FORT LAUDERDALE
-- Expedia Inc. has agreed to buy a stake in CruiseShipCenters, a
Vancouver-based cruise retailer with 100 franchisees and more than
1,500 independent agents in Canada.
The two companies
said that Expedia's investment would help finance
CruiseShipCenters' expansion into the U.S. The amount of the
investment was not disclosed.
"Everything that
we're looking at doing, for the next three years anyway, is really
focusing on growing the U.S. market," Michael Drever, president and
CEO of CruiseShipCenters, said at the Cruise Lines International
Association's Cruise3Sixty conference here. "Expedia gave us a
capital injection in the back end that will enable us to grow much
more quickly than we would have done organically."
CruiseShipCenters
said it currently books 20% of all cruises sold in Canada and has
an annual revenue growth rate of 30%. Its U.S. penetration is
relatively small. Only 5% of its cruises are sold to customers in
the U.S.
"We are excited
about the offline distribution channel," said Mark Kammerer, vice
president of cruise for Expedia. "It's good to find a partner who
has shown how to make that successful. Rather than do it ourselves,
we like to pick the best in class and either acquire them or make
an investment in them. We see [CruiseShipCenters] as a perfect
place to go and make their expansion plans a reality into the rest
of North America."
The move prompted
several travel agents at the conference to declare that it proved
Expedia's online sales strategy did not work for selling
cruises.
Not so, said
Kammerer.
"This lets us
support people who want to buy travel in whatever way makes sense
for them," he said. "Do we still believe in selling cruises online?
Absolutely, yes. There is a range of customers who are looking for
all different types of experiences around vacation purchases and
planning.
"There is a group
of people that want a more fully assisted, more high-touch
experience and relationship with a person," Kammerer added. "We
have the online [business] that we're very good at, and we had the
opportunity to invest in a company that is very good at the
higher-touch side of it."
Drever said that
CruiseShipCenters' agents would benefit from Expedia's strong
supplier relations and high volume with noncruise suppliers, such
as car rental companies, hotels, vacation properties and tour
companies.
"We want to
primarily focus on cruise, but our customers want to acquire those
products," Drever said.
"We will
interface the noncruise product and technology into the
CruiseShipCenters system. We will effectively have the purchasing
power and technology that Expedia has in a high-tech channel, and
we would be able to offer the same competitive advantage in a
high-touch environment, the retail and home-based distribution
channel."
Drever and
Kammerer both said that they were not sure how the technology
interface would happen, nor was there any indication that the
CruiseShipCenters or Expedia names would be marketed on the others'
Web sites or literature.
CruiseShipCenters
will open its first U.S. location in Bellevue, Wash., which will
serve as a host agency for home-based agents and independent
contractors throughout the U.S. and also act as a regional
corporate support center for the company's planned franchising
effort.
Kammerer also
noted Expedia's interest in the growing home-based agency business
and the upsurge in luxury cruise sales, a category that
particularly benefits from high-touch, personalized, travel agent
relationships.
"Online and
offline gets a little overplayed," said Kammerer. "What we want is
to be competitive in the products and services we offer."
To contact reporter Johanna Jainchill, send e-mail to [email protected].