Archive for November, 2009

A Thanksgiving Travelhost “Speculative Analysis” To Consider Before Investing

November 30, 2009

Brilliant 40 yr old “churn and burn” technology at it’s best exposed…

These are some quick numbers to consider, when researching the Travelhost Magazine business model:

First, some basic assumptions:

  1.  The Travelhost network hovers around 100 AP’s on average.  (now? Not so sure.)
  2. The Travelhost network loses about 33 AP’s per year on average. (33% ? if not, prove me wrong)
  3. The Travelhost network gains about 33 AP’s per year on average. (33% ? with slick sales pitch)

*Each New Investor (AP agreement & AP distributorship) = $60,000  (includes two magazine printings)

So as a rough estimate,  Travelhost grosses almost 2 million dollars per year, or ($1,980,000) signing new AP agreements??  That does not include the other two issues they most likely print, before they go broke, using a one year average.

Add in the extra two magazines, for a total of 4 quarterly printings per year,  and your average (new AP) is worth about $90,000 during the first year, if they make it a full year.

THAT BEING SAID, AND ALL THINGS BEING ASSUMED HERE:

Assume that Travelhost signs up 3 new AP’s per month, for a total of around 36 per year.  They are grossing over 2 million dollars per year on the “churn and burn” technique.  Year after year, after year!

Add in the other 66 AP’s at 60k per year in printing (another $3, 960, 000…almost 4 million dollars) and you have yourself a 6 MILLION DOLLAR A YEAR BUSINESS?!

Of course, out of the 6 million dollars earned, one third of it is from TURN OVER.

This is a very important thing to consider, when looking at the Travelhost business opportunity!

Now, here’s what we hope to accomplish with our efforts here at The Publisher’s Advocate:

If we can just help one person realize that Travelhost Magazine’s “Business Opportunity” is likely an unprofitable one for the INVESTOR, and profitable only for TRAVELHOST, than we can help save investors: time, energy, well being, opportunity costs, jobs, family, and  A LOT OF MONEY!

This is why The Publisher’s Advocate Blog is so important.  It saves investors money.

I can’t save my time and money at this point, or the MILLIONS lost by countless others over the course of the last 40 years, but I can save other people from making the same mistake I made.

I realize your time is as valuable as mine, and I appreciate you taking the time to read this posting.  Good luck in finding the right investment, there are a ton of good business opportunities out there.

Respectfully Yours,

Brian D. Hickey

Brian@NYTravelhost.com

PS.  I want to thank everyone for thier patience and understanding while we deal with this matter at hand.  Even though it is my opinion that Travelhost puts it’s associates at a COMPETITIVE DISADVANTAGE, some of you have gone out and made a good living for yourselves and your family.  Even though Travelhost put me out of business, I remain confident that I’ll bounce back, and make it happen out there.  And, I wish the rest of the AP network all the best, as you embark on 2010.

An open invitation for Travelhost to answer some questions about success rates:

November 25, 2009

I have gotten many calls lately regarding the way Travelhost has been treating us associates, some for many years. I wanted to openly ask Travelhost a few questions, with the hope of getting some answers. This would also provide an opportunity for Travelhost to offer their explanation or rebuttals to some of the issues discussed here in this blog.

Oh, and one more thing, if anyone would like to email me personally to discuss something written here on this blog, please do. I welcome all responses at Brian@NYTravelhost.com.

Keeping it very simple, Travelhost, please answer these questions:

1. How many “Associate Publishers” currently PROFITABLY publish Travelhost Magazine here in the United States? (please show us proof)

2. What is the SUCCESS RATE (likelihood of success/failure) for newly acquired investors (associate publishers)? (please show us proof)

3. Finally, why do you feel that your company is NOT subject to Franchise Laws? (please list the reasons why, and provide us proof)

3.5 After 40 years of being in business, why are there so few “Associate Publishers” in your network?

There are 15 states that have very strong, specific laws that franchises must follow and obey. Do you live in one of these states?

The States are: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, Wisconsin.

These fifteen States and the Federal Government have Franchise Investment Protection Acts. The acts are designed to mandate certain disclosures to people considering an investment in business opportunities such as Travelhost.

