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The recent acquisition of Cruise Holidays as a division of Vacation.com signals a trend that has many cruise-only agencies seeking to significantly increase their land and tour sales as an essential business strategy.
Both Cruise Holidays, a cruise-only franchisor with about 261 franchisees at the end of 2013, including home-based operators, and Vacation.com, a travel agency marketing group with thousands of agencies across North America, are part of Travel Leaders Group.
According to Jason Olson, president of Cruise Holidays in Redding, Calif., the move to become a division of Vacation.com is a win-win that will help his agency increase tour, all-inclusive and river cruise products — all of which offer stronger commission structures than mainstream cruises.
Olson bought the third oldest franchise in Cruise Holidays last year, entering the travel industry after he sold two start-ups in Silicon Valley, Calif.
“My businesses were professional service organizations that mirrored the travel agency business more than I’d ever imagined,” Olson said. “I was already looking into how we could access more land-based product relationships, and this move saved me the trouble of going elsewhere. With Vacation.com, we went from being one entity in 200 to one in 5,000, and that’s a significant enhancement.”
Olson explained he sees the incorporation of Cruise Holidays into Vacation.com as an opportunity to shift his current business model to one that involves selling an equal balance of land and cruise products.
“We don’t yet have full transparency on what commissions will be like next year, but the promise is access to extensive preferred relationships and overrides through Vacation.com,” said Olson.
The proliferation of non-commissionable fees (NCFs) on mainstream cruise sales is at the heart of Olson’s plan to increase his agency’s land sales.
“Agents are voting with their efforts, not selling as much with the suppliers who stack up non-commissionables,” he said. “On the other hand, we all made a special effort to get behind Celebrity Cruises when they made the experiment in paying commission on the NCFs.”
Olson also sees professional fees as the core profit center for the travel agencies of the future.
“It’s time to distance ourselves from the cruise lines and make commissions just the gravy,” he said. “We all work for the person who pays us, and that should be the client.”