Saturday, 16 August 2014

Cruise-only sales model perhaps on the decline

Cruise-only sales model perhaps on the decline

By Tom Stieghorst
With Cruise Holidays becoming a division of Vacation.com, agencies will transition from a franchise model to a licensee model, which will lower fees.

The move may signal that the once novel cruise-only model of travel sales is on the wane.

Cruise Holidays has grown only marginally over the past four years, from 202 in 2010 to 214 franchisees today, according to Entrepreneur magazine. Cruise Holidays said Entrepreneur did not count a master franchise in Quebec, involving about 50 agencies.

Even so, U.S. franchise units have dropped sharply, falling from 168 in 2010 to 118 this year. Growth has come from Canadian and international sales, but even those locations fell compared with last year, according to Entrepreneur.

Cruise Holidays said that when home-based operators are included, it had 261 franchisees at the end of 2013.

Meanwhile, Vacation.com is growing rapidly. At its annual meeting, it reported 200 new members in just one year, bringing the total membership to 5,300.

Liane Lance, an outside agent with Cruise Holidays of Kansas City, called the reorganization "kind of a no-brainer."

Jim Smith, a veteran industry consultant and former president of GEM, one of the predecessor companies to Vacation.com, agreed. "The only thing that's remarkable is why it took so long," he said. "The marketplace over time has evolved."

Smith said that in the late 1980s and early '90s, Cruise Holidays was a great business model, and it remains strong.

"However, when you look at everything that V-com brings to the table in terms of their marketing and technology wherewithal, not to mention their aggregate revenue reach, this can only be a boon for the Cruise Holidays agents and agencies," Smith said.

Lance said more than 70% of her business comes from land vacations, so the hookup with V-com will help there.

John Lovell, president of Consortia and Leisure, cited the number of preferred tour operators as a key benefit for Cruise Holidays members.

Lance also said she will have access to a V-com regional manager, something Cruise Holidays didn't offer because of its size.

Lovell said Cruise Holidays will stop selling new franchises, but could grow through mergers. He said franchisees will be offered financial incentives to convert to the new agreement by Sept. 30.

Stacey Coggan, a home-based Cruise Holidays agent in Hainesport, N.J., said some franchisees had been hoping for this outcome since Lovell took over leadership of the brand last summer. "I couldn't be happier," she said.

Lovell said Cruise Holidays agents will participate in V-com's annual conference next May on the Quantum of the Seas but will have their own program within that meeting. The brand's President's Circle awards will continue for three years, after which they might be folded into V-com's award program, he said.

Besides the brand, the Cruise Holidays website is being preserved, as AgentMate, a popular booking system formerly known as CruiseWeb.