July 2008

Issue No. 44

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Host Agencies

Expedia CruiseShipCenters sets a major expansion into the U.S. home-based market
By james shillinglaw

north american host

ing systems he had developed for his own agency. He then started franchising in 1989, building the company gradually to its current size. Two years ago he joined with Magic Johnson Travel Group in a joint venture that included Royal Caribbean and GOGO Worldwide to start a travel agency franchise group for urban minorities. CruiseShipCenters still

as Expedia become a host travel agency? Not exactly, but whats clear is the online travel giant is investing in more traditional travel agent businesses, namely by last year purchasing a minority investment in CruiseShipCenters, the Vancouver-based agency franchisor and host agency. CruiseShipCenters just happens to be the biggest cruise seller in Canada with $350 million in sales and 25 percent of the market. That deal came in March 2007, and by December the newly renamed Expedia CruiseShipCenters unveiled a plan to expand into the U.S. market, targeting both independent contractors and those interested buying agency franchises. Earlier this year Expedia CruiseShipCenters began a marketing campaign seeking to attract existing agents as well as people new to travel. The company has already signed up 35 agents in the U.S. and is targeting a total of 300 by the end of the year. In April, it opened its first cobranded retail location at the Crossroads Shopping Center in Bellevue, Wash. While Expedia CruiseShipCenters may not be a household name in the U.S., top cruise line executives already know it as major force in the market, based on the proprietary technology it developed to help its franchisees and independent contractors sell cruises in Canada. CruiseShipCenters currently has roughly 1,700 agents and 107 franchise locations in Canadarepresenting a mix of home-based independent contractors, host agencies and retail locations. It also has received two Franchise Excellence Awards in 2006 and 2007 from the Canadian Franchise Association. Indeed, the company has come a long way since it began in 1987. At the time, Michael Drever, the current president and CEO, was an independent contractor working with CruiseShipCenters. But when the company ran into some difficulties, he took it private and then relaunched it in 1988 as a cruise-only travel agency. Drever says he began putting in the technology, marketing and operat-

Expedia CruiseShipCenters team: Front row kneeling (L-R) Ella Brackett, LeeAnn Galli, Amy Conover; back row (L-R) Ronda Bliey, Wendy Denny, Matthew Eichhorst (COO Expedia CruiseShipCenters), Michael Drever (CEO Expedia CruiseShipCenters), Dan Chappelle (General Manager Expedia CruiseShipCenters Bellevue Center), Inga West, Marlene Bjornstad. provides the back-end support for that group, which now numbers close to 100 franchisees. But clearly Drever saw the potential in building not just a Canadian travel agency franchise with some U.S. connections, but a much larger company that would cater to the entire North American market. He began talking to Expedia, which was interested in developing a multichannel strategy of distribution that

included live agents. They were interested in the home-based franchise business and the cruise business, Drever says. They were basically interested in everything we were involved in. We talked for about four or five years, but then finally did a deal. Our system is accountable for about 25 percent of the Canadian market in cruise sales, so the logical next move was to go south of the border. Of course, while Canada has a number of host agencies, the U.S. market often seems saturated with them. So what is Expedia CruiseShipCenters unique proposition to attract agents and franchisees here in the U.S.? We have the best operating system in the industry, Drever says. Our customer relationship management system is a fully integrated operating platforma true CRM. I havent seen anybody in the business with a true CRM. Drever also says Expedia CruiseShipCenters prides itself in helping people change their lives in the travel business. They can work from anywhere and they have access to Cruise Desk, our cruise agency platform, as well as their own personal website, he says. Its a true CRM that enables a home-based or centerbased independent contractor to be far more productive. Matthew Eichhorst, chief operating officer of Expedia CruiseShipCenters, says the company offers a complete system for agents. The phrase weve coined is Enterprise CRM, he says. What we mean by that is in the travel business you can go out and license lots of technology that allows you to use a CRM tool, but it doesnt necessarily drive your e-marketing, website and back office. We have more of a complete system that weve written all ourselves. Essentially, the company offers a complete turnkey solution to selling cruises. It provides extensive training and marketing programs, as well as business development managers that help independent contractors and franchisees build their businesses. Its headquarters

