caribbean’s lead on this and up the commission thresholds for everyone, and quite honestly I hope they do. It should weed out some of the under performing Agencies who are just barely hanging on and make more room for the likes of YTB who’s already been documented to book some $13 Million with Royal Caribbean when the faucet was turned off late last year.

That’s the collective power we have as YTB. It’s also a big reason why only a few suppliers have actually dropped us. Money talks and with $414.5 Million booked in 2007 YTB is well on it’s way to dominating this industry, just like it was promised back in 2001.

I’ll devote more time to this later on in future posts but I wanted to shed just a little light at what I’m currently working on. While the following quote was printed back in September of 1999 and it did talk about another shift in the industry concerning the airlines, I think this quote could ring very true if the speculation does come to fruition concerning commission thresholds in the future.

“”When I entered this industry … I realized that the strong would survive, and strength — many times — equates to size,” he said.

“If you have five or six million dollars in sales or less, you are not going to get the attention from the [Cruise Lines] that you need to survive.”

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