Cruise veteran Julia Wilcox, 24, is used to her inbox being flooded with promotional emails from cruise lines recruiting repeat customers. But Wilcox, who vlogs her cruise experiences on TikToksaid one cruise line takes a more distinctive approach to its marketing: Two or three times a month, she receives thick, glossy paper envelopes in the mail from Viking Cruises, the luxury cruise line with which she took a 10-day trip. in January 2023. They are the only cruise line that sends her paper mail, and they do it all the time.
“I get so much paper mail from Viking. I think it’s crazy,” she said. Luck. “You could send me on a free cruise for the amount of paper and stuff you send me.”
While Viking’s marketing strategy is anomalous, the logic behind Viking’s insistence on sending snail mail makes more sense after Wilcox, a Gen Z TikToker, admitted that she is not the company’s target audience. In fact, she was four decades younger than the average age of cruise guests, which was 60 or 70 years old. This is exactly what Viking wants.
“They are the richest group we have,” Viking CEO Thorstein Hagen said in a May 1 interview with CNBC. Squawk on the Street interview. “They have money; They have time.”
Hagen, who at 81 surpasses his target audience of baby boomers, has tailored the cruise to the tastes of older adults who adhere to 70% of the country’s disposable income. Children under 18 are not allowed on board and there is no casino. Instead, the Viking line of 92 ships traveling to all seven continents and employing 10,000 employees offers walking tours of European cities and cheese tastings.
“It’s a pretty relaxed environment for people their age,” Hagen said, “and for curious people who want to go to a destination rather than [who want] ride water slides and things like that.”
Hagen’s strategy has certainly worked so far. Viking, s. Estimate: $10.4 billion., raised $1.5 billion in an initial public offering on May 1, the highest of any company this year. In a year filing documents with the SEC Compared to last month, Viking saw 14.4% growth from 2015 to 2023, the biggest jump among luxury river or ocean cruises during that period.
“We have a very, very clear goal, and that’s reflected in all of our customer ratings, the rewards that we receive, and so on,” Hagen told CNBC. “It doesn’t make us as big as others, but it certainly makes us more attractive to the consumer.”
Viking didn’t answer Luckrequest for comments.
The precision and analytical approach that Hagen brings to the company reflects his elementary physics lesson from the Norwegian Institute of Technology before coming to the US and earning an MBA from Harvard. The Norwegian, originally from outside Oslo, developed his business intuition first from failure and then from success. As CEO of the Royal Viking cruise line in the 1980s, Hagen orchestrated a $240 million management buyout that fell through when a competitor unexpectedly bought the company. Soon he was removed from role.
Hagen, who runs the company with daughter Karin Hagen, founded Viking in 1997 when he was 54 years old. According to Hagen, he considered it a modest operation consisting of “two guys with two cell phones and four riverboats.” company prospectus. The purpose of the Viking during its maiden voyage was: according to Hagento be a thinking man’s cruise rather than a drinker’s cruise.
Flow
Viking has benefited from good timing for the cruise industry, namely its recovery from pandemic restrictions that left wealthy vacationers yearning for an indulgent respite. Patrick Scholes, managing director of lodging and leisure research at Truist Securities, is optimistic about the future of the industry due to such strong demand.
“People want a vacation,” he said. Luck. “They’re looking for something new that they didn’t do during the first two to three years of COVID, which certainly happened on a cruise ship.”
Cruises have gained a good reputation during the pandemic because their enclosed spaces, which encourage the spread of contagious diseases, have sometimes left boats early connection. Even the Viking took a hit after 100 passengers battled norovirus while on a June 2023 cruise. Companies have made concessions to win back customers, offering discounts and promises of private beaches. Although restaurants and resorts have been slow to recover from the pandemic due to labor shortageThe presence of cruise ships in foreign waters meant there was no need to comply with U.S. wages or employ a sufficient workforce of mostly foreign workers. During Wilcox’s cruise on the Viking, she admired the constant and frequent turndown service and cleaning.
“The value proposition is a high and consistent level of staffing and service on a cruise ship,” Scholes said. “You’ve been in a restaurant, you’ve been in a hotel — staffing is a problem, it’s a challenge post-COVID. And the cruise lines didn’t have that problem.”
Bob Levinstein, CEO of the travel agency CruiseCompete, spoke about this. Luck Viking especially lives up to its promises by turning food, service, excursions and communication into a reliable product.
“They really thought everything through,” he said.
The company expects further growth. Having survived the pandemic, Viking has 24 ships on order, an option for a dozen more, and ambitious plans expand its customer base in China to 150,000 passengers by 2025. Viking’s resilience during a difficult time for the industry made the decision to go public an easy one for Hagen.
“Private equity firms at some point have to create liquidity through their investments, and they’ve been in business for eight years—so this has been as good a time as any,” Hagen said. Luck last month. “It wasn’t easy during the pandemic and I think now having come out of it and performing well, it was a natural thing to do.”
Low tide
But the situation is changing, and the economic conditions supporting the cruise business are no exception. As cruise lines meet rising demand by introducing more ships, Scholes predicts that the companies’ promotional packages and pricing power will weaken.
“It’s just economic capitalism,” he said. “In 2029 we will see a lot of new ships and we will have to fill a lot of cabins. It will be difficult to raise prices.”
Viking has a reason to remain level-headed as the industry evolves, Levinstein argues. The company’s $1.5 billion IPO was timely but likely won’t impact Viking’s future, he said. This is likely just a way for owners to stay liquid and replenish their wallets.
“It’s only four ocean-going ships, maybe a little less if prices have gone up since they did the last deal,” he said. “But it’s not a game changer.”
Cruise’s modest but established amenities aren’t foolproof either. “The food was definitely a bust,” Wilcox said of her stay aboard the Viking, which resulted in her receiving the “worst” room service hot dog she “ever had.” She had heard from other cruisers that the cruise’s signature menus promised to change every night, but the dishes offered remained the same for ten years.
The erosion of Viking’s reputation as a reliable service provider may be a blow to the cookie-cutter model that Hagen touts as the reason for the cruise line’s success, but the CEO remains clear about the company’s philosophy: a lean, unwavering approach. service.
“I think the moment you try to do everything for everyone, you know what happens?” He said. “You’re not doing anything well.”