Travel MLMs: What You Need to Know
We’re about to get a little bit controversial here and chat up on travel MLMs (multi-level marketing) businesses.
Before I launch in, I want to say that this is not a “host travel agency vs. MLM face-off” or anything of the like. No way. We’re all about peace, puppies, totality, and trumpets over in our neck of the woods. If you want to go with a travel MLM and you know what you're getting into, go for it.
Every so often an aspiring travel agent stumbles into a travel MLM thinking it functions like a host travel agency. But that’s just not the case.
But every so often an aspiring travel agent stumbles into a travel MLM thinking it functions like a host travel agency. But that’s just not the case. Host agencies and MLMs are two different types of businesses. I'd say they're like apples and oranges, but it's really more like apples and elephants.
We want to help agents differentiate between full-service travel companies like host agencies (which support agents to sell travel) and travel MLMs (which tend to emphasize selling memberships). Here's the key takeaways:
⭐️ HAR ARTICLE HIGHLIGHTS: ⭐️
- What is an MLM? An MLM, short for Multi-Level Marketing, is a business model that relies on recruiting others to sell products rather than just selling products yourself. You make money by getting commissions on your sales, but also on the sales of the people you recruit (your "downline"). >>> Jump to section
- What is an MLM Travel Agency, Specifically? It's a business model that focuses on recruitment over booking travel. Unlike traditional travel agents, income from travel MLMs comes mainly from selling memberships to build a sales team, not commissions from booking trips. >>> Jump to section
- The Truth About Travel MLMs (An Infographic) Travel MLMs are opaque when it comes to documenting earnings and success rate. This infographic offers a look at travel MLMs in a visual nutshell! It magnifies the "fine print," showing data from income disclosure statements, offering a list of travel MLMs, and more. >>> Jump to section
- A Note on Travel MLM Income Disclosures & Compensation Structures: A review of what travel MLM income disclosures and compensation structures include and conceal with real-life examples. >>> Jump to section
- The Coded Language of Travel MLMs: How do you know if you're in MLM danger zone? Check out these real-life examples of travel MLM lingo. >>> Jump to section
- The Travel MLM Hybrid/ MLM-Affiliated Model: Some companies affiliated with an MLM marketing arm distance themselves given the bad reputation of pyramid schemes. Read more about this model of "hybrid" travel MLMs. >>> Jump to section
- How Did Travel MLMs Start Getting a Bad Rap (An Origin Story)? Travel MLMs started with YTB, Your Travel Business. Here's a rundown on how the emergence of YTB soured the travel industry for the travel MLMs of today. >>> Jump to section
- How Is a Travel MLM Different from a Host Agency? What makes a host agency different from a travel MLM? A lot. This section takes a big-picture look at these differences including how HAR flags travel MLMs and MLM hybrids on their site. >>> Jump to section
Not sure what a host agency is? You will soon!
What Is An MLM?
In a nutshell, an MLM, short for Multi-Level Marketing, is a business model that relies on recruiting others to sell products rather than just selling products yourself. You make money by getting commissions on your sales, but also on the sales of the people you recruit (your "downline"). MLM marketing is also called “network marketing” and “direct sales,” so if you see a website throwing around that terminology, they’re probably talking about an MLM business model.
MLM expert, Robert FitzPatrick, published a 2008 study that covered ten publicly traded MLMs at its time—including the now-defunct travel MLM Your Travel Business (YTB). What did he find? In short this: ". . . 99% of all [MLM] participants received less than $10 a week in commissions, before all expenses." 1
We love academic papers, but this fictionalized explanation from The Office is arguably (or factually?) more fun.
Except for YTB, FitzPatrick's study take didn't offer a deep-dive on how travel MLMs, in particular, operate. Moving on, we'll focus on how MLM travel agencies are unique. Why? Because travel is a very different product than, say, herbs, vitamins, makeup, or leggings.
But one thing travel MLMs have in common with more conventional MLMs is the high rate of failure. Let's dig in and chat about travel MLMs specifically.
What Is an MLM Travel Agency?
In travel MLMs, the dominant revenue stream is from selling memberships to recruits, not commissions from selling travel.
What is an MLM travel agency? It's a business model that focuses on recruitment over booking travel. Unlike traditional travel agents, income from travel MLMs comes mainly from selling memberships to build a sales team, not commissions from booking trips.