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office in Vancouver has 70 staff members supporting agents, and the new office in Bellevue has another 10 staffers doing the same. There arent too many host agencies that have that level of support, Drever says. We will also open up other storefront locations in the U.S. Bellevue is just the first of many. There are also several ways agents and those new to the travel industry can affiliate with Expedia CruiseShipCenters. They can join as a new franchise, convert their existing agency into a company franchise or add on a franchise to their existing agency. They also can join as an independent contractor working from home or as a retail contractor affiliated with a retail location. As you grow your business, you might find you want to have people working for you, Drever says. You can do that by becoming a home-based franchise partner. At a certain point in time, you may find yourself with 10 or 12 home-based or independent contractors working through your franchise. Then you may want a retail outlet in order to execute a retail marketing strategy. Many of our franchise partners started as independent contractors, just as I did. Drever is so confident in his system and the growth of the cruise market that he believes Expedia CruiseShipCenters can grow to as many as 15,000 agents in North America. To reach that goal, he is focusing on two different targets. First, were looking for brand-new people to the industry who are looking for change of lifestyle and for a new opportunity where they can be completely trained in the business, he says. The second person were looking for is obviously the existing agentsomeone who is in the business and may be lacking the required tools they need to be successful. So what does it cost to join up? For a home-based cruise and travel consultant, the initial fee is $299 plus $29 per month. For a retail cruise and travel consultant (working with an Expedia CruiseShipCenters retail location), the initial fee is $295 plus $29 per month. For a homebased franchise, the fee is $3,995 plus a monthly MIS fee of $95 and a marketing fee of $50. A full retail franchise requires an investment of $75,000 to $130,000, plus a franchise fee of $25,000 to $43,000. Independent contractors receive between

Expedia CruiseShipCenters opened its Bellevue, Wash., retail outlet in April. 70 and 90 percent commission, while franchisees get a full 100 percent. Those who sign up get a license to CruiseDesk, a personalized website, a full permission-based marketing strategy, and access to the Seven Seas Cruise Club, which is how Expedia CruiseShipCenters markets its cruise products. Agents enter their customers name into the club, and the system automatically generates e-marketing and direct marketing based on the customers preferences. Marketing includes weekly emails, printed flyers and quarterly magazines targeting the specific kinds of cruising the customer is interested in. Expedia CruiseShipCenters also has an extensive training program, with a series of Cruise to Success seminars held several times a years and a Cruise to Success seminar at sea, offering week-long training sessions. New franchise partners get a four-day training program in the companys Vancouver headquarters, while new independent contractors can take advantage of online training. Drever also believes his partnership with Expedia provides a very real benefit to his franchisees and independent contractors. Were not a land vacation-, air-, car- and hotel-focused company, so by becoming part of the Expedia family, obviously we can tie into those programs, and we have, he says. Weve taken Expedias non-cruise technology systems and integrated them into our CruiseDesk agent portal. Now its an amalgamation of the best technologies available. Perhaps an even greater benefit, however, is access to the Expedia brand. Expedia is one of the most recognized brands in travel, Drever says. When you take Expedia and combine it with CruiseShipCenters, the research shows the response is very, very favorable. I think the Expedia CruiseShipCenters name gets attention, and theres a full story behind it, says Geraldine Ree, senior vice president sales and marketing. One of the big benefits of combining with Expedia is that it endorses all travel agencies. Expedia also has the connotation of technology, and having that name there just reinforces the fact we have good technology. Clearly, U.S. agents are interested in what Expedia CruiseShipCenters has to offer. Tami Fredericks, who runs a home-based host agency in Greensboro, N.C., with 15 independent contractors, joined Expedia CruiseShipCenters in May. Roughly 70 percent of her business was cruise, so she was intrigued by the potential to grow her sales even more. After thoroughly investigating Expedia CruiseShipCenters, I knew that it was the way of the future, Fredericks says. The branding, CRM and advertising...it just simply could not be ignored. As agents, we have one of two choiceswe can join hands with one of the largest travel forces in the world or we can sit back and watch it succeed and wish we had. @ For more information on Expedia CruiseShipCenters, call 877-767-7327, ext. 3586, or visit www.cruiseshipcenters.com/change.

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