The Virgin Group, which has stretched its lifestyle brand into