One to One With Joystar

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OSSN: Are you concerned about the impact of another possible terrorism attack in the United States?

Alverson: As a human being and as a father, I am concerned. The reality is that there will be more terrorist attacks, but travel always comes back. People are very resilient. It's in our nature to explore and to travel. In the long run travel has always been a growth sector.

OSSN: Where do you see the travel business in two years?

Alverson: As far as the industry is concerned, I believe the big online agencies will continue to gain market share in simple travel products including air, car, and hotel, but professional travel agents will maintain their dominant position as the primary distribution channel in complex travel including cruises and vacations. Travel agents will be able to succeed through hype-differentiation, or "niche to get rich" as we say at Joystar.

OSSN: More than 2,200 travel agents have joined Joystar since you launched your program in August 2004. Why do you believe it is growing so fast?

Alverson: We definitely weren't the first host agency on the block. So, in that regard, the "first mover" advantage really didn't pertain. We are though, what I consider an "early mover" which is to say that the home-based revolution really won't hit a "tipping point" for another two to three years. The reason we're growing at such a phenomenal rate has a little to do with our very aggressive and savvy recruitment strategy, but more to do with our ability to show the professional travel agent community that we really do care more about them. That doing business with us is not about a transaction but, rather, building a long-lasting, mutually rewarding relationship. Professional travel agents can sense this, and I believe they can relate to our belief system because it's the very same formula that has brought them success in their businesses.

OSSN: You've received a tremendous amount of press lately. Joystar has been referred to as a "Host Agency on Steroids" as well as a "Host Agency on a Roll." Yet, you've also seen your share of articles that appear to be written like they're "out to get you." Any comments?

Alverson: Oscar Wilde once said "There is only one thing worse than being talked about, and that's not being talked about." The bottom line is that Joystar's business model is highly disruptive to agency owners and hosts who wish the industry to remain "status quo." What our competitors fail to grasp is that if it wasn't Joystar, some other company would eventually come along offering travel agents a better way to do business- a brighter future. It has been happening for hundreds of years across every industry.

OSSN: What are the Company's short- and long-term goals?

Alverson: Our laser focus has been and will remain on building our professional travel agent network. We are on track to have over 4,000 members by year's end. I believe we can grow the network to 10,000 strong by the end of 2007. Again, I want to reiterate the fact I'm talking about professional, high-producing travel agents selling a whole lot of travel.

OSSN: Travel is a highly competitive marketplace. How do you help your members stand up to the online agencies such as Travelocity, Expedia and Orbitz?

Alverson: Our professional agents sell the travel products the online agencies are having a hard time selling. Less than 10 percent of complex travel is booked online, and most experts agree that figure won't change much in the foreseeable future. Additionally, we urge all of our members to carve out a niche in the industry. Establishing yourself as an "expert" is the only way to succeed in this business today. To that end, we offer reimbursement programs for our members who purchase training modules from CLIA and The Travel Institute.

OSSN: You have said you want Joystar to be at $100,000,000 in sales in 2006. That's pretty ambitious.

Alverson: We are currently just under $20,000,000 in annualized sales. It's important to note that this is predominantly cruises and vacations and not low-margin air bookings. It is also much more difficult to build a company from a "start-up" with no sales to $20,000,000 than it is from $20,000,000 to $100,000,000. Our commission levels with the suppliers have increased dramatically over the past year as well, attracting more and more "high-producing" travel agents.

OSSN: We know the home-based travel agency model is emerging. How big is it -- and how big do you expect it to be in five years?

Alverson: A recent study by Credit Suisse/First Boston estimated that there were 15,000 to 20,000 professional agents who have migrated to home-based operations. The analysts expect that number to grow to nearly 50,000 professionals by the end of the decade. With the rapid technology advancements the travel industry is experiencing, I believe CSFB has grossly underestimated the potential of the home-based business model.

In addition to the approximate 125,000 existing travel agents in America, there are more than 13 million Americans operating some kind of business from home. And, according to the Department of Labor Statistics, 1,500 new home-based businesses open every day. At the same time, the barriers of entry to this business are diminishing. What used to cost $30,000to $50,000 to set up an agency is now only a fraction of that cost.

Every industry needs new blood and fresh entrepreneurial minds that can take travel retailing to the next level. It will be good for everyone involved in the industry -- even the "nay-sayers." I know I'm looking forward to it.