Like any other MLM, travel MLMs have two revenue streams for their members:
- Commissions from selling a product (in this case, travel) directly to clients.
- Commissions, overrides, or kickbacks on membership sales from recruiting others into the organization.
In travel MLMs, the dominant revenue stream is from selling memberships to recruits, not commissions from selling travel. Travel MLMs will try to entice you with promises that residual (or passive) income will trickle down from the upper echelon of the downline. (*cough* pyramid scheme.)
What makes a travel MLM different from other MLMs (like Amway, LuLaRoe, Herbalife, etc.) is that reps don’t have to buy any product to sell like leggings, makeup, or vitamins. (However, oddly enough, some travel MLMs do also try to push selling vitamins and energy boosters!) In some ways, not having to buy products makes a travel MLM less risky in terms of financial investment (but not without risk).
Travel MLMs are opaque regarding their success rate. Many travel MLMs are not required to publicize their income disclosure statements (they're not publicly traded). Those that do share their disclosures (in the name of transparency) present a pretty grim picture when it comes to income potential.
You know how in most sales situations, you make the bulk of the commission on the product? Well, with MLMs, the people above you are the ones raking in the dough. (*cough* pyramid scheme). Here's a visual of how MLMs operate, using real-life MLM income disclosures as an example.
Here's a closer look at the three Travel MLM income disclosures mentioned in the infographic.
1. Dream Trips (formerly WorldVentures)
For example, travel MLM Dream Trips (formerly WorldVentures) reported in 2019 (the most recent disclosures available) that 14.6% of all Representatives earned a commission or a bonus. 85.4% earned nothing or operated at a loss. The average commission and bonus earnings of all reps was $354.31, including the ones who made $0.
If you take out the group who made nothing (or operated at a loss), you get an average of $2,425.55 and a median of $50.00. But the annual cost to join Dream Trips is a minimum of $769.89 in its first year (source for annual fees). (It may not come as a surprise to our perceptive readers that WorldVentures has declared bankruptcy, attempted an acquisition, and rebranded as Dream Trips, all since 2019.)
2. Incruises
Travel MLM Incruises is one of the world's largest subscription-based travel companies whose majority of income-earning "partners" (reps) bring in less than $10,000 annually. 705 Partners earned more than 10,000 dollars in a 12-month period, which is only 2.21% of all "active" reps (what they mean by "active" is clear as mud, which we'll address later).
They actually state quite plainly in their April 2024 disclosure that: "most Partners will not reach the highest levels...where a substantial income can be achieved." The number that does, in fact, is 97 people total. (Friends, that's 0.30%.) 2. YIKES.
3. MWR
Travel MLM MWR has a unique income disclosure in that they do not tell you:
1. the overall average income
2. how many members are a part of their network
What this means is that we can't tell you what percent of members earn zero income. But the numbers are no less dismal. Most of their membership base, 73%, are among the worst-performing tier. This group (entering pyramid scheme territory) earned an $18 annual average (and no, that is not a typo).
A Note on Travel MLM Income Disclosures
You've have a peek behind the when it comes to income disclosures and compensation structures. Looking at an income disclosure can leave you with more questions than answers. If a travel MLM does provides an income disclosure (they are not required by law unless the travel MLM is publicly traded), you can typically find out:
- the average earnings for active reps at different tiers
- the period in which income was earned
- the percentage who earned some and/or no income during that period
These income disclosures are in stark opposition to the implications of all the residual income and free trips these travel MLMs focus on in their marketing.
But there's a lot that an income disclosure doesn't tell you. Many income disclosures will not include information such as:
- Churn Rate & Attrition: How quickly reps turnover and leave the MLM. The data may only include the number of reps who are still signed on with them at the end of the disclosure period, and do not account for the number of reps who left within that time frame.
- Total Number of Distributors at Different Levels of the Organization: This masks the total number of reps and distributors in general, then further obscures the data by not revealing how many reps sell at what level. How does this affect things? It skews the average income of the typical rep since the income spread between the bottom and top of a pyramid scheme can be significant (hundreds of thousands or even a million).
- How Much Income is from Travel Commissions: The data also does not disclose what percentage of the income earned is from actual travel commissions (vs. residual income from referrals).