The key thing here is that these Acts place uniform disclosure requirements on Franchisers before the investment is made. They also have severe punishments to Franchisors who fail to make the required disclosures. Why hasn’t Travelhost disclosed any of this information to us before we invested?

Are there any Travelhost AP’s out there who were warned of the very high failure rate of Travelhost AP’s?

The answer may astound you! Wouldn’t you think, that investing 60k into a business that’s got a national network going for over 40 years, one would have a HIGHER than average success rate? Isn’t that what you pay for?

Wouldn’t you have like to have known about the EXTREMELY LOW SUCCESS RATE before you signed on the line?

Travelhost, will you please shed some light on these unanswered questions?

We’d all like to know the answers!

PLEASE TELL US WHY WE ALL PAY SO MUCH TO BELONG TO THIS TRAVELHOST NETWORK!

WHY DO A THIRD OF OUR ASSOCIATES DROWN IN DEBT AND GO BROKE EVERY YEAR?

WHY DO YOU LET THIS HAPPEN, YEAR AFTER YEAR AFTER YEAR, AND NOT TRY TO CORRECT THE COURSE OF ACTION?

WHY DO YOU STRING THESE PEOPLE ALONG, UNTIL THEY ARE SO BROKE, THEY HAVE NO OTHER CHOICE BUT TO SIGN PAPERS THAT HOLD TRAVELHOST HARMLESS, IN EXCHANGE FOR SOME MINOR CONCESSION?

Ripoff Report: “The Truth About Travelhost”

November 22, 2009

A former employee of Travelhost, who claims to have worked for them for over a decade, provides a fair and somewhat balanced report.  While I don’t agree with everything this person says in their post, they seem to have a reasonable grasp of what it’s like to be an investor.  They just watched from the other side of the line…the Travelhost side.

The bottom line: They do not recommend becoming a Travelhost AP. 

Take a look:  Taken directly from:  http://www.ripoffreport.com/book-magazine-publishers/travelhost-magazine/travelhost-magazine-no-support-756mp.htm  (A SPECIAL THANKS TO RIPOFF REPORT FOR PROVDING A FORUM FOR PEOPLE TO DISCUSS THESE TYPES OF THINGS.  THE PUBLISHER’S ADVOCATE JOINS YOU IN THE CRUSADE TO HELP PEOPLE MAKE INFORMED DECISIONS BEFORE THEY BUY, POTENTIALLY SAVING PEOPLE THOUSANDS OF DOLLARS AND WASTED TIME AND ENERGY.)

The Truth about Travelhost

Travelhost Magazine has been around for 40 years, and that alone should say volumes about the company. It has provided opportunity for countless people in both the Associate Publisher capacity as well as for numerous employees who have come and gone. I am one.
While it is true that the main reason Travelhost is in business is to print magazines, they do strive to prepare potential Associate Publishers for what is lies ahead. True, much of the information is vague, the sales training is indeed outdated, and the stories of great success of a few of the publishers can appear misleading. Like with any company selling an expensive product, facts are often embelished and half-truths soon become myth. The sales and production teams here are an odd mix of oversized egos and blinded loyalty.
I worked for Travelhost in production, editorial and training for over a decade. I knew every associte publisher, many personally over the years, and most were very satisfied with their investment . Yes, most new APs failed, and failed within months or the first couple of years, soon replaced with other investors. I often looked at the innocent faces of potential APs that arrived at the plant for the tour and the talk and wanted to say “Run! Take you money and run!” But that would go for any investment in any company. These people were mostly college educated (one I remember from Harvard), had business backgrounds and savvy, and were hardly naive. They walk into this opportunity knowing the risks, as this lady from Colorado should have known, and they take the risks and take the successes — or the hits.

