Travelhost Survival Plan for 2010: Several Small Changes To The Business Model To Ensure The Future Of This Business:

The situation: Down to about 80 markets and falling fast, TH is in deep doo-doo.  The “churn and burn” method of recruiting markets that once earned TH a cool 2 mill per year, isn’t happening anymore.  The network is shrinking, the value isn’t there, and the business model needs to change…or the business will die.

Here’s a quick conglomeration of ideas that I put together, to help get TH back up and on its feet for 2010.  These ideas are basic business principles, that any student enrolled in business 101 might read about in one of their textbooks.  No high tech calculus here, no nonsense, just basic stuff.

I think that most will agree that we have a good start here, and plenty of room for improvement.  With the exception of Jim Buerger, of course, but even he won’t be able to argue that these things don’t  make perfect business sense.  Though, he has been doing things his way for so long, even the basics may not make sense to him now.

It is my hope, that TH will consider this information, and be open-minded enough to change for the better…to “better serve the traveler.”  Or, face the consequences.

(This information is also available on our new website: www.publishersadvocate.info) just click on “A Plan That Works”

1. Admit there’s a problem.

Realize that this model won’t work anymore, and move past it.  Admit you’re a franchise, and stop violating franchise laws.  Create a good business, and the UFOC won’t be such a scary thing.  You won’t have to hide things from potential investors, and cover your tracks all day.  Instead, you can focus time, energy, and resources on solid business principles that will BUILD the business, not tear it down.

2. Stop charging AP’s double for printing and production.

Charge normal market rates.  This will ensure new AP’s will have the best possibility of success, and will allow TH AP’s to compete fairly in their local markets with other publishers.  This will also help TH build the number of AP’s well beyond the average125 mark that they’ve been stuck at for so many years. Sure TH can mark the cost up “some” for the brand value (it will one day develop), but 2-3 times? Nope.

In my estimation, TH could easily have 350 profitably operating markets, in every nook of the country.  Then, TH can make money from selling advertising, like it should.  The TH penetration will be so high, that there will be actual value in regional and national advertising.

*If TH is unable to print magazines, due to antiquated printing presses, etc., it might make more sense to print elsewhere.  It would be less expensive to the AP, if they could print somewhere regionally.  Shipping would be less, and overhead for TH would be less.  No need for a giant warehouse, and printing personnel.  A win-win for everyone involved?

3. Allow the AP to be flexible with page count, press run, print frequency and quality.

Flexibility is the key in an unstable, slowed economy.  Printing 48 pages because you’re contractually obligated is highly detrimental to the AP’s business.  If sales call for a 32 page magazine, allow the AP to print 32 pages.  It’s that simple.  All of our competitors are printing less pages, less magazines, and decreasing quality where needed, in order to ensure their survival!  Also, allow AP’s to print 2- 3 issues per year, where there is no business during the Winter.  (some markets are already doing this, if you look closely. Flint and Boise? Maybe Jeff Loudon in Yakima, Washington…his last issue said “Winter” and it came out in early October? I’ll be watching for a new one soon)

High-end markets like Chicago, Boston, Phoenix, Los Angeles and others have been begging for a better quality paper for years, if not decades. They are willing to pay for it (not with the usual 500% TH mark-up). These markets need a better paper and a better modern and traveler relevant look to get into nice hotels. How can we get this through Mr. Buerger’s head? (Business 101…provide what your “customers” need!)  Good Luck!

4. Create a win-win situation for royalties.

Instead of just grossly (obnoxiously) overcharging TH franchisees, create a system where TH takes a (small) percentage of gross (or net) sales.  This way, it’s mutually beneficial for both AP and TH for each and every market to do well!  It’s the way most franchises are set up. Not 35% of sales…how about 5% like Subway? (If it is to continue at 35+% TH needs to warn people upfront….or I will)

5. Sell advertising, not printing.

As market numbers increase from these simple changes, advertising will become easier to sell.  As local markets surpass 150-200 markets, more companies will buy ads, because the entire country will be penetrated with TH magazines.  You then have a publishing business, not a printing business.  A business where everyone makes money from well placed advertising.

Implement a national ad sales plan immediately.  Hire one person to work in Dallas at HQ, to sell ads regionally and nationally.  Come up with a fair and equitable split, (even a cut for TH HQ and the sales guy, of course) and everyone will be making money!

6. Improve the product.

As stated above, if TH can’t print nice magazines, print them elsewhere.  A perfect bound, local-covered edition of Travelhost magazine would better serve the traveler.  And that, after all, is what we are out to do, right?  Why let our competition run with better products just because we have an old printing press that’s paid for.

Improve and FINISH the website and mobile device software.  It doesn’t have to be PERFECT, just finish it.  We have been beat out by “Where” twice, with a functioning website, and now mobile device service on MULTIPLE devices.  Beat to the punch, because time and resources are shifted to market expansion’s churn and burn (and CYA) efforts.  Spend the time and money where it will have an impact on the business!

Mr. Buerger, Lawrence Welk is long gone. So is the style of that era, A style you seem bound and determined to retain. Listen to the Advisory Board and the screaming chorus of your “customers,” the AP network.

7. Travelhost overhead reduction. (not the way it was done Tuesday, by the way, 10 days before Xmas)

TH HQ will not need as much staff, with: no printing presses, less production people (as production builder is finished and implemented) and less executives running around recruiting/covering their asses for fraud…TH can run a national company on far less people this way.

Without the “churn and burn” method of finding and constantly replacing of new associate publishers, you will build an organization of hundreds of successful, happy, profitable PARTNERS IN BUSINESS.  Earning money the way a publisher should:  with a good product, good placement, good people, good advertising, and actual business ETHICS.  No need to look over your back anymore, when you’re doing the right thing!

And, no need for a in-house corporate lawyer making a quarter of a million dollars per year either.  With normal, ethical business practices, a company like Travelhost shouldn’t need a lawyer on staff!  Especially not to the tune of 250k, where the “associates” who are being burned pay for it!

Best of all, Mr. Buerger, you might have at least a slim chance of an “upgrade” in your afterlife….if you get the drift? I can tell you that you could really use one. IMHO

8. Utilize TH resources better.

The entrepreneurial group that TH has recruited, has some of the smartest, bravest, most creative people on the face of the Earth.  This time, truly PARTNER with them.  LISTEN to them, and consider making improvements to the business. (Just because they were tricked into what has historically been a rip-off, doesn’t mean they are stupid people)

What worked 40 years ago, might need some changing to work today.  Be open minded about change, and embrace it.  It will be the only way to ensure the survival of this potentially fantastic business.  The model doesn’t work right, and ya’ll know it.  Do something about it, or TH will soon fizzle out, like the hundreds (thousands) of AP’s from over the years.

Finally, in the information age as at present, you are in fact going to have to treat the APs as customers…not unpaid, low-grade employees. As you can undoubtedly see, somebody like me is going to make your life miserable until you radically change. (or somebody like a judge in a class action suit?)

It’s up to TH to drastically change. I’ll be glad to erase this when the steps are put in place.