- Definition of "Active" Distributor: Is active defined as someone who has sales during that period? Or any distributor paying fees? We have no idea.
What this means is that if you're interested in aligning yourself with a travel MLM, you'll want to arm yourself with curiosity. The FTC published a pdf chapter from Jon M. Taylor, PhD, 2011 book, "The Case For (and Against) Multi-Level Marketing." Here, Dr. Taylor cautions those interested in MLMs to ask about attrition (dropout) rates. Here's what he says:
"Prospects should ask their recruiter to furnish the company’s attrition (dropout) rate; i.e., the percentage of recruits who sign up only to drop out within a year — and over a five or ten-year period. If they can’t or won’t furnish it, you can assume that it exceeds the minimum of 50% per year . . . Over a five-year period, at least 95% typically have left the company; and usually after ten years, nearly all but those at or near the top of their respective pyramids will have dropped out." Source (pg. 6)
Herein lies the illusion of transparency when it comes to a travel MLM's income disclosure: As bad as the disclosures look already, they get even worse. The info included does not (and is not required to) offer to a complete picture of the earning potential of MLMs, which can further mask losses.
And this is really just the tip of the iceberg. There's a ton of other juicy information that many MLMs (not just travel MLMs) conceal in these types of statements. 3
The Coded Language of Travel MLMs
In general, travel MLMs get real shady when they make more money by recruiting other sales reps into the organization than they do actually selling a product (in this case, travel). This is entering serious pyramid scheme territory. And that’s a major DANGER ZONE folks.
But how do you know if you're entering the travel MLM danger zone before it's too late? Marketing language is one key! Travel MLMs use their own jargon for their travel agent members. They use this wording to make their offer more attractive. Be your own boss! Work independently! A travel MLM will more likely refer to its participants with terms like: representatives (PlanNet Marketing), builders (Surge365), referring travel agent (YTB) . . . you get the gist.
Alternately, with a host agency, it's 99% likely that they'll refer to you as an "independent contractor," travel business, or travel advisor.
The TV show Schitt's Creek nails the jargon for their fictional MLM, Allez Vous.
But you don't need to rely on fiction, you can see it in action. This "Your Travelution" promotional video clip outlines some of the misleading and manipulating marketing strategies travel MLMs will use to try and recruit members:
Halfway through the TraVerus video below, it attempts to sell you on a nutritional supplement (another MLM product), which reps, in turn, would sell to others—verging from its original appeal and trying to woo you with promises of feeling and looking great while you lounge on the beach.
The MLM Hybrid/ MLM-Affiliated Model
[Editor’s note: This section was added Oct. 12, 2018, and updated April 18th, 2024.]
While InteleTravel is not an MLM, anyone who wants to sign up with them must go through their MLM marketing arm, PlanNet Marketing
While InteleTravel is not an MLM, per se, anyone who wants to sign up with them must go through their MLM marketing arm, PlanNet Marketing, to sign on. And this is where it gets a little sticky.
As is typical of an MLM, earnings from PlanNet Marketing do not compensate for the level of investment required. Here’s the cliff notes in their own words: "During the period January 2023 to December 2023, 20.92% of all IRs earned a commission or override, while 79.08% did not."
For PlanNet marketing's "Rep" level (the entry point), the average annual income reported was $41.64. 4. This lowest-earning segment is 93% of PlanNet marketing's membership.
But how does PlanNet link in with InteleTravel? InteleTravel uses PlanNet marketing to recruit advisors. To be very clear, someone can join InteleTravel without joining PlanNet Marketing. Borrowing from PlanNet Marketing's terminology, this means that InteleTravel agents are not required to sell ITAs ("independent travel agencies").
But again, the caveats:
1. If you want to join InteleTravel, you must go through a PlanNet Marketing Rep. You cannot sign up directly with them. What does mean? It means you will be a part of someone's downline whether you engage in recruiting or not.
If one wants to steer clear of the MLM and sign up for InteleTravel only, they may be pressured (depending on the rep they purchased their agency through) to also sell ITAs (InteleTravel travel agencies) through PlanNet Marketing. A PlanNet Marketing rep will send you their personal page to sign up. This is a huge red flag.
It looks like this:
The small print (on the image above) also indicates you can only enroll through the PlanNet Marketing rep account first if you're interested in joining InteleTravel.
