The CruiseOne and Dream Vacations franchises are currently owned by World Travel Holdings (WTH). Now, they are the nation’s largest cruise agency and award-winning leisure travel agency. Specifically, CruiseOne/Dream Vacations offer franchises for establishing and operating businesses that sell cruises, vacation packages, and certain other travel-related products and services.
Dream Vacations’ business model consists of over 1,600+ franchise owners. Recognized as the #1 best-rated travel franchise, Dream Vacations allows franchisees the opportunity to offer customers exclusive promotions operating under the right brand name. Dream Vacations franchise is designed to increase brand awareness by spending more than $4 million annually in marketing and promotions on the franchisees’ behalf. With all the web-based technology, franchisees can start their business with the flexibility to work from anywhere.
Contents
Who Owns CruiseOne/ Dream Vacations Franchise?
In 2021, World Travel Holdings announced that it is merging its Cruises Inc. independent contractor and CruiseOne/Dream Vacations franchise business models. Starting in 2022, the company will be operating one franchise unit under the CruiseOne and Dream Vacations brands. WTH offers customers a wide range of vacation options from owned brands and private-label brands.
At the start of 2005, Brad and Jeff Tolkin leveraged their years of experience as operating executives in the travel industry to co-found World Travel Holdings. Since then, WTH has expanded through multiple acquisitions of travel companies. In 2006, WTH more than doubled in size with the acquisition of National Leisure Group (NLG), the largest cruise seller in America. WTH’s CruiseOne franchise business comes from NLG’s expansion in 2003. WTH later launched the travel franchise Dream Vacations in 2016. Franchisees can choose to operate under either CruiseOne or Dream Vacations.
Since 2016, nearly 85% of the franchise owners operate under the Dream Vacations brand, and 100% of all new franchise owners choose to go to market under the Dream Vacations brand.
How is CruiseOne/Dream Vacations Franchise Positioned in the Travel and Hospitality Industry?
The Travel, Hospitality, and Leisure industries intersect with multiple industries, such as Food & Beverage, Hotel, Recreation, and Tourism. As it is both a capital and labor-intensive industry, it relies on investments in fixed assets. This industry generates over $1.6 trillion in economic output, representing 2.8% of GDP.
The travel and hospitality industry has grown tremendously over the last few years as flights have become more affordable and people are willing to spend their money on vacations and travel. Under the COVID-19 pandemic, the industry can expect some changes in consumers’ demand, where people will tend to travel more within the borders than abroad. Cruises are one of the rapidly growing markets within the travel and tourism sector. The largest market for cruises is seniors 65 years or older who have time and disposable income to spend on these types of leisure activities. CruiseOne franchise offers one of the most comprehensive options for customers, which is considered a head start for franchisees operated under the WTH.
CruiseOne and Dream Vacations compete in the Travel and Hospitality Industry against other travel agencies and in-house travel departments such as Cruise Planners, Expedia Cruiseshipcenters, and Itrip Vacations. CruiseOne and Dream Vacations franchises also compete against other franchisees in your territory.
Franchise Cost
Different from other franchisees, the initial amount of franchise fee of CruiseOne and Dream Vacations depends on whether you are a new, intermediate or experienced franchisee with flexible financing. CruiseOne and Dream Vacations respect and value people from various professions. Under the Community Heroes discount program, franchisees are able to get a 20% or 30% discount on the initial franchise fee if they can provide satisfactory proof of service.
| New Franchisee | Intermediate Franchisee | Experienced Franchisee | |
|---|---|---|---|
| Initial Franchise Fee | $10,500 | $3,195 | $495 |
The total amount of investment necessary to begin operating a new franchise is $11,800 to $21,000. If you are an intermediate or experienced franchisee, the total investment necessary ranges from $1,795 to $13,695. These both include the initial franchise fee that must be paid to the franchisor or affiliate.