I was laid off from Travelhost due to company politics and I could be bitter but I have chosen not to be. I have moved on to much better opportunities and do not regret a thing. If there was one thing I learned at this company it was not necessarily how to run a company, but how NOT to run a company. That in itself is a very valuable lesson.
Would I recommend someone becoming a Travelhost Associate Publisher? Probably not. The initial $40,000 investment (due up front) is only the beginning of the money drain to start up this business. This is a distributorship that needs to be carefully examined and planned for. There are definitely rewards if it works, but quick failure if you’re not prepared.
Former Employee

One other note on this posting: David Portner, owner of The Palm Springs Travelhost AND CMO of Travelhost Inc., is a very successful AP, and has provided a rebuttal for the original post.  He’s one of just a few.  Now…he’s not lucky, he’s very smart, and worked very hard to get where he is today.  However, he still pays double for printing.  (Unless he’s compensated for his CMO position with free printing.) 

Either way, it’s obvious that some people value the Travelhost brand enough to spend an (estimated) extra 2-3000 dollars per month just to be part of this network. 

It’s his choice, but I’m thinking his readers would enjoy “Dave’s Travel Guide” just as much, and his advertisers would get the same great results!  And, he’d make even more money.

The Price Term Of The Travelhost Asscociate Publisher Contract…

November 21, 2009

Hello Everyone,

Thank you for all of your support. We have about 30% of the network in support of what’s going on here, that’s a great start. I’m sure more will follow. Together, we can make this a great company to work for! Until then, I’ll continue to bring you the information you need…to make the right decision.

There continues to be confusion about whether I, along with hundreds of other people signed a crappy contract with Travelhost, and then belatedly complained because through OUR OWN FAULT, things didn’t work out.

The truth is that in many cases APs own missteps may have led to their demise, but those missteps did not include signing a lousy contract in the price term. The only continuing misstep of the AP network and myself will be to let Travelhost continue to price 2 times wholesale when the contract, inconsideration of an “extra” $24,000 gives the AP’s wholesale pricing….Travelhost wrote a contract that is not to the owner’s liking so he is choosing to ignore it.

From Jeff Loudon’s December 2008 post of his “Travelheist Investor Blog” that was erased:

“Pricing for the printing is specifically referenced in my two contracts with Travelhost, Inc.:

Paragraph 1.1 of the Distributorship Agreement states:

“Distributor agrees to purchase from Publisher and to accept delivery of not less than ______ copies of each quarter of the Publication in accordance with the rate schedule attached hereto as Exhibit “AAA.”

Paragraph 6 of the Associate Publisher Agreement, an option I chose for an extra $30,000, modifies this price term to my benefit (?). It states:

“ Publication Discount: In addition to the advertising rights referenced hereinabove… AP also shall be entitled at all times to wholesale pricing for the publication, notwithstanding the provisions of Exhibit “AAA” to the Distributorship Agreement.”

We do not need to pay 2 times “retail” for to Travelhost printing. Our contract specifically promises otherwise.”

One would only assume that WHOLESALE is less than RETAIL. And, we pay 2 times RETAIL…so how is that WHOLESALE???????????????????

For all you successful associate publishers out there, feel free to pay anything you want, I don’t feel so generous to Travelhost at this point in time.

There are a few Travelhost AP’s out there who don’t mind paying extra, and that’s OK if you believe the value is there…however, paying more than necessary for anything is not good business sense. Here in NY, 2500 dollars per month, for a title, is just not worth it

We are entitled to wholesale pricing, why aren’t we getting it?

Some more Travelhost questions to ponder…

November 20, 2009

1. Why do so many associate publishers go out of business each year?  And, why doesn’t Travelhost tell us about these people?

2.  Why does it cost so much to produce and print these magazines?  What value do we get for this extra cost?

3.  Why do we always have to sign an agreement with Travelhost that says we have to hold them harmless for every single little concession they make for us?  Do you do this with your customers?

4.  How many “Associate Publishers” are currently publishing Travelhost Magazine in the US?  How many were there last year?  The year before?  Remember, Travelhost has been in business over 40 years!

5.  Why has it taken so long to come up with a website that works?

6.  Why does Travelhost make money from printing, and not from Advertising?

7.  Why does Travelhost put it’s AP’s at a competitive disadvantage by forcing them to print pages they don’t need?

8.  Why does Travelhost blame every single AP for their failure, instead of taking accountability for their business model?  If that’s the case, why don’t they pick better AP’s after 40 years of doing this?

9.  Why do they give you 2 magazine printings when you buy in?  Why not just charge you half the price, and let you pay for the magazines when they are printed, when you’ve sold some ads?