2. PlanNet Marketing's strategy draws hoards of advisors to Inteletravel.
In July 2023, InteleTravel reported having "more than 90,000 independent home-based advisors." 5 For perspective, the total number of travel advisors/ ICs reported by every host agency listed on HAR was 76,298 at the time of writing this. The average number of ICs was 387
Several InteleTravel agents I spoke with (who I will not name for privacy purposes) have reported that an InteleTravel agent is not required to sign up for PlanNet Marketing to sell ITAs. The important thing to know is that when you sign up for InteleTravel, you'll be a part of someone's downline whether you personally participate in the MLM side of things or not. When host agencies rely on these MLM marketing arms, we call them "MLM hybrids."
Though InteleTravel is not technically an MLM, for us there are red flags with InteleTravel due to their reliance on PlanNet Marketing's MLM branch.
This might be more information than you ever wanted to know. However, InteleTravel is one of a handful of host agencies that partner with MLM marketing branches in the same way and we want you to be informed! (Archer Travel, who affiliates through Evolution's MLM marketing branch is another.)
Do you know of other travel MLMs or MLM hybrids that are not mentioned in this article or infographic? Drop a comment below!
How Did Travel MLMs Start Getting a Bad Rap?
The shady reputation of MLMs certainly is not limited to the travel industry, but when it comes to travel MLMs in particular, it was the rise and fall of YTB (Your Travel Business) that really left a bad taste in the mouth of the travel industry.
Long story short: founded in 2001, YTB was modeled after a typical pyramid scheme structure that preyed on hopes of those who were economically vulnerable with promises of get-rich-quick schemes that required little time and relatively low financial investment. In 2008, California's then-Attorney General Edmund G. Brown Jr., won the lawsuit he filed against YTB to halt their operations.
85% of YTB’s revenue was from selling memberships and materials for marketing courses to new recruits rather than travel sales. This from a company that had claimed you were a travel agent!
And there’s more … guess how much the average YTB rep earned each year? The average annual commission paid to a YTB rep was $44.29. Sounds bad, right? Well, it gets worse, because 81% of all YTB reps earned no money at all, and 4% of YTB reps (those at the top of the upline) received 96% of all commissions paid to the company.
Ouch.
And the travel MLMs' habit of primarily booking personal travel (rather than travel for consumers) is something vendors noticed. Vendors felt that non-professionals were exploiting travel agent benefits (such as FAM trips) for personal gain. So much so, that many travel vendors severed ties with YTB.
TW image sources here, here and here.
YTB was subject to lawsuits from CA, and IL, as well as a class-action lawsuit, and eventually went bankrupt. But the vestiges of YTB exist today in modern-day travel MLMs. The founder of YTB (J. Lloyd “Coach” Tomer) is now the Chief Visionary Officer for Surge365 (one of the companies featured in our infographic earlier).
David E. Manning was president of now-defunct Travelworks International, Inc. and is currently the president of Paycation (which now shows up as TraVerus, over which he also presides) and he is also the chairman of XStream Travel. All of these are travel MLMs. 6
MLMs will often run strong for a few years, but implode once they get too big to sustain themselves. The MLM may close its doors, possibly reemerging if its founders will start a new one, or rebrand and operate under another name.
And The Oscar Goes to . . . A Travel MLM Mashup!
Steph put together a great travel MLM mashup video to illustrate exactly how MLMs and their reps operate by preying on vulnerabilities, making big promises with zero info to back them up, and how they eventually become saturated and collapse (yes, it's essentially a more entertaining version of what I just wrote 🙂)
If you're still not convinced, and you want to give MLMs a shot, the FTC has a resource page with some great questions to ask your sponsor before signing on with an MLM.
How Is a Travel MLM Different from a Host Agency?
At its most basic, the major difference between a travel MLM and host agency is what comprises their primary revenue streams. Host agencies don't earn money unless you sell travel (not so with a travel MLM, which makes more money from membership sales). This means that hosts are motivated to support you to sell as much travel as possible.
But there's many differences beyond revenue channels. Here's some more:
How you book travel
Some travel MLMs such as WorldVentures (which filed for bankruptcy in Dec. 2020) do not allow their reps to book directly with vendors. Rather, vendors require that travel bookings are made through a designated MLM HQ, where the MLM permanent staff (not any of its members) make the actual booking for agents.
