Travel Franchise vs Host Agency: Which is Right for You?

Written By: Michelle Fee, CEO & Founder – Cruise Planners

 

 

As a travel advisor, clients turn to you to take their vacations to the next level. But where do you turn when you’re looking to take your business to the next level?

 

For travel agents looking to maximize sales and earnings, partnering with a larger network can provide several benefits, including increased buying power and business support.

 

In the world of travel, there are two traditional options for forming this type of partnership: a franchise or a host agency.

 

Both franchises and hosts provide unique benefits to help travel advisors grow successful businesses. If you are an independent advisor, you should strongly consider aligning with a franchise or host. If you are already affiliated with a larger organization, it is a good idea to evaluate the tools and support you currently receive to see if your franchise or host is truly helping your business reach its full potential.

 

Understanding the differences between a franchise and a host agency will allow you to determine the best fit for you.

 

What is a Travel Agency Franchise?

When you purchase a franchise, you are essentially buying a business in a box. Don’t be confused, you own and operate your own travel business, but you now have the power of proven systems and an established brand behind you. The franchisor has already set up many pillars of the business, like operational procedures, marketing plans and a website. This allows you to ramp up the business more quickly, because much of the leg work has already been done for you.

 

A franchise will also provide ongoing support and resources to help you grow a successful business. At Cruise Planners for example, we have large in-house marketing and technology teams that consistently develop turnkey campaigns and tools that leave our agents more time to do what they do best: sell travel. All our advisors also get personalized business development coaching to help them focus on their specific business needs.

 

A large franchise network like Cruise Planners has well-established relationships with all major travel suppliers. As part of a franchise, you will benefit from the entire network’s buying power. This will give you access to lower travel rates and the potential to earn higher commissions.

 

What is a Host Agency?

A host agency is simply a membership organization. It is a collective group of independently functioning travel advisors who operate under the same umbrella. As part of the host, you can tap into the collective buying power of the group to access better rates from travel providers compared to a completely independent operator.

 

Unlike with a franchise, you will have to establish much of the foundation of the business on your own. This could include purchasing a CRM tool, developing and maintaining a website and designing marketing materials. Your access to training, marketing and support will be minimal if it is provided at all.

 

Comparing Costs: Consider Overall Earning Potential

One of the first comparisons people will make when considering a franchise or host is the cost. While initial costs are certainly important, perhaps it is more important to evaluate your overall earning potential.

 

For those that are new to the travel industry, a franchise will typically have a higher upfront cost. However, for experienced travel advisors with existing books of business, that fee can be greatly reduced and is comparable, and in many cases less, than that of a host agency. At Cruise Planners for example, well-established agents can join for as little as $695.

 

Plus, with a franchise, the built-in benefits included in the initial fee are immense.

 

Cruise Planners initial franchise fee covers nearly everything needed to establish and grow your business. This includes a proprietary, all-in-one CRM and booking engine, a customizable website, agent and consumer mobile apps, an email automation tool, comprehensive marketing campaigns, social media management, customer segmentation data, personalized business development support and ongoing training.

 

Because so much is included, you can spend less time and money sourcing and maintaining all these things yourself. This greatly reduces administrative tasks and allows you more time to focus on selling travel and supporting your customers. And ultimately, this can lead to more profits.

 

By comparison, host agencies typically have low upfront costs, and while this can be appealing at first, ultimately you get what you pay for. Technology tools, marketing programs and business development support are limited, if available at all, and establishing each one of these pillars on your own would be incredibly time consuming and very costly.

 

When comparing the cost of a franchise versus a host, it is important to look beyond just the initial fee. You should also consider the cost of everything needed to establish and maintain your businesses. We’ve created a worksheet to help you track this. Use the worksheet to evaluate what is and is not included with your current franchise or host and determine the true cost of running your business.

 

Commissions, Fees and the Value of Time

In addition to upfront costs, it is also important to consider commissions and fees. Commissions are the money you earn from a travel provider each time you make a sale. Typically, you will then pay a fee to the franchise or host. This may be a flat royalty fee based on the total value of the sale you make, or it could be a portion of the commission you earn.

 

Each franchise or host will have a different commission structure, and it may even vary depending on the type of travel sold. While it can be tempting to look at the commission split only on face value, like the initial cost, you should also consider how the commission split will impact your earning potential in the long run.

 

Cruise Planners franchise owner Rodney George started with a host agency before coming to Cruise Planners, and he recalls how the perceived cost savings of a host ultimately weren’t worth it.

 

“I came from a host, and I gave up a percentage of my income to come to Cruise Planners,” George said. “But my income is five times greater now than it was four years ago, just because I don’t have to go out and re-invent all the stuff that just happens automatically with Cruise Planners. The marketing, the technology, the support – all that stuff is just done.”

 

That’s one of the biggest benefits of a franchise. Because so many tools and resources are provided, you can spend more time focusing on selling.

 

Each hour you spend doing something other than selling is taking away potential profits from your business, and that cost can add up quicker than you realize.

 

A great franchise or host will provide you the tools and resources to reduce your time spent on administrative tasks so you can focus on selling and make more money.

 

We’ve created a worksheet to help you better understand how you spend your time each week and the actual cost of every activity to your business.

 

You may be surprised by how much time (and money) you might be wasting.

 

The Importance of Proven Systems and Brand Recognition

In addition to the many programs and support, one of the biggest benefits of a franchise is that you are buying into an established brand with a proven model of success.

 

A company such as Cruise Planners has spent more than 26 years refining its systems and tools to ensure its travel advisors are successful. This long history, combined with an American Express Travel affiliation, provides tremendous brand recognition and trust, which are critical to growing your business. Because you don’t have to build a brand yourself, you are able to get to market quicker and spend more time focused on selling.

 

With a host, you may get some increased buying power compared to an independent operator, but you are not getting the proven systems and the brand equity that come with a franchise. Instead, you will have to work to build your own brand, a task that can be incredibly time consuming and costly for a small business owner.

 

Franchise or Host: Finding the Right Fit

Both franchises and hosts offer benefits to independent travel advisors looking to grow their businesses, and there are several excellent franchise and host agency options. Whether you are an independent agent or already affiliated with a franchise or host, it is important to evaluate the support, programs, marketing, technology and tools currently available to you to ensure you have everything you need to maximize your earnings.

 

Want to learn more about Cruise Planners and how we help take travel businesses to the next level? Visit www.cruiseplannersfranchise.com and see if you qualify for our reduced travel agent rate.