Richard Branson Set To Disrupt Cruise Industry With Virgin Voyages

Richard Branson is targeting the high seas, from Virgin Atlantic in the skies to Virgin Galactic in space.

The business tycoon who founded the Virgin Group, the company behind dozens of Virgin-branded businesses, aims to disrupt the $ 100 billion cruise industry – at a time when the big established operators still don’t know how to run Covid.

Virgin Voyages, the first cruise line to launch since Azamara in 2009, opened flights in the UK last summer. It was slated to launch last year in the United States before a pandemic broke out. Virgin Voyages’ first flight to the United States from Miami is scheduled for October 6.

Branson said that the fact that he never liked cruises actually prompted him to start Virgin Voyages. “Did you know that I was never interested in cruise ships, and I suspect that about 90% of the people who listen are not very interested in cruise ships,” he told CNBC. “This is the reason that I have opened many businesses in the past 50 years.”

Despite the challenges facing travel and hospitality operators still recovering from the pandemic, Branson remains confident that his cruise line will be different from the rest. “We want to try to attract as many people as possible who would never dream of going on a cruise ship,” he said. “It will be a fun ship for adults. Children are not allowed on board and I think people are having a great time. “

Private equity firm Bain Capital is Virgin Voyages’ largest investor. Sources familiar with the agreement said the total investment, mostly from Bain, in the cruise line and its three ships is around $ 3 billion, with each ship worth around $ 800 million.

“We have an amazing history with stocks and I think a lot of people will want to get involved. I think public markets are a really viable option for us, ”Ryan Cotton, head of consumer and retail sales at Bain, told CNBC. … “In a way, this is pure new ship play and you don’t have to buy the entire legacy fleet.”

Virgin Voyages is trying to create a narrative that its ships will be cooler and cooler than those currently on the market. Industry experts said the challenge is to figure out how to separate from big brands in order to attract younger customers without alienating cruise enthusiasts.

“We need people with young souls,” Branson said. “So I don’t want to exclude myself from getting on board, but we want it to be a fun ship. We want people of all ages to come on board and have a great time. “

Cruise lines have succeeded in bringing energetic millennials on board in recent years, but this remains a long-standing problem. According to Morgan Stanley, the average age of cruise passengers in the United States has dropped and is now 49 years old. The International Cruise Lines Association, an industry trade group, said the median age is approaching 47.

One of the ways Carnival and Royal Caribbean have been able to attract young people to book cruises is by offering shorter cruises than a full week on the ship.

After touring all 16 decks of the Virgin Voyages Scarlet Lady at the Port of Miami Marina this week, I noticed the ship’s emphasis on health and entertainment, including a nightclub cabaret night out.

One of the suites contained a fully stocked cocktail bar and turntable. On the terrace adjacent to each room, there were two sun loungers and a bright red hammock in which guests could relax.

Like Royal Caribbean’s Oasis of the Seas and Celebrity Edge, Virgin Voyages has invested heavily in fitness, from bicycles and yoga to an upper deck boxing ring.

Some of the travel agencies the company has taken on a tour of the ship seem like gimmicks but are curious, like the tattoo bar where guests can get permanent and temporary stamps.

However, when Branson and Virgin Voyages president Tom McAlpin were asked about the reservation, both were hesitant to give a clear picture of whether their first October trip to Miami was sold out.

“People know who Virgin is. But they haven’t seen Virgin Voyages. And we just had a successful season in the UK. Great rave reviews, ”McAlpin said on CNBC’s Power Lunch this week.

At the world’s largest cruise conference Seatrade in Miami, the CEOs of the two largest cruise lines said on Tuesday that they were not at all threatened by Branson’s latest adventure.

“It’s important to look at the industry and say that new players benefit us because they attract attention,” Royal Caribbean CEO Richard Fein told CNBC.

Fein remembered Disney’s foray into the cruise industry years ago. He said that he was then asked, “This is such a powerful brand, won’t it attract customers?” Then he answered about Disney, and now about Virgin Voyages: “Absolutely not.” He recalled that Disney added “2% to our industry’s supply, and they added 10% to demand.”

Carnival CEO Arnold Donald gave Branson advice: “Listen to your potential guests and listen to the travel agency professionals you work with.”

Experts believe the upcoming numbers and booking data will ultimately tell Wall Street whether Virgin Voyages can smoothly transition into a publicly traded stock.

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