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Billionaire Richard Branson brought in-flight massages to the airline industry and the promise of space travel to civilian tourists. Now he wants to lure a younger generation of passengers to cruise ships.
Branson’s Virgin Cruise line is ordering its first three ships, capable of carrying 4,200 passengers and crew, from Italy’s Fincantieri SpA, with delivery starting in 2020, the magnate announced in Miami Tuesday. Virgin will offer seven-day cruises in the Caribbean, targeting an audience Branson says hasn’t been reached by industry giants like Carnival Corp.
“We know how to create something which will, hopefully, bring millions of people who don’t currently go on cruise ships, who would never dream of going on cruise ships, to give it a try,” Branson said in an interview after the announcement.
Virgin is betting that its brand will attract passengers from the 95-million strong millennial generation — those born in the U.S. between 1980 and 2000. The current cruise passenger is 49 years old and married with income of $114,000, according to the Washington-based Cruise Lines International Association.
“There’s a segment of the market that just isn’t getting served today,” Virgin Cruise President Tom McAlpin said. Companies that try to appeal to all segments of society “are trying to be all things to all people and at the end of the day you aren’t providing anything specific.”
Passengers numbers will top 23 million this year from 22.1 million last year, according to the industry association.
Other companies are already innovating. Industry leader Carnival this month introduced fathom, a line aimed at customers who want to do good while they sail. The first itinerary next year will include a stop in the Dominican Republic where guests can plant trees or teach English before returning to the ship.
Anything that puts a spotlight on cruising is good for the industry, Arnold Donald, chief executive officer of Carnival, the world’s largest cruise operator, said in an interview.
“We’re excited, we love it,” he said of Branson’s entry. “It generates interest in cruising. Our competition is the land-based vacation. If you add up all the berths in all the cruise ships it’s less than 2 percent of the hotel rooms in the world.”
Branson and McAlpin dismissed a lawsuit filed by Colin Veitch, the former head of Norwegian Cruise Line Holdings Ltd., who said his idea to create and finance a new shipping company under the Virgin label was stolen from him, cheating him out of $315 million. The suit “doesn’t have any merit,” both men said.
North America Focus
Virgin’s ship order totals “under $2 billion,” Branson said, declining to give details on how the purchase is being financed. A final contract will be signed with Trieste, Italy- based Fincantieri in the fourth quarter, Virgin said.
The company isn’t currently looking at expanding its operations to China, where other cruise companies have said they see more potential for growth than in the U.S.
“We’re looking at the North American market,” McAlpin said. “This is a big market with a lot of untapped capacity. We’re fishing where the fish are.”
–With assistance from Christopher Palmeri in Los Angeles.
This article was written by Bill Faries from Bloomberg and was legally licensed through the NewsCred publisher network.