As a seasoned cruiser at just 24 years old, Julia Wilcox is used to having her inbox flooded with promotional emails from cruise lines courting loyal customers. But Wilcox, who vlogs her cruise experiences on TikToksaid one cruise line that takes a more idiosyncratic approach to its marketing: Two to thrice a month, she receives thick, shiny paper envelopes within the mail from Viking Cruises, the luxurious cruise line with which she took a 10-day voyage in January 2023. It’s the just one Cruise company that sends paper mail – and does so consistently.
“I get so much paper mail from Viking. I think that’s crazy,” she said Assets. “You could send me on a free cruise for the amount of paper and things you send me.”
Although Viking’s marketing strategy is anomalous, the logic behind Viking’s insistence on sending snail mail makes more sense after Wilcox, a Generation Z TikToker, admitted that she isn’t the corporate’s target market. In fact, she was 4 many years younger than the common cruise guest age of 60 or 70. That’s exactly how Viking wants it.
“They are the richest group we have,” Viking CEO Torstein Hagen said on CNBC on May 1 Squawk on the Street Interview. “You have the money; You have the time.”
Hagen, who at 81 surpasses his goal demographic of baby boomers, tailored the cruise to the tastes of the older demographic 70% of the country’s disposable income. No children under 18 are allowed on board and there are not any casinos. Instead, the Viking line of 92 ships sailing all seven continents and employing 10,000 people offers walking tours of European cities and cheese tastings.
“It’s a pretty quiet environment for people her age,” Hagen said, “and not for curious people who want to visit destinations.” [who want] Doing water slides and things like that.”
Hagen’s strategy has definitely worked to date. Viking, with a Valuation of $10.4 billion, raised $1.5 billion in its IPO on May 1, essentially the most of any company this yr. Pro on SEC filing Compared to last month, Viking reported 14.4% growth from 2015 to 2023, the most important jump of any luxury river or ocean cruise during that period.
“We have a very, very clear focus, and that is reflected in all of our customer reviews, the rewards we receive, etc.,” Hagen told CNBC. “This means we are not as big as the others, but we are definitely more attractive to consumers.”
Viking didn’t answer AssetsPlease comment.
The precision and analytical approach Hagen brings to the corporate mirrors his own initial pursuit of physics He graduated from the Norwegian Institute of Technology before coming to the United States and earning his MBA from Harvard. Originally from outside Oslo, the Norwegian developed his business intuition through failure before success. As CEO of the Royal Viking cruise line within the Nineteen Eighties, Hagen arranged a $240 million management buyout that fell through when a competitor unexpectedly bought the corporate. He was soon pushed out of the role.
Hagen, who runs the corporate along with daughter Karine Hagen, founded Viking in 1997 on the age of 54. He viewed it as a modest undertaking, consisting of “two people with two cell phones and four riverboats,” in accordance with the statement the corporate prospectus. From its maiden voyage, Viking’s goal was: in Hagen’s wordsto be a cruise for pondering people, not drinking people.
The river
Viking has benefited from opportune timing for the cruise industry, particularly the recovery from pandemic lockdowns that left affluent vacationers on the lookout for a break. Patrick Scholes, managing director of residential and leisure equity research at Truist Securities, is optimistic in regards to the way forward for the industry as a consequence of high demand.
“People want a vacation,” he said Assets. “They’re looking for something different that they hadn’t done in the first two or three years of the COVID crisis, which is on a cruise ship.”
Cruises gained a repute through the pandemic due to their enclosed spaces, which increased the chance of infection, sometimes resulting in boats early docking. Even Viking took successful after that 100 passengers battled norovirus on a cruise in June 2023. Companies embellished their deals to win back customers by offering discounts and promising private beaches. While restaurants and hotel resorts were slow to get well from the pandemic Labor shortageThe presence of cruise ships on foreign waters meant that they didn’t should adhere to US wages and needed to employ loads of staff, mostly foreign employees. During Wilcox’s Viking cruise, she marveled on the regular turndown and cleansing services.
“Part of this value proposition is the high, consistent level of staff and service on a cruise ship,” said Scholes. “You were in a restaurant, you were in a hotel — staffing is an issue, a challenge post-COVID. And cruise ships didn’t have that problem.”
Bob Levinstein, CEO of travel agency CruiseCompete, said Assets Viking specifically lives as much as its value proposition and combines food, service, excursions and communication in a single reliable product.
“You really nailed it,” he said.
Further growth for the corporate is on the best way. After surviving the pandemic, Viking has 24 ships on order, with an option for an additional dozen, and ambitious plans to expand its Chinese customer base to 150,000 passengers by 2025. Viking’s resilience during a difficult time for the industry made the choice to go public a no brainer for Hagen.
“The private equity firms have to create liquidity from their investments at some point, and they have been doing that for eight years now, so it’s been as good a time as any,” Hagen said Assets Last month. “During the pandemic it was not easy and I think now it was natural to come out of it and achieve good results.”
The ebb
But the tide is popping, and the economic situation driving the cruise business isn’t any exception. As cruise corporations meet growing demand by adding more ships to service, corporations’ promotional packages and pricing power will weaken, Scholes predicted.
“This is simply economic capitalism,” he said. “In 2029 we will see a lot of new ships and that will have to fill a lot of cabins. It will be difficult to increase prices.”
There’s a reason for Viking to maintain a cool head because the industry matures, Levinstein argued. The company’s $1.5 billion IPO was timely, he said, however it probably won’t make waves for Viking’s future. It’s probably only a way for owners to remain liquid and pad their wallets.
“That’s only about four of the ocean-going vessels – maybe a little less if prices have increased since their last deal,” he said. “But it’s not groundbreaking money.”
Even the cruise’s modest but established amenities aren’t foolproof. “The food was definitely lacking,” Wilcox said of her time aboard a Viking, which resulted within the “worst” room service hot dog she’d “ever tasted.” She heard from other cruise ships that the cruise’s specialty menus supposedly modified every night, however the food offered had been the identical for a decade.
The blip in Viking’s repute for rock-solid amenities could also be a blow to the “baked-out” model that Hagen touts as the explanation for the cruise line’s success, however the CEO stays clear in regards to the company’s philosophy of streamlining and steadfast service.
“In my opinion, you know what happens when you try to do everything for everyone?” he said. “You’re not doing anything well.”