This may sound nice but the downside is that you're not in control of your reservation. This is problematic if you sign on believing you’ll be able use vendors’ travel agent portals, call in direct to the travel agent support lines, and build a relationship with the sales reps.
With a host agency, you are able to connect with suppliers either directly or through the hosts proprietary booking portal (or both!)
Transparency
Travel MLMs and MLM hybrids offered little to no concrete information about commissions, backend support, Seller of Travel (which you need if you’re selling travel in certain states), E&O insurance—not even basic information about joining without signing onto their email listserv or participating in a sizzle call.
Heck, many of these sites don't even include profiles of people who run the business. So if the only way to get support for your agency is to send an email to an address with no name or employee attached to it, I'd be wary. By and large, they offered a lot of promises without any information to back it up.
The host agency profiles on HAR's site (and on hosts' websites) are very clear about this information from accreditation, licensing, technology, IC volume, sales, and more. Here are just a few of the other differences between a host agency and a travel MLM.
Travel Advisor Volume
Host agencies will typically have much lower volumes of travel advisors compared to travel MLMs. These days, most MLM income disclosures refer to their member volume.
What we do know is that MLM hybrid InteleTravel reported 90k advisors. With InCruises reporting that 31.73% of their members are membership-free, we can extrapolate they have ~32,067 members. Most other travel MLMs don't disclose their volume.
Host agencies, which do not focus on recruitment, have much lower IC volumes. At the time of writing this, the 197 host agencies listed on HAR averaged 387 ICs. (For comparison, InteleTravel reported 90,000 travel advisor ICs in April, 2023).
In fact, if you want to become a travel agent with a focus on creating a client base, receiving a constant travel education, building relationships with suppliers, and providing great customer service over recruiting other sellers, I’d steer you (far) away from an MLM and direct you to a host agency.
If you're a travel agent or an aspiring travel agent who wants to earn money planning trips and selling travel, we here at HAR do NOT think a travel MLM is a good option for you. No sirree. Not by a long shot.
The HAR crew has mind-melded on the travel MLM issue. Originally, when this article was first published, we didn't even list MLMs on the site. Since then, we decided it's important to list them because our whole purpose is for travel agents to make informed choices. So here's the drill: if you see an MLM or an MLM hybrid (more on hybrids soon), you'll notice an alert on their profile.
Like so:
Why do we advise such caution? It's our opinion that MLM travel business models use deceptive advertising, prey on people who are at an economic disadvantage and do not provide adequate support to serious travel agents.
If you want to be a bonafide travel agent, I suggest you go directly to our 7-Day Setup Accelerator Course.
Want to Become a Travel Agent Without Joining a Travel MLM?
If you're interested in becoming a travel agent without falling into the costly trap of a travel MLM, Host Agency Review's 7DS Accelerator course can help you breeze through your travel agency setup process. Whether you want to sell travel part time or build it into a full-fledged dream career, the course ensures that you will align with legitimate host agencies, franchises, or accrediting organizations who are not highly regarded by travel suppliers.
The course gets you off the ground faster so you can start earning commissions faster. That right, earning a solid income from selling travel . . . not recruiting people. Check it out!
In Closing
If you're still not convinced, and you want to give MLMs a shot, the FTC has a resource page with some great questions to ask your sponsor before signing on with an MLM.
Travel MLMs were something of an uncharted territory for me. So when I started by digging into the Google-verse, I was surprised to find how little concrete information was provided about joining a travel MLM organization on their site.
Heck, many of these sites don't even include profiles of people who run the business. So if the only way to get support for your agency is to send an email to an address with no name or employee attached to it, I'd be wary. By and large, they offered a lot of promises without any information to back it up.
Travel MLMs have gotten shiftier. No longer will they make promises of how much income you can earn in a month (because, according to the FTC, they need to be able to provide support of any income claims 7). Rather, they make appeals to lifestyle and promises of free or discounted travel.
Ultimately, I was just really confused. I was left with more questions than answers. Which I interpreted as “proceed with extreme caution" and I hope you will too!
*Editor's Note: This post was updated April 26th to update the infographic. "World Ventures" reorganized and co-branded as "Dream Trips" in 2022, "with Verona International Holdings as a plan of reorganization sponsor under the bankruptcy code." (Source)
Footnotes