Once the operations begin, franchisees are expected to pay the company a royalty fee of 1.5%-3% on annual commissionable sales and a travel insurance royalty fee of 3% on annual commissionable sales. The royalty fee on each annual commissionable sale is calculated as follows:
- 1.5% of annual commissionable sales upon which CruiseOne/Dream Vacations receives a commission of 4.9% or less
- 2% of annual commissionable sales upon which CruiseOne/Dream Vacations receives a commission of 5% to 9.99%
- 3% of annual commissionable sales upon which CruiseOne/Dream Vacations receives a commission of 10% or greater
Compared to the average Travel and Hospitality percentage fee, CruiseOne, and Dream Vacations have an absolute advantage. The average industry royalty fee is approximately 5.2%, while CruiseOne and Dream Vacations have the highest at 3%. As the average industry marketing fee requires 2.3% of the commissionable sales, CruiseOne and Dream Vacations fully fund promotions and national advertising.
How Much do CruiseOne/Dream Vacations Franchise Owners Make?
CruiseOne/Dream Vacations do not make any representations about a franchisee’s future financial performance or the past financial performance of company-owned or franchised outlets. However, if you are purchasing an existing CruiseOne/Dream Vacations franchise, the company may provide you with the actual records of that franchise.
Through our analysis of the franchisor income statement, we can guesstimate sales figures from the income statement line item “Franchise Revenue.” Ideally, the line item is Royalty Revenue. Franchise revenue can include franchise fees received.
CruiseOne/Dream Vacations during 2021 saw a revenue decrease of over 22.5% and we can conclude that this sharp decrease was due to the spread of COVID-19 and the fact that fewer people are able to travel domestically or abroad due to symptoms of COVID and financial dilemmas.
2021 CruiseOne/Dream Vacations Sales and Breakeven point:
Royalty fee: 2% of annual commissionable sales
Royalty revenues: $3,485,922
Estimated system-wide franchise sales: $174,299,600
Estimated average franchise revenue: $117,531
| Initial Investment – Midpoint | %Profit Margin Of Average Franchise Sales | Estimated Profits | Time to Recoup Investment |
|---|---|---|---|
| 12,072 | 30% | 35,2559 | 1.34 yeras |
| 12,072 | 40% | 47,012 | 1.25 years |
| 12,072 | 50% | 58,765 | 1.21 years |
According to Glassdoor, our estimated average franchise revenue of $117, 531 is reasonable. Based on the average sales calculated above, at an average of a 40% profit margin, it will take approximately 1.25 years to recoup your investment. I scaled up one year to reflect the time of training and preparation for opening. Usually, the time to recoup investments incorporates roughly a 2-year period to scale up the franchise. However, since franchisees can open up a CruiseOne or Dream Vacations franchise solely online, there is less time and money investment to start the business.
Is this Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for CruiseOne/Dream Vacations franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems of travel agencies.
Under $1 Million Net Sales
- Estimated Selling Price = Net Sales – 0.47
$1 Million – $5 Million Net Sales
- Estimated Selling Price = Net Sales – 0.13
Over $5 Million Net Sales
- Estimated Selling Price = Net Sales – 7.07
When you go to sell a CruiseOne/Dream Vacations franchise based on the median multiple of 0.47 and net sales of $117,531, it would sell for $55,239. This is significantly higher than the midpoint investment of $12,072 and even higher than the highest investment of $21,000. If you have at least 9 stores, the median multiple for net sales between $1 million and $5 million is 0.13, resulting in $1.1 million in franchise sales. Selling these 9 stores would amount to $137,511.
However, only as an owner of multiple (42+) CruiseOne/Dream Vacations franchises, you do have the ability to make a significant profit, enjoying a median multiple of 7.70, with over $5 million in sales. However, this is very unlikely because the more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
How Many CruiseOne/Dream Vacations Units Have Opened and Closed?
The number of franchisees is increasing over the last three years. In 2021, there were 290 agencies opened while 111 terminated, 27 non-renewals, and 58 ceased operations. Failure rate represents franchise unit terminations, non-renewals, and franchises that ceased operations for other reasons in a given year relative to the total number of franchise units. The failure rate for CruiseOne/Dream Vacations is approximately 12.4% in 2021, lower than the average industry failure rate of 15.61%.
The failure rate in 2019 is 8.7% and increased significantly to 14% in 2020 due to the COVID-19 pandemic. As the failure rate decreased and more franchises started to join the brand in 2021, this franchise system proved to be a viable option by looking at the store count.
| Year | Agencies at Start of Year | Agencies Opened | Terminations | Non-Renewals | Reacquired by Franchisor | Ceased Operations – Other Reasons | Agencies at End of Year | |
|---|---|---|---|---|---|---|---|---|
| Franchised | ||||||||
| 2019 | 1,287 | 323 | 64 | 28 | 0 | 38 | 1,480 | |
| 2020 | 1,480 | 215 | 138 | 40 | 0 | 30 | 1,483 | |
| 2021 | 1,483 | 290 | 111 | 27 | 0 | 58 | 1,577 |
CruiseOne, Inc.
