Veteran cruise participant Julia Wilcox, at just 24 years old, is accustomed to having her inbox flooded with promotional emails from cruise lines courting loyal customers. But Wilcox, who blogs about her cruise experiences On TikToksaid one cruise line takes a more personal approach to its marketing: Two or three times a month, she will receive thick, shiny paper envelopes in the mail from Viking Cruises, the luxury cruise line with which she took a 10-day cruise in January 2023. It's the cruise company. The only Navy sends her paper mail, and she does it constantly.
“I get a lot of paper letters from Viking. I'm like, 'This is crazy,'” she said. luck. “You can send me on a free cruise for the amount of paper and stuff you send me.”
Although its marketing strategy is offbeat, the logic behind Viking's insistence on sending snail mail makes more sense after Wilcox, a Gen Z TikToker, admitted she's not the company's target audience. In fact, she was four decades younger than the average age of cruise guests, which is 60 or 70 years old. This is the way the Vikings want it.
“They are the richest group we have,” Torsten Hagen, Viking’s CEO, said in a May 1 CNBC interview. Meet the scream in the street. “They have money. They have time.
Hagen, who is 81 and outgrows his target audience of baby boomers, designed the cruise to suit the tastes of an older demographic that carries… 70% of the country's disposable income. Children under 18 are not allowed, and there are no casinos on board. Alternatively, the 92-ship Viking Line – which travels to all seven continents and employs a crew of 10,000 – offers walking tours of European cities and cheese tastings.
“It's a pretty quiet environment for people their age, for people who are curious and want to go to certain destinations, not (who want to) go to water slides and stuff like that,” Hagen said.
Hagen's strategy has certainly worked so far. Viking, with A Value: $10.4 billion, raised $1.5 billion in its initial public offering on May 1, the highest amount ever for any company this year. for every SEC filing As of last month, Viking had seen growth of 14.4% from 2015 to 2023, the largest jump of any luxury river or ocean cruise during that period.
“We have a very clear focus, and that's reflected in all of our customer reviews, the rewards we get, etc.,” Hagen told CNBC. “It doesn't make us as big as others, but it certainly makes us more attractive to the consumer.”
The Vikings did not respond luckRequest for comment.
The rigor and analytical approach Hagen brings to the company reflects his style The initial pursuit of physics from the Norwegian Institute of Technology before coming to the United States and earning an MBA from Harvard University. Originally from outside Oslo, the Norwegian has developed his business instincts through failure before success. As CEO of the Royal Viking cruise line in the 1980s, Hagen arranged a $240 million management buyout, which fell through when a competitor surprisingly bought the company. It was close Kicked out of the role.
Hagen, who runs the company alongside his daughter Karen Hagen, founded Viking in 1997 when he was 54 years old. He considered it a modest project consisting of “two guys with two cell phones and four river ships,” according to Hagen. Company prospectus. Since its maiden voyage, Viking's goal has been, As Hagen put itIt should be a cruise for a thinking person, not a trip for someone who drinks alcohol.
the flow
Viking has benefited from the cruise industry's good timing, namely its recovery from pandemic lockdowns that left wealthy vacationers craving leisurely breaks. Patrick Scholes, managing director of lodging and leisure equity research at Truist Securities, is optimistic about the future of the industry because of this high demand.
“People want a vacation,” he said. luck. “They're looking for something different that they didn't do during the first two or three years of the coronavirus outbreak, which was certainly happening on a cruise ship.”
Cruises have gained a reputation during the pandemic, as their confined spaces, which lead to infectious diseases, have sometimes led to the use of boats. Early docking. Even the Vikings took a hit after that 100 passengers On a cruise in June 2023, he battled the norovirus. Businesses have improved deals to win customers back, offering discounts and promising private beaches. While restaurants and hotel resorts have been slow to recover from the pandemic due to… Labor shortageThe presence of cruise ships in foreign waters meant not having to adhere to American wages and employing a large staff of mostly foreign workers. During Wilcox's Viking cruise, I marveled at the consistent and frequent turndown and cleaning services.
“That value proposition is the high and consistent level of staff and service on a cruise ship,” Scholes said. “You've been to a restaurant, you've been to a hotel — staffing is an issue, it's a challenge after COVID. The cruise lines haven't had that problem.”
said Bob Levenstein, CEO of travel agency CruiseCompete luck Viking especially delivers on its promise of value, mastering food, service, travel and communications into a reliable product.
“They really nailed it,” he said.
More growth for the company is on the way. Having weathered the pandemic, Viking has 24 ships on order, an option for dozens more, and Ambitious plans To expand its Chinese customer base to 150,000 passengers by 2025. Viking's resilience in a difficult time for the industry made the decision to go public a no-brainer for Hagen.
“Private equity firms, at some point, have to cash in on their investments, and we've been doing that for eight years — so this was as good a time as any,” Hagen said. luck Last month. “During the pandemic, it wasn't easy, and I think now that coming out of that and getting good results, it was the natural thing to do.”
Tides
But the tides are turning, and the economic waters that support the cruise business are no exception. Scholes predicted that as cruise companies absorb increased demand by operating more ships, the promotions and pricing power of companies will decline.
“This is just economic capitalism,” he said. “By 2029, we will see a lot of new ships, and there will be a lot of cabins to fill. It will be difficult to raise prices.”
There's a reason Viking has remained balanced as the industry matures, Levenstein said. He said the company's $1.5 billion IPO was well-timed, but likely wouldn't make a splash for Viking's future. This is likely just a way for ownership to stay liquid and hedge their portfolios.
“That's only about four ocean liners — and maybe a little less if prices have gone up since they did their last deal,” he said. “But this money is not a game changer.”
The modest but well-established amenities of a cruise aren't guaranteed either. “The food was definitely a miss,” Wilcox said of her time on board the Viking, resulting in the “worst” room service hot dog she “ever had.” I heard from other cruisers that the specialty menus the cruise promised changed every night, but the food items served have remained the same for a decade.
A slide in Viking's reputation for solid amenities may be a blow to the “cookie cutter” model that Hagen touts as a reason for the cruise line's success, but the CEO remains clear on the company's philosophy of streamlined, consistent service.
“I think the moment you try to do everything for everyone, do you know what happens?” He said. “You're doing nothing good.”
