Expedia CruiseShipCenters is a full service travel agency that specializes in cruises. Celebrating 25 years in franchising this year, the company has 15 retail and 14 sales centers in the United States and more than 132 retail locations in Canada. In 2011, the company did approximately $420 million in sales. Expedia CruiseShipCenters is looking to expand its presence in the United States along the Pacific and Atlantic coasts.
I recently had the opportunity to speak with Matthew Eichhorst, President of Expedia CruiseShipCenters, about the company’s franchise model, current growth, and expansion plans.
Prior to joining the company in 2002, Matthew spent 20 years as an entrepreneur, 13 of which were in the information technology industry. His efforts focus on the long term sustainability of Expedia CruiseShipCenters’ Franchise Partners, Consultants, and Corporate growth. In addition to his key responsibilities, Matthew is passionate about leadership development and building high performance teams.
Franchise Chatter (FC): Please describe the business model for an Expedia CruiseShipCenters franchise? How do your franchisees generate revenues? What are the major expenses involved in running the business?
Matthew Eichhorst (ME): Each Expedia CruiseShipCenters Franchise Partner operates as a full service travel agency specializing in cruise vacations. Our franchises support a team of Travel Consultants who aim to sell what we call “the door-to-door vacation” which includes the client’s flight, hotel, car rental, travel insurance, tours, and shore excursions in addition to their cruise package.
Our Retail Center franchise opportunity has always been our core model, which is a traditional brick and mortar travel agency supporting an unlimited number of inside and outside Consultants. We have now also introduced a second, lower investment option called the Sales Center franchise which allows owners to operate from a small commercial office supporting a team of up to 5 Consultants.
Retail franchises will have substantial fixed expenses for leasing and operating a storefront location. All franchisees incur monthly marketing and technology fees in addition to royalties on all bookings. Our Consultants are Independent Contractors who are paid on commission only, so our Franchise Partners do not incur any fixed expenses for employee wages.
FC: What is the relationship between Expedia, the travel website, and Expedia CruiseShipCenters, the franchise? Do these two entities compete with each other for business?
ME: In 2007, Expedia Inc. made a strategic decision to invest in CruiseShipCenters to grow their expertise and sales in the cruise market.
There are many other travel companies who are part of the Expedia Inc. family, including Expedia.com, Classic Vacations®, Hotels.com®, and Hotwire® to name a few. Some of these companies offer the same products, but Expedia CruiseShipCenters really targets customers who are looking for personalized service and advice from a vacation specialist.
Our relationship with Expedia has been extremely positive and our Franchise Partners continue to benefit from the brand recognition, sophisticated technology, and massive buying power that come with being part of the largest online travel company in the world.
FC: Can you describe the competitive landscape for travel agencies specializing in cruise ship packages? How stiff is the competition from travel websites?
ME: Cruising is one of the most profitable travel products to sell, and with more than 33 million North Americans intending to cruise in the next 3 years, our Franchisees and Consultants are in a great position. Research shows that cruise customers tend to conduct their research online but in the end, the vast majority feel more comfortable booking with a specialist. In fact, two-thirds of all cruises are booked through a travel agent.
That said however, we recognize the importance of having a very strong online presence to provide as many ways for our clients to deal with us as possible, whether it’s for research or booking purposes. Customers have the freedom to book with our locations in person, over the phone, or through their Consultant’s personal website, and know that they’ll receive the same high level of service no matter which method they choose.
FC: What sets Expedia CruiseShipCenters apart from other travel-related franchise opportunities?
ME: The Expedia brand is a huge competitive advantage for our Franchise Partners. It instantly conveys value and is a brand that consumers trust. A lot of people want to receive in-person service when planning a vacation and our two unique franchise opportunities enable franchisees to start small with a Sales Center location and transition their agency into a Retail Center as their sales and cash flow grow.
We are continuously recognized as a top franchisor for the incredible support that we provide for our franchisees, not only during the start-up process, but on an ongoing basis. Our marketing and online technology platform, CruiseDesk®, also sets us apart from our competitors and has been called the best Customer Relationship Management system in the industry.
FC: What kind of background or skills set do you look for in a prospective franchisee?
ME: Every member of the Expedia CruiseShipCenters team shares two common interests: a passion for travel and a desire to help people plan an unforgettable vacation. Expedia CruiseShipCenters Franchise Partners come from a variety of different backgrounds, but are all seeking to build their own business in a sector that they truly enjoy. We look for team-oriented individuals who are focused on driving results and accomplishing the goals they set out for themselves. Being an excellent nurturer, trainer, and motivator, along with the ability to lead a sales team, are the key qualities for success.
FC: What is the ideal location and geographic territory for an Expedia CruiseShipCenters’ location?
ME: Our franchise locations operate successfully in both large cities and smaller communities. Retail Franchises tend to open in strip-mall locations where there is plenty of foot traffic, while Sales Center Franchises may conduct business from a small commercial office space.
FC: What kind of training and support can your franchisees expect to receive?
ME: The first step for our franchisees is to attend our week-long Cruise Management Academy (CMA), which provides in-depth training on our systems to give them the confidence they need to launch their business. After that, they will receive ongoing support from their Franchise Development Manager in core areas to help them recruit and train a team of Consultants, market their services, and manage their overall business. Our 80+ Corporate Support team is also dedicated to the success of our Franchise Partners providing on-demand assistance through our help desk and an extensive library of tools developed by our training, technology, marketing, and franchise development teams.
We really believe that our Franchise Partners are going into business for themselves, not by themselves. We encourage them to leverage our unique culture of Stronger.Together® through plenty of networking opportunities with our executive team, travel suppliers, and their fellow Franchise Partners. Quarterly conference calls, bi-annual regional meetings, and our annual National Conference aboard a 7 day cruise are just a few of the ways we demonstrate this culture.
FC: What are your top franchisees doing differently to build and grow their business?
ME: Our top franchisees understand the value in following a proven system. They leverage the Expedia CruiseShipCenters brand while applying their own creativity to the way they manage their business at a local level. They’re creating a fun, supportive culture in their Center that gets clients excited about travel and Consultants motivated to sell.
FC: What can you tell us about the estimated initial investment, royalty fees, and profit potential for an Expedia CruiseShipCenters franchise?
ME: Our Retail Center Franchise requires a capital investment of approximately $90,000 due to the build out of the retail space, while our Sales Center Franchise can be started for as low as $9,500 since no build-out is required. Royalties are the same for all Franchise Partners at 9 percent of the gross commissions earned. Profit varies with each individual Center and Franchise Partner; however, revenue tends to directly correspond with the number of Consultants working for the location.
FC: What are your growth targets for Expedia CruiseShipCenters in 2012, and beyond? Which geographic regions are you targeting for expansion?
ME: Expedia CruiseShipCenters is aggressively expanding throughout the United States and plan to open another 40 franchises in 2013. We tend to target port cities along the East and West coasts, but have also seen significant interest in our franchise opportunities in the Southwest and Midwest.