MSC To Be Third Biggest Luxury Player

2027 Luxury Market Breakdown

With MSC Cruises entering the luxury market with dedicated 1,000-guest ships, the family-owned company will be the third biggest luxury operator by 2027, according to Cruise Industry News estimates.

Viking Ocean will control most of the market pie, with 18 ships and an estimated market share of 35.7 per cent based on passenger capacity.

Silversea, with an aggressive newbuilding program and a new owner in Royal Caribbean Cruises, will be the second largest luxury line, with 12 ships and 13 per cent of the market come 2027, based on the existing cruise ship orderbook.

MSC Funnel

MSC Cruises is next, as the Italian brand will have four 64,000-ton luxury ships, 4,000 berths and just under 10 per cent of the luxury market, not including the company’s Yacht Club berths on its quickly-expanding fleet of megaships.

Crystal and Seabourn round out the top five, as both are expanding into the expedition market with new ships and Crystal has also committed to a new class of larger ocean-going vessels.

How will Virgin Voyages navigate adults-only cruising?

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Built to carry more than 2,700 passengers at double occupancy, Virgin Voyages ships will be the largest that won’t cater to families.

The line said last week that it won’t book passengers under age 18. Virgin Voyages is due to launch its first ship in 2020.

“We have seen it work successfully with Viking Ocean’s 18-plus policy,” said Vicky Garcia, COO of Cruise Planners. “Also, on the land side, there are many adults-only resort models that work well when targeted so that the clients know what to expect.”

Most cruise lines that sail with children have an area of the ship that is adults-only, such as the Solarium on Royal Caribbean International’s largest ships, the Sanctuary on Princess Cruises and the Serenity areas on Carnival Cruise Line.

“Virgin Voyages is looking to attract those who probably are averse to cruising because of their impression that cruising is too focused on kids and families, with water slides, rock climbing and such,” Garcia said.

While Virgin could be going after a “party-hearty” demographic, several mainstream cruise lines fill that niche already, especially in the short-cruise segment.

Virgin’s plan calls for seven-day Caribbean cruises from Miami on its first ship.

Some expect Virgin to be aimed at the more sophisticated and lucrative end of the singles/couples continuum.

“I’m foreseeing a very South Beach-style vibe that will attract new-to-cruise passengers,” Garcia said. “It’s hard to know exactly what other vacations their target is currently aimed at, but the brand’s focus on the yacht-like design is unique and super sexy.”

The first renderings of the Virgin ships’ exterior design demonstrated some of Branson’s typical flair.

The ship’s colours will be silver-grey with red accents, including a red funnel. The aft below the promenade deck will be red with the familiar Virgin logo in large white letters centred in the middle.

Virgin also unveiled an image specific to Virgin Voyages: a sexy mermaid with blonde hair and a red tail trailing a flowing Virgin banner in one hand. The mermaid will appear at a modest size on the side of the ship’s bow in line with the bridge.

Virgin said the mermaid was inspired by figureheads on historical vessels and was designed by the London-based artist Toby Tinsley.

The overall shape of the vessel shares some angles and features with recent Fincantieri designs, such as MSC Cruises’ upcoming MSC Seaside and Norwegian Cruise Line’s Project Leonardo ships.

Renderings show a broad promenade at the aft contrasting with a slim tower of upper decks and a bow with a strong vertical aspect. Virgin said that 86% of all cabins will feature a balcony, and 93% will offer an ocean view.

Virgin has begun accepting $500 refundable deposits that will enrol prospective passengers in a presale that takes place before Virgin Voyages goes on sale to the public.

Viking looks to ocean vessels for new growth opportunities

AMSTERDAM — As it prepares to launch its first ocean vessel, the 930-passenger Viking Star, in April, Viking Cruises has embraced a new strategy intended to split its growth more evenly between river and ocean cruising.

At a news conference aboard the Viking Skirnir, one of 12 new river vessels that Viking dedicated here and in Rostock, Germany, on March 24, the company’s chairman, Torstein Hagen, said Viking planned to build six new river cruise ships for 2016.

That’s half the total delivered this year and a third of the record 18 ships dedicated en masse in 2013.

Hagen acknowledged that growth in the river cruise business has been slowing slightly, but he said the company’s total growth would not slow, because the new ocean cruise ships will be coming on line.

“We’re making space for some of our ocean cruisers,” Hagen said. “We want to make sure that’s at least as great a success as the rivers.”

