Joanie Davis, a travel agent at PR Travel
in Nashville, last week predicted of YTB Travel Network, "This
house of cards will fall."
Davis represented a
common reaction among traditional travel agents after Royal
Caribbean Cruises Ltd. announced on Oct. 9 that it was terminating
its relationship with three so-called "card mill" agent-recruiting
companies.
But an equally
fervent response emerged from the other side of RCCL's ax, as
travel agents affiliated with the alleged card mills joined the
executives running them to defend the legitimacy of the companies
and the livelihood of their agents.
Joystar, a host
agency and division of TravelStar Inc. became the second company to
admit it was on RCCL's card mill list. As of press time, the third
company with which RCCL had severed contractual ties had not been
revealed, and RCCL was not naming names.
Larry Fishkin had
been president of Joystar for all of six days when he had to inform
its chairman, William Alverson, that he had received a letter from
RCCL stating that it was terminating its relationship with the
company "without cause."
Fishkin,
interviewed by phone from his South Florida office, said he was
confused about RCCL's decision. He insisted that his company had
been mischaracterized, and he said that he and other Joystar
executives had met with Royal Caribbean's top management on Oct. 16
to try to persuade the cruise company to reinstate Joystar.
"The only thing
they would say to us is that we have philosophical differences,"
Fishkin said. "I think they're misguided and misinformed. I haven't
heard any rational explanation for why they're doing
it."
The day after the
meeting, Alverson sent a letter to Joystar agent affiliates
describing the meeting in harsher terms.
"It took about
three minutes for us to learn that [RCCL] had absolutely zero
intention to listen to our side of the story or to ask questions we
could answer to clear up the matter," he wrote.
Alverson, like
Fishkin, wrote in the letter that RCCL's move was a total
surprise.
"Last Tuesday
evening, I tipped my hat to Royal Caribbean management as I read
their e-mail announcing they were sending termination letters to
travel industry 'card mills,' "he said in the letter titled Royal
Mistake. "After all, it was about time suppliers took a stand on
behalf of real travel agents.
"Imagine my shock
and dismay the following morning when our president ... informed me
Joystar was the recipient of 'the card-mill letter.' "
"How in the world
could any person in the travel industry label Joystar a card mill?"
Alverson wrote. "Even our most outspoken rivals in the host agency
space know Joystar is anything but a card mill. Surely, this was a
horrible misunderstanding. Someone or some group of very sinister
people had obviously fed Royal Caribbean inaccurate information
causing them to react this way."
Alverson and
Fishkin said they had met with Royal Caribbean management, but they
identified only Lisa Bauer, senior vice president of sales for
Royal Caribbean International, as being present. Bauer, along with
Dondra Ritzenthaler, senior vice president of sales for Celebrity
and Azamara, had signed the letter.
Alverson wrote that
Bauer told him that she considered Joystar to be a card mill and
that RCCL had "decided to broaden the definition of what a card
mill is" to include "recruiting customers to 'save money on their
own travel' and 'travel like a travel agent.' " Alverson wrote that
Joystar did not practice that type of recruitment
strategy.
Bauer said that
RCCL had terminated its relationship with companies it considered
to be "card mills" by exercising a standard 30-day out clause in
their respective contracts.
"We terminated the
relationships basically without cause, so we really didn't have to
say specifically why," Bauer said.
Both Alverson and
Fishkin said that in its meeting with RCCL, the cruise company had
not cited any reasons related to specific Joystar business
practices.
"We were told they
did not have any particular concern..., that we have never done
anything to harm their brand or hurt them financially, but they
were terminating our relationship anyway," Alverson
wrote.
A top cruise
producer, speaking on the condition of anonymity, said that every
cruise line creates an annual agreement with its agencies that
covers the rights and responsibilities of that agency in doing
business with the cruise line, its level of compensation, including
commissions and overrides, and the level of marketing and support
that the cruise line will give the agency, along with the rules of
using that cruise line's brand.
The producer said
that the agreements were annual contracts and that every cruise
line gave itself the right to opt out of it at any time.
Joystar's attorney,
Al Anolik, acknowledged that under most circumstances a cruise line
could, in fact, opt out of the contract with no cause.
However, Anolik
contends that what RCCL is doing in relation to Joystar interferes
with Joystar's contractual relationships with its agent affiliates
because RCCL is now trying to steer Joystar agents to RCCL's own
Web site or to other host agencies.
"You can't
interfere with contractual relations by trying to get them to go to
other people," Anolik said. "They can [opt out] if there are no
other ulterior motives. But if there is discussion with
competitors, if there are ulterior motives, then they do not have a
right to cut off a competitor the way they did."
Bauer responded
that RCCL had "discussed the issue thoroughly with our attorneys
before taking any actions, to ensure it was not a problem, which it
isn't."
The top producer
also noted that because RCCL and Carnival Corp. dominate so much of
the cruise industry, RCCL's move could put a cruise-heavy travel
agency out of business. The producer said that if his company lost
its business with Royal Caribbean it would lose 40% of its
revenue.
One Joystar agent,
also speaking anonymously, said that she was concerned about her
business if she were to lose her Royal Caribbean and Celebrity
bookings.
The agent defended
her host agency, saying that she had been with Joystar for two
years and a travel agent for almost 20 years. In order to work with
Joystar she said she had to produce a CLIA card or IATA
card.
"Joystar will not
issue cards unless the agent has produced enough bookings to
qualify for either card," the agent noted.
Fishkin said that
in terms of performance Joystar had "crushed" any sales targets
that RCCL had set and that prior to receiving the letter, the
company had been commended by RCCL.
"We went from high
praise to the doghouse, with nothing in between," Fishkin
said.
YTB also defended
its position to RCCL and noted that it had booked about $13 million
in cruises with the company this year. President Kim Sorensen said
that Royal Caribbean had not responded to his requests for a
meeting. He said YTB had "a significant number of groups in process
with RCCL," at various stages that the company would have to figure
out how to handle.
"We have a lot of
issues to deal with," he said. "They made a decision, and we are
forced to react to that. I've been trying to meet with them to
determine how we do that."
Many travel agents
wondered if other cruise lines would follow RCCL's example, as
often happens with cruise industry decisions.
Anne Sedgwick,
Carnival Cruise Lines' business development director in Missouri
and southern Illinois, said that she had not experienced any "abuse
for reduced rates" related to YTB, one of her clients, and that she
found YTB agents to be particularly eager to learn about the
business.
"There's an
enthusiasm that many vendors are really surprised by," she said of
YTB agents. "They are very serious about training their people, and
they are investing a lot of money into it.
"I understand the
agencies' concerns if they don't understand this type of model,"
she added. "Go to one of their trade shows. ... It's exciting to
see that enthusiasm and passion."
To
contact reporter Johanna Jainchill, send e-mail to [email protected].