10.  Does Travelhost charge all AP’s the same price for “publishing?”  How much do you pay?  Do you know what your competition is paying for the same type/quality/quantity?  Check it out….

11.  How many AP’s limp along making very little money, if any, for years…until they just cant take anymore, and stop publishing?  What happens to these people?  Does anyone know?

 

These are enough for now…I look forward to your responses.  I appreciate everyone’s positive feedback, both online and offline.  I never knew how many supporters I would have!

Has Travelhost been in court over any of this?

November 19, 2009

They just may have. Another question best answered by pasting a copied portion of Jeff Loudon’s “Travelheist Investor’s Blog” from earlier this year:

“Travelhost has been beaten in Court before…Badly
This is a follow-up to my May 3rd post as it relates to the Barton case where Travelhost was sued in 2005. The outcome disappeared, but I seem to have some new friends. An anonymous writer sent me this press release. (below)

I specifically disclaim any representation that this is in fact accurate. However, I spoke with Theodore Anderson, the managing partner of the law firm, who confirmed that a jury did make a substantial award against Travelhost in 2006. He also did not deny the sum of $588,000. He said it’s a matter of public record. He also said that they later settled the case and can’t say anymore….sounds like a typical TH arrangement to me.

“DALLAS, TX – April 12, 2006 – The Dallas County District Court for the 101st Judicial District a judgment for an award of $588,000 plus court costs in damages for fraud, fraudulent inducement, and negligent misrepresentation in favor of John E. Barton and J. Barton Associates, Inc. against Dallas based TravelHost, Inc, whose Founder and Chairman, James E. Buerger, served one term on the Dallas City Council from 1989 – 1991.

TravelHost, Inc., a 38 year old, national publishing corporation based in Dallas with over 100 markets in the United States, filed suit accusing Mr. Barton, an individual associate publisher with a long and honorable military record, and his company of breach of contract and breach of a non-compete agreement. A jury found that Mr. Barton and his company did not breach the agreement, and found in Mr. Barton’s favor on the counterclaims that he had been fraudulently induced into entering into the agreement with TravelHost,

Ted Anderson, Managing Partner with Kilgore Kilgore and lead defense counsel in the case, remarks, “With the economic utility of non-compete cases a subject of much discussion in the media recently, this case sets in motion an important precedent. David has triumphed over Goliath.””

So, it appears that Travelhost HAS been questioned about past business practices. Thanks, Jeff, for explaining this to us. Was anyone made aware of this before they bought into their local market?

Anyone?

You’re just one sales pitch away from your new TRAVELHOST business!

November 19, 2009

Jeff Loudon told the story well in his “Travelheist Investor Blog” that he had going in the earlier part of the year. He tells the story quite well, and explains the circumstances better than I could, so why not just quote Loudon on this one. I copied that blog before it disappeared, thankfully, so I can bring you the info you need to know…Before you invest!

“The sales technique.”

“Upon reflection, the biggest deception is the TH sales technique. I must say it is a thing of beauty. I get called by a person from TH that has reviewed my resume on Monster. “You know Jeff, we were very impressed with your unique credentials, you know, we are extremely selective, but you just might have what it takes to become a Travelhost AP.”

In a subsequent conversation I’m told that about 1 out of 100 “applicants” are invited to Dallas and “about 1 out of 10” of the interviewees are “offered a distributorship.”

The concept sounds great so I head to Dallas on my own nickel for an “interview” for a perfect sounding endeavor. Pre-interview I get nothing but a slick brochure talking about how TH is such a great deal if you have what it takes. (Well, I also received a sample of “good magazines.” These were Ft Lauderdale, Orlando, Daytona Beach and several others…strangely, upon reflection, these were “successful” magazines….they must print many extras of these!). Note: I also received the contracts in advance of the “interview.”

Obviously, I have received no franchise disclosures and I’m pretty excited because this really sounds perfect. I have the initial interview with two nice guys who tell me more about TH and then comes the moment of truth…an hour and a half interview with the company chairman, “Mr. Buerger,” to see if I can persuade him to let me become a distributor…absolutely a beautiful set-up.

