NEW YORK -- Carnival Corp. reached an agreement with The Mark
Travel Corp. for a 50-50 joint venture to launch and operate
eLeisure Network (eLN), a business-to-business Internet-based
leisure travel marketing and distribution system.
Carnival and Mark are spending $20 million to $25 million apiece
to start eLN, which will be based in Milwaukee, and begin
operations in the fall.
The new system will feature two basic programs. One will enable
agents to book leisure vacations on any of Carnival's six cruise
brands or with any of Milwaukee-based Mark's tour companies, which
include AeroMexico Vacations, Funjet Vacations and Mirage Resort
Vacations, using eLN's Web-based engine.
Agents will receive standard commissions for all bookings,
including any overrides due from Carnival Corp. or Mark Travel
brands. ELN also will offer agents bonuses to encourage use of the
system.
Under the second program, eLN will create and maintain
private-label Web sites for travel agencies and travel management
and marketing companies. Sites, which will have booking
capabilities, will include advertising, e-marketing components and
site-related customer service, all handled by eLN.
Agencies participating in this area of the eLN program will not
earn standard commissions, but a per-transaction fee and a portion
of advertising proceeds, say officials of the joint venture.
Carnival said it has not yet determined the numbers for the
fees.
"The agent will, in effect, be operating a dealership for the
eLN brands," said Carnival chairman Micky Arison.
Rick Meadows, Carnival Corp.'s vice president of marketing, said
eLN would provide "a complete end-to-end business for these
agencies."
"The agencies are contributing the marketing, but since we are
handling the bulk of the expense, we think it should be a fee
[rather than a commission percentage]," he said.
ELN has set a target of about 250 agency members in its first
year, and is expecting about 70,000 transactions through the
private-label web sites it plans to create, said Brian Robb,
president of the company and most recently senior vice president of
distribution and information systems integration at Mark. "Agencies
with preferred-supplier relationships [with eLN's brands] are the
first target for this, followed by non-ARC appointed agencies,"
said Robb.
"This gives agents a way to get into e-commerce simply without a
lot of expense," said Meadows.
The program also is designed to lower Carnival and Mark's
marketing acquisition costs while expanding the pair's
distribution.
Meadows said it takes an average of 13 phone calls between an
agent and a cruise-line receptionist to complete a cruise booking.
"When a supplier takes a booking over the Internet rather than the
telephone, there are cost savings that are associated with not
having an actual reservationist answer the phone," he said. "Plus,
this site will bring us to more people and expand our reach."
Cruise analysts took a positive view of the deal following its
announcement. "The real opportunity for cruise operators is
penetrating the uncruised market," said Rob Brookby, an analyst
with Raymond James & Associates of St. Petersburg, Fla. "It
makes strategic sense for cruise lines to expand their distribution
any way they can," he said. "Whatever novel ideas they can come up
with to expand distribution are certainly worthwhile."
Carnival officials said the new company will not affect other
distribution vehicles, including agreements with GDS systems like
Sabre and Worldspan. "In the case of Carnival Cruise Lines, 18% of
our business is [generated through] automation," said Bob
Dickinson, president of Carnival Cruise Lines.
"That means 82% is handled over the phone by a reservationist.
The potential savings from eliminating the telephone is a much
larger savings vs. moving away from the GDS."
Carnival Corp. officials said eLN will incorporate other leisure
travel and travel-related products as the system evolves, although
it remains unclear whether other travel suppliers, particularly
major cruise lines, will opt to offer their inventory through a
system half-owned by cruising's biggest operator. "The intent is to
look for other supplier partners that are complementary with our
inventory," said Robb. "We will have inventory that addresses 90%
of the vacation options out there."
"Our primary focus will be getting travel agents to recognize
the efficacy of the system," said Dickinson. "Once agencies become
comfortable with this, I think other suppliers will eventually come
to us rather than the other way around."
Privately owned Mark Travel, with sales in excess of $1 billion
a year, is considered a leader among tour operators and travel
packagers in terms of Internet and electronic booking technology.
Even some of Mark's competitors, including Fort Lauderdale,
Fla.-based Certified Vacations, contract with Mark's technology
division to handle their CRS and Internet reservations. Last year,
Mark Travel said it was working on a Web-based booking platform for
its preferred agencies; that platform is the basis for eLN, said
John Ische, Mark's executive vice president.