Statements of Income,
Years Ended December 31, 2021 and 2020
| 2021 | 2020 | |
|---|---|---|
| REVENUE | ||
| Royalties from travel sales, net | 3,485,992 | 4,497,859 |
| Franchise and other fees | 3,812,755 | 3,478,511 |
| Total revenues | 7,298,747 | 7,976,370 |
| EXPENSES | ||
| Selling, general and administrative | 6,576,342 | 6,393,951 |
| Amortization of intangible assets | 9,580 | 9,581 |
| Depreciation | 152,244 | 221,608 |
| Total expenses | 6,738,166 | 6,625,140 |
| Net income | 560,581 | 1,351,230 |
The net income of CruiseOne/Dream Vacations in 2021 was $560,581. With decreasing revenues and increasing expenses, the CruiseOne/Dream Vacations franchise saw an approximately 58% decrease in net income from 2020 to 2021.
Due to the COVID-19 outbreak, the company has experienced a decline in sales volume from historical levels, which has resulted in declining revenue since 2020. However, the company is preparing for its return after travel restrictions. As many major cruise lines have been gradually and systematically returning ships to service, such that by year-end 2021, all the major cruise lines have resumed operations with at least a subset of their fleets operating revenue-generating cruises. They estimated that they will return to service with full capacity by the third fiscal quarter of 2022.
CruiseOne/Dream Vacations Cash Flows Statements Takeaways
Liquidity is one of the most important measurements of a company’s ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund business operations, operations, and expansion of franchised locations. According to the cash flows statement, CruiseOne/Dream Vacations has a $2.9 million increase in cash and cash equivalents. At the end of the fiscal year, its total cash and cash equivalents amounted to approximately $14 million. Compared to 2020, there was a $3 million increase in cash in 2021.
CruiseOne, Inc.
Statements of Cash Flows
Years Ended December 31, 2021 and 2020
| 2021 | 2020 | ||
|---|---|---|---|
| Cash flows from operating activities: | |||
| Net income | $560,581 | $1,351,230 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||
| Amortization of intangible assets | 9,580 | 9,581 | |
| Depreciation | 152,244 | 221,608 | |
| Allowance for doubtful accounts | 70,956 | 183,398 | |
| Deferred rent | (43,832) | 39,930 | |
| Changes in operating assets and liabilities: | |||
| (Increase) in: | |||
| Accounts receivable | (230,456) | 548,594 | |
| Prepaid expenses and other current assets | 74,064 | (44,528) | |
| Due from World Travel Holdings, Inc. | (314,101) | (1,261,125) | |
| Long-term receivables | (157,271) | 36,679 | |
| Increase (decrease) in: | |||
| Accounts payable | 506,682 | 892,043 | |
| Accrued expenses | 258,085 | (488,932) | |
| Unearned revenue | 541,624 | (887,792) | |
| Customer deposits | 1,697,953 | 42,551 | |
| Net cash provided by operating activities | 3,126,109 | 643,237 | |
| Cash flows from investing activities: | |||
| Acquisition of property and equipment | (296,375) | (70,028) | |
| Cash flows from financing activities: | |||
| Proceeds from promissory note | 65,000 | – | |
| Net increase in cash | 2,894,734 | 573,209 | |
| Cash, beginning of year | 11,324,204 | 10,750,995 | |
| Cash, end of year | 14,218,938 | 11,324,204 | |
Conclusion
Investing in a CruiseOne/Dream Vacations franchise is an interesting opportunity especially post COVID-19 outbreak, as they are positively recovering from the sale losses. The average entry investment of $12,072 is relatively low compared to other industries, and it can be lower if you already are an experienced franchisee. Although the industry can be easily influenced by pandemics and nature, the prospects for growth within the industry are huge. If you have extensive management experience and plan to open multiple CruiseOne/Dream Vacations stores, it is worth evaluating as a franchise, as you are getting way more than you have invested! If you only have the asset and experience to operate only one store, you recoup your investment in only two years!