Phew…I find out early next week that I made the cut and am being offered the opportunity.

Here’s the beauty of it: How many of you in a “job interview” that you’ve paid the better part of $1K to attend, are going to ask the “Chairman” :

* How many times have you been sued?
* What’s the failure rate?
* Please give me names of everyone who has failed nationally?
* How many times has my market gone dark? Who were they?
* Gee, the plant tour where you showed me how cheaply and efficiently you can mass-produce Travelhost was impressive. I take it based on your unambiguous promise in the AP agreement about getting wholesale pricing, that you aren’t going to charge 2.5- 3 times wholesale for printing?
* What is the real success rate in selling these 2 pages of free national ads?
* How many APs in the last 5 years have collected the supposed 40% commission for placing national ads?

My guess is that some smarter people than I asked those questions and were summarily booted out the door, minus the “opportunity” and minus $1K

My point is, this is the essence of deceit, all of it in my opinion. If it’s a franchise, it is unlawful deceit. I also believe that it might be “unlawful deceit” even absent franchise law protection.

“Where in the world” is Jeff Loudon?

November 14, 2009

Part of my inspiration for this blog, was a good friend and colleague at Travelhost named Jeff Loudon, from Yakima Washington.  Washington Wine Country!

In the earlier part of this year, Jeff and I were discussing some ways to make our businesses better, and some ideas to make the Travelhost network even stronger.  After being encouraged by Travelhost to continue our efforts, they went mostly ignored.  So we started asking ourselves, why wouldn’t Travelhost want to apply basic business principles, to make the business stronger (and more profitable)?

Well, the answers became clearer as we dug deeper into the Travelhost business model.  See, Travelhost was making their money as a printer, but claims to be a publisher.  What’s the difference, you ask?  Well, publishers mostly make money from ADVERTISING.  Not PRINTING.  (Travelhost is given away free at hotels, so most people don’t sell subscriptions to this particular publication.)  So we dug deeper…

Why wouldn’t Travelhost want to make m0ney from ADS, like every other publisher?  Well, because they’re overcharging the people who actually “publish” the magazine for PRINTING.  See, the “associates” go out and sell the ads, create and gather editorial, and pay for the production and printing up front. (All at approximately 200% over retail pricing.)  Retail, meaning what anyone would pay, if they went to a commercial printer.  Not to be confused with wholesale, which one would assume to be a lesser price.  A price that all Associate Publishers are entitled to in their contract with Travelhost, by the way.

So it became clear.  Travelhost made its money from the unsuspecting associates, not advertising.  No wonder they didn’t care if we could actually SELL advertising.  Their business model didn’t call for it, as long as your associates credit card cleared its payment, all is good.

After discovering all of this, Jeff Loudon set out to clear the air…he questioned the executives at headquarters, he started a blog, and questioned Travelhost on its practices.  He questioned our “wholesale pricing” that we’re entitled to.  He questioned about following FRANCHISE LAWS.  He questioned about DISCLOSURE to the associates.  (It was our opinion that since there’s a difference in price between what we would pay at any commercial printer, and what we pay at Travelhost, then that would be considered a “FRANCHISE FEE.”  For this franchise fee, many thousands of dollars extra, we received very little benefit.  If any.  Definitely not worth the money we were paying.  So….he emailed the entire network of publishers, and told them about this.

Jeff Loudon was foaming at the mouth like a rabid pit bull, ready to sue Travelhost in court for misleading us all!  Misleading us on our pricing, misleading us on key facts that should have been told to us before we invested in this venture!

And, then…POOF.

Jeff Loudon dissappeared!

Like magic!

Hmmmmmmm.  Why would a guy like this, just all of the sudden…be quiet?  And carry on, as if nothing ever happened?  When you call him, he’s not interested in discussing Travelhost.  Yet, he’s still a publisher in the TRAVELHOST NETWORK!!!!! He doesn’t want to make things better!  He doesn’t care about being overcharged?  He doesnt care about DISCLOSURE?  WHats going on here?

 

Anyone have any ideas out there? What happened to Jeff Loudon?

Anyone know “where in the world is Jeff Loudon?”
I have some ideas, and will explore them soon.  Stay tuned!

