Royal Caribbean has made a controversial decision to end sales partnerships with a handful of travel agents they deemed deceptive. The story first appeared in Travel Weekly, a travel agency trade publication; it noted that the agencies on Royal Caribbean's no-sale list were "card mills" -- a term for companies that sell agent-like ID cards to anyone who plunks down $500 or so.
The main draw of such companies is that people can take advantage of some travel agent perks without the training or qualification necessary to actually become travel agents. Benefits can range from commission on cruises sold (say, to friends and family) to access to upgrades and significantly discounted fares.
Though Royal Caribbean did not release the names of companies it axed, at least two -- YTB Travel Network and Joystar -- have let the cat out of the bag by issuing their own statements on the matter. Both have said they are not card mill operations but are, rather, host companies with industry credentials. Joystar and YTB, for example, are members of Cruise Lines International Association; Joystar is also affiliated with the American Society of Travel Agents.
It's fair to say that neither YTB Travel Network nor Joystar are pleased with Royal Caribbean's announcement.
How This Could Affect You
In layman's terms, a card mill is a travel agency that promises it can make you an agent with access to numerous perks, such as discounts on travel and free upgrades, benefits typically available only to professionals. To qualify, all you need to do is pay a fee -- which is always slightly less than $500 because that's the point at which state franchise applications and business opportunity disclosure laws would come into play, according to ASTA.
Though each company differs, your $500 generally gets you an ID card (to prove you qualify for perks), a method by which to book travel for potential clients (such as a members-only Web site) and varying degrees of instruction (from a "how to" handbook to multi-course certification sessions).
Bill Kraus, president and CEO of Cruise Club of America, one of the country's leading cruise travel agencies, tells us the promises of these card mills aren't always as rosy as they seem. "We receive calls every week from so-called travel agents asking if they can book through us because their parent company can't offer competitive prices," he says. "Some even mention the fact that they are 'real travel agents' yet when we question them, they really don't know beans about the industry."
Card mills can also affect those of you who've never even heard of the concept (or have but didn't deign to join). That's because desirable cruise cabins can be snatched up by these card holders leaving full-paying customers out of luck. Furthermore, a travel agent who lacks education and accreditation might not provide the same service as one who does -- and a consumer looking to book a cruise could ultimately suffer from decisions made by "agents" without the appropriation training or resources.
Where this week's announcement made such an impact is in Royal Caribbean's strategy: removing these agencies from their roster altogether rather than merely restricting them by allowing them to sell the cruise product -- just without the "regular" agent perks and freebies -- as is more commonly done throughout the industry.
"We look at it as a much bigger issue than somebody traveling at a travel agent rate or perks," Lisa Bauer, the senior vice president of North American sales for Royal Caribbean, tells us. "At the end of the day we philosophically disagree with their business model.
"We had a whole team of folks internally that were taking a look at all of the criteria," Bauer adds. "We have developed brand guidelines and standards for what we're looking for in a travel agent, which we'll be publishing that in the not so distant future."
These guidelines, Bauer notes, will be available to anyone or any entity interested in selling the Royal Caribbean product.
Who's Fighting Back?
Gutsy it may be, but chief executives at both Aliso Viejo, California-based Joystar and YTB Travel Network, headquartered in Wood River, Illinois, have addressed the issue publicly, contradicting Royal Caribbean's decision to cut them loose.
Joystar CEO William Alverson tackled the subject in his blog, saying that just two months prior, Royal Caribbean was brainstorming possibilities with the company for the following year. In fact, Alverson reprinted on his blog the text from a Power Point presentation given to Joystar by Royal Caribbean's management less than 60 days ago. Slide 1 stated simply: "Royal Caribbean International - Joystar - Growing Together in 2008." Now, a Dear John letter is all that remains.
J. Kim Sorensen, the president of YTB Travel Network, was caught off guard, too. "Out of the blue without a phone call, without an inquiry, we received a letter stating they would no longer be doing business with us," he tells us. "I regret [the decision]. We've had a great relationship with the folks we work with. We did about $10 million in business with Royal Caribbean this year, and had projected $20 million next year based on growth."
(For a point of comparison, a member of Cruise Critic's sales team says that there are some large, reputable agencies that pull in less in Royal Caribbean sales than YTB though exact figures are proprietary information and cannot be shared.)
Sorensen tells us that YTB still does business with Carnival Corporation brands, NCL and "pretty much everyone else." Interestingly enough, a spokesman for Carnival tells us it has long had a policy in place that does not allow any free or reduced rate travel agent benefits to be extended to companies they believe to be card mills. YTB agents in particular are allowed to sell Carnival cruises, but only representatives who book group sailings can get reduced rates.
"The vast majority of our reps," Sorensen confirms, "do not qualify for and do not get any reduced rates ... The only reps that get reduced rates are the ones that qualify by meeting minimum booking requirements. We work with each supplier we do business with to see what they're comfortable with [offering our top sellers]."
So Are They ... or Aren’t They?
According to Sorensen, YTB differs from other companies that might be considered "card mills" because it focuses on selling rather than buying travel. Once a person has enrolled for $449, they simply refer people to their personalized Web site (provided by YTB for a monthly fee of $49.95) to book travel; they then earn commissions.
Though an ID card is and always has been issued, the company says it has toned down promotion of discounted travel dramatically over the last few years. We looked for bold statements about snagging agent-only perks on YTB's demo site, ytb.com, but found none. Training options rum the gamut from online courses to twice-yearly trade shows. And when the company blocks group space on a ship for a seminar at sea, they pay for it ... at retail price.
Meanwhile, budding travel agents can find several programs on Joystar's Web site, joystar.com. The entry-level option, AgentAdvantage, incurs a $99.95 set up fee plus $25.95 per month; participants are assigned a "mentor" to help them build their business, and receive among other tools a weekly newsletter and training modules. There's no ID card issued, though regulated CLIA and International Airline Travel Agent Network cards are possible down the road (the site does say "you'll have the opportunity to earn free and discounted travel").
In contrast, travel agents that go the traditional route are usually trained at an agency, though the amount of training and education required by each for actual employment varies. Some have related degrees; many take college-level courses for certifications. To qualify for, say, CLIA membership, travel agents must be "actively engaged in the business of selling cruise travel" and "attest to the fact they are meeting all federal, state, and local ordinances relative to conducting such sales." CLIA offers voluntary educational programs.
"I think [Royal Caribbean] made a decision that they would rather cater, for lack of a better word, to the traditional brick and mortar agency than work with the newer concepts," Sorensen says. "They haven't responded to any of our inquiries to try to work it out. They said they did, but they didn't...."
Bauer declined to comment specifically on either company.
Back To You
Royal Caribbean's decision -- and the card mill concept in general -- hasn't gone unnoticed on Cruise Critic's message boards. cb_at_sea posts on Cruise Critic's message boards, "We have friends who I'm afraid have been 'taken' by some company claiming to make them TA's! These folks know nothing about travel, but [are] paid a pretty penny a monthly fee to be a TA! I think all it gives them is a Web site which does all of the booking for them. Sounds like a scam to me!"
"Royal Caribbean announced just a couple days ago that they will not do business with companies recruiting people as 'travel agents' basically under a pyramid scheme (paraphrasing)," posts GottaLuvCruising. "My skin crawls when I hear folks say they are 'becoming a travel agent' when they are totally clueless and have no travel background. It's not easy ... and, as a consumer, you don't want a novice working for you!"
--by Melissa Baldwin, Managing Editor
Royal Caribbean Takes Stand Against Faux Travel Agents
October 25, 2007