The shift comes against a backdrop of weaker-than-expected sales of European river cruises in 2015. Hagen said river cruise bookings to date this year have been running about 10% ahead of last year, which he termed “a little bit slower than we had expected.”

Alluding to the impact on U.S. vacationers of the viral outbreak in West Africa and a terrorist incident in the French capital, Hagen said, “I think [slower growth] relates to Ebola, Paris, stuff like that.”

Another factor more specific to Viking is reduced demand for its cruises in Russia. Tony Hofmann, Viking’s senior vice president of operations, said that bookings were off about 50% for the line’s five Russian ships and one Ukrainian vessel.

“We’re now in an extremely solid financial position. We have money coming out of our ears.” — Viking CEO Tor Hagen

As a result, two Russian ships and the Ukrainian ship have been laid up, although Hagen said the staff remains on payroll.

“It will come back, I’m sure,” he said of Russian river cruising.

Until the slowdown began, Hagen said, Viking had posted overall growth of more than 30% a year for the past five years. Turnover, a European term for gross revenue, will be about $2 billion this year, he said.

Part of that will be derived from the new ocean cruise side of the business. Hagen said Viking planned to take delivery of Viking Star by March 29 and run a 10-day shakedown cruise in early April.

Hagen said that within three months of its 2013 announcement, the ship was 80% booked for the inventory that was put on sale, and it is now 85% booked for 2015. He said that in 2016, when at least one and possibly two more ocean ships will be delivered, the Viking Ocean is 49% booked.

The river cruise expansion, Hagen said, has left Viking in a good position to finance its entry into the ocean segment, which is considered to have high barriers to entry by many analysts.

“We’ve been very fortunate,” Hagen said. “We’ve had tough times along the way. We’re now in an extremely solid financial position. We have money coming out of our ears.”

The 47,000-gross-ton Viking Star, being built by Italy’s Fincantieri, has been estimated to cost about $300 million, although Viking hasn’t publicized the price. Hagen said other aspects of getting into the ocean side of the business have been easier for Viking because it already has a purchasing department, a sales operation, food and beverage and other functions.

“It’s a piece of cake,” Hagen said.

So far this year, Viking has hired about 1,200 ship employees, including 650 for the 12 new river ships and 550 for the Viking Star. They all go through a three-week training program before starting work on the ships.

At a celebration banquet after dedicating the newest river vessels in Amsterdam, Hagen suggested that his dream for the ocean cruise side of the business included at least 10 ships.

He was given a commemorative game board by Bernard Meyer, managing partner of Germany’s Meyer Werft shipyards, where Viking builds its river cruise vessels, that included slots for 100 ships, a number Hagen had laid out several years ago as a “nice” goal for his river fleet.

In accepting the board, Hagen said he had a vision for the ocean cruise business with a number that “ends with a zero, but not two zeros. It wouldn’t be surprising if we see 10 of these someday,” he said.

As Viking eases into the ocean business, its strategy calls for continued rapid growth but spread over a larger base than its river cruise business, which is largely concentrated in Europe.

“Our rate of growth is running at 35% per year, and you don’t have very many companies that accomplish that,” Hagen said at the banquet.

Viking recently announced it plans to enter the river cruise market in the U.S. with six ships built for the Mississippi River. He said he did not yet have a contract for the construction of the ships, which will be built in a yard in the U.S., but hoped to start operations toward the end of 2017.

Viking has already started running ads on TV and elsewhere promoting its ocean cruise business, and one question is how much the river cruise market will feel the effects of Viking’s switch in emphasis.

Hagen said the company has spent upwards of $600 million since 2001, when it began marketing in the U.S., all of it on river cruise promotion.

“We are not surprised river cruising is growing so fast,” Hagen said at the Viking Skirnir press conference. “With normal modesty, we are causing it to grow.”

Viking’s brand awareness is high, he said, fed by a successful sponsorship of the PBS hit series “Downton Abbey.”

Now it may be ocean cruising’s turn in the spotlight. Hagen said the mayor of Bergen, Norway, has invited 20,000 people to the Viking Star naming ceremony in May.

The decision to build only six river ships next year, he said, “is a little bit related to our entry into ocean ships. We’re now giving people a choice. And we want to make sure we have excess demand.”

But Hagen also noted that Viking retains options with Meyer’s shipyard to build an additional 18 European river ships.

“There comes a time when it will ease off. No doubt about it,” Hagen said. “But we won’t lead the ease-off, I can assure you.”