On the subject of Travelhost…

November 6, 2009

Here’s an excellent response by an ex-associate publisher of Travelhost:

10 Tips to Assess Whether You Should Become a Travelhost Associate Publisher

I launched my edition of Travelhost of Rochester & the Finger Lakes in June of 2006.  In the training class, there were about a dozen of us launching eight separate editions across the U.S.

Now, only 1 out of 8 is still publishing.  I’m 1 of the 7 who is not.   I invested my life savings, took a leap of faith and I did not reap the benefits I believed I would.  The net did not appear.

The first thing I want to share is that I LOVED being a Travelhost Associate Publisher. I felt I was making a difference and doing something important.  I made friends and met people I’d probably never have known before.  It was a great learning experience.  And my edition was successful…in every way but financially.

My hotels loved the magazine, my advertisers loved it and the readers I heard from adored it.  I learned these lessons and I’d like to share them.

1) Be sure you know what business you are going into. If you decide to buy a Travelhost edition, be sure you go into it with both sales skills and publishing skills at the outset.
After the edition closed, a friend asked, “Carol, what business did you think you
were in?”

“I thought I was publishing a travel magazine,” I responded.

“Did you have subscribers?” He asked.

“No. Hotels, inns and B&Bs and travel stops got copies of the magazine for free.”

“So your only revenue came from advertising.  Then what business were you really in?” He asked

“Ad sales,” I responded glumly.

I was an experienced publisher and editor.

But I had no ad sales background when I started.  I quickly realized that if I were going to succeed, I needed to learn quickly.  I studied sales by reading, attending classes and taking training.  I invested in my education and really worked at it.  Former advertisers have said I was one of the best ad salespeople they knew.

2) Search the web for information about their reputation and information about the strength of their brand.
After becoming an Associate Publisher, I attended the NYS Governor’s tourism conference with 300 tourism professionals.  I was surprised how many had never heard of the magazine and those that knew of it said, “Oh, that magazine with the high turnover.”

3) Understand what business TH is in.  They are in the printing business.  Their model is a way to keep their printing presses full.  Get quotes on what you would pay for retail printing locally and compare it against the company’s quoted prices for printing.  Had I done this, I’d have found that I was paying more than double what local printers would charge.  Do the same for shipping and distribution costs.  I found substantial discrepancies between the estimates provided and reality.

4) If you do decide to “go for it,” get it in writing that your content cannot be used online if your market closes.

5) Questions to ask:
a. Associate Publisher success rates.  Listen and get facts.
b. How many failed publishers were in your market before you?  When?  Ask for their name and contact information.  If these aren’t shared, think carefully.
c. Talk to the person who owned the market before.  What is the real reason s/he gave it up?
d. Find out how many editions are actually being published in your state.  If you find an edition online but there is no name in the welcome letter or the masthead, chances are, it has gone dark.

6) Do not anticipate that you will be able to sell regional or national advertising.

7) If you can’t launch your magazine, do not expect to get your money back.

8) Anticipate that success is a long-term investment.  Are there successful associate publishers?  Absolutely!  Some are wildly successful. Most started a long time ago or purchased previously successful editions.

9) Be sure to look at their website.  Is it using current technology?  Will it serve the needs of your customers?  If you’re not sure, ask a local marketing expert for their opinion of the site.

10) Remember that starting a business is very hard work.  You are running the company, selling the ads, probably writing much content and doing all the work.  I worked 75 to 80 hours every week, and there just wasn’t enough of me to go around.

Do your homework and hopefully you will find the right opportunity.  Keep an open mind but be cautious and remember, this is business, not personal.

It took me about a year to move through the grieving process over loss of a dream.  Many smart, savvy, dedicated entrepreneurial associate publishers I know personally have lost tens, even hundreds of thousands of dollars, their homes and their financial security.  Like me, they all expected to succeed.   A failed edition can seriously affect your personal life, your credit and your peace of mind.  If you come to the end of your money, do not go into debt for this venture.  Cut your losses and move on.

Be sure to think about what you’ll do if you don’t succeed. Understand the financial obligation you are making and be clear about your expectations and what you’ll do if expectations are not met.