How the President of Expedia CruiseShipCenters is ushering in a new era of expansion for the travel franchise
The Expedia® CruiseShipCenters® travel franchise is one of the largest sellers of cruises in North America. Matthew Eichhorst, President of Expedia CruiseShipCenters, is leading our rapid expansion as we continue to increase our foothold across the country.
After high-profile positions in global companies such as General Electric, Matthew has been with Expedia CruiseShipCenters for more than a decade. As President of the travel franchise, Matthew is shepherding the company from being the prominent travel franchise in Canada to becoming the prominent travel franchise in North America. With more than 200 locations open or under development, Matthew’s vision is rapidly becoming reality.
This is Matthew’s story:
Describe your background and how you came to be President of Expedia CruiseShipCenters.
I’ve always considered myself an entrepreneur. I started my first business when I was 14; it was a pool service business. By the time I graduated high school, I was installing pools. That is how I paid for college, where I got my degree in business and computer science.
I saw technology as a way to really improve customer service. I opened a tech company while I was in college, and we sold and helped companies integrate Lotus Notes. We ended up having 85% market share in British Columbia, and I ended up selling that company to General Electric. I stayed as an executive with General Electric for three and half years, until I decided that I wanted to do turnaround work.
General Electric was great corporate training — it gave me a lot of structure. I joined a wireless technology company during the dot-com era, and CruiseShipCenters (this was before Expedia invested in the brand) was a customer of ours. I saw that CruiseShipCenters had a lot of untapped opportunity, so I decided to join the company. Soon after, we negotiated a deal with Expedia, and we’ve been growing ever since. I have been here since 2003.
How have you been able to grow a retail travel agency in the internet age?
One of the things the internet did was give us amazing access to information. People feel like it’s easy to become experts on any subject because we can find things online. But it turns out, when it comes to booking travel, the internet has become one of the most overwhelming experiences you can have. There is such a thing as too much information.
People want someone to help with their decisions in booking their vacations, especially with cruises, where you’re not just going to one destination — you are stopping at multiple ports and have the potential for a lot of different adventures on a single trip. According to Cruise Lines International Association, 70% of cruises are booked through travel agents, and it is the complexity of the product that creates a demand for our services. For instance, with Royal Caribbean, the difference between the oldest ship and the newest ship is so different that it can be like cruising with two different companies. There are a lot of cruise lines, hundreds of ships, thousands of staterooms and an endless combination of potential itineraries. People want to know where they are going, what they are getting and how the experience will meet their expectations.
What happened to independent travel agencies is that they couldn’t stay relevant. If you did not have a big brand, you had a hard time competing in a world of online travel. People associate big brands with great pricing and service. That’s why Expedia CruiseShipCenters has a great advantage. We have an incredible brand name, as well as the personal service component, which is what people want when booking a cruise. They want Sally to be their travel agent and to be able to get Sally’s expert advice and assistance, but they also want to know the company behind Sally is very trustworthy. Expedia is one of the biggest travel brands in the world and has great leverage and supply chains, which creates huge advantages for our franchise owners.
What is the difference between using Expedia CruiseShipCenters and booking a vacation online?
When you’re booking a cruise vacation online, you don’t get the expertise we have to determine whether what you’re getting is the ideal trip for you. Someone may want to go on a cruise, but they don’t want big buffet lines. Maybe they want something more quiet and intimate. It can be easy to miss that distinction when booking a trip online, but it can have a huge impact on how much you enjoy your trip. Are you the type of person who likes to stay at a Best Western or at the Four Seasons? We can ask our customers: “What are you looking for? What do you want to do when you are on vacation?” We can dial into their personality and their expectations to make better recommendations and get our customers on the right cruise for them. The difference between Expedia CruiseShipCenters and a website is that instead of simply selling a cruise, we’re navigating a spectacular vacation experience.
Why is now a great time to get involved with the cruise industry?
In the late ’60s and early ’70s, cruising started to become popular in a really big way. A lot of the cruisers back then were retirees, but they would sometimes bring their children or grandchildren along. Those younger generations grew up loving cruising, and as they have all become adults, cruises have become much more common as multigenerational family vacations. Cruise lines are innovating their ships, and the product has changed to appeal to a broader range of people, and the industry is actively going after that younger market. Baby Boomers have enough population for the industry to continue to do well, but having the additional draw from younger cruisers is amazing. Research shows that the Millennial bubble will affect the cruise industry in a positive way in the coming years.
What is attracting younger franchisees to Expedia CruiseShipCenters?
I find that a young person who is entrepreneurial doesn’t just want to make money, they want to be in control of their own destiny. Someone who wants to own their own business is motivated by freedom at least as much as by financial gain. We provide a platform they can use to build a very strong business capable of accomplishing both goals.
Explain the benefit of the Expedia brand name.
There are two huge things — the name recognition and the business model. You don’t have to explain who you are when Expedia is part of your name — our brand gives our travel franchise owners instant credibility. Also, Expedia has about 230,000 hotels in their inventory and access to a ton of non-cruise products that travelers are looking for like flights, car rentals, vacation packages and more. We bolt that supply and data into a traditional travel agency franchise, and it provides a huge advantage in their local community. They’re able to provide the personal service along with Expedia prices.
What makes your business model special?
One of the reasons Expedia invested in us is because of the strength of our business model.
We are a large organization, but all of our stores are franchises who support teams of agents — Vacation Consultants — doing business as independent contractors. Our model is special because it’s so scalable. Franchisees don’t have the overhead of paid employees because consultants are paid only by commission for what they sell. There’s no limit on team size, so franchise partners can build a substantial business through a single location.
Our marketing and sales programs are also our key pillars. All of our marketing materials go out through our travel franchise owners, but they’re developed by our corporate team and are of a higher quality that an individual agent could achieve on their own. They’re very sophisticated and have a direct impact on driving sales back to their businesses. We spend a lot of money on technology every year, with our CruiseDesk® CRM platform. Year after year we are told we have the best technology in the business — whether it is the technology our agents use in searching and booking cruises, or the business analysis and team leadership dashboards our franchise owners use to continuously boost their profitability. We also have a sales program we call The Navigators Approach — it’s a process to help agents explore what customers want and then move them through the stages of designing and purchasing a spectacular vacation, which earns franchisees a higher-than-normal repeat customer rate.
Why does Expedia CruiseShipCenters stress having a retail location?
People may say, “I don’t go to travel agents to buy cruises anymore,” but this isn’t actually the case. In fact, according to Cruise Lines International Association, 70% of people prefer to book their cruise vacations with a travel agent. Having a retail stores is essential to our model because they serve as a landing pad for the franchise owner’s team. When we look for Vacation Consultants, we look for people who want to be agents — people who want to be part of a bigger brand and have a place to go when they need help. Our customers do not always go into the store to buy their cruise, but they want to know you are in the community. It’s about establishing trust and credibility. Our customers want the ability to call a local number and speak to an agent who lives in their community.
What is your vision for Expedia CruiseShipCenters?
Our vision is to be the largest cruise retail network in North America that is the trusted brand for cruisers in their communities. I want our customers to say, “I know Expedia is online, but I want to talk to somebody that I can trust, and there is an Expedia CruiseShipCenters right on Main Street.” The credibility of being in the community has been even more beneficial than we thought. The walk-in traffic a good location can generate is key for both consumer sales and also recruiting of agents.
Who makes a good franchise partner?
Our franchisees range from stay-at-home moms to former teachers to ex-corporate managers to retired military. The behavioral trait that our partners must have is a genuine love for people. We look for people who like coaching a winning team more than being the best player on the field. We’re not looking for franchisees who want to sell travel themselves. Our best franchise partners really try to make their Vacation Consultants as successful as possible; they have nurturing personalities. People who are committed to a high level of customer service and support their team members do very, very well. They are passionate. They like people. We obviously want people who are travelers and get excited about destinations, too!
Our model is not for an entrepreneur who wants to be an absentee owner. That being said, it is common to have at least two locations. In fact, 40% of our franchise partners own multiple stores. Our largest travel franchise owner has five stores. Another couple owns four stores, and in order to further expand and continue supporting their agents, they will need to empower a Cruise Sales Manager and a trainer. Those who can do that can do really, really well.
How do you set earning expectations for your franchise partners?
In the first year or two we focus a lot on top-line revenue. Right now 65% of sales volume comes from cruises, and 23% of sales volume comes from booking hotels for a customer who needs help with the land aspect of their trip.
We help our franchise owners build their store sales, and once they hit enough volume we start working on improving their profitability. Of course, some owners are more successful than others, so the numbers can fluctuate. The Item 19 in our Franchise Disclosure Document provides a good overview of potential earnings for a franchise partner.
Where is the industry headed? How will you grow with it?
The future of cruising is very bright. There is a growing audience that wants to buy cruises with nearly a quarter of all cruisers falling in the 30-39 age group. The cruise lines are investing billions with 57 new ocean cruise ships coming out over the next seven years, so there is more product for us to sell. The product itself is being enhanced, too, which improves yield. A $1,000 cruise in five years may be worth $1,500, so that raises the amount of the commission going to our franchise partners and consultants. Our internal goal is to grow at a rate that is triple the growth rate of the industry. We have been able to do that every year for more than two decades — when the industry grows by 7%, we grow by 21%.
In the year 2020, I see 500 Expedia CruiseShipCenters franchise locations in North America, with 300 stores in the United States — which is really exciting. At our National Conference last month, our theme was “20/20 Vision: Bigger, Better, Stronger, Together.” We’re growing quickly, but we never stop thinking about improving current systems to help existing stores be more profitable, too. After all, we’re not successful unless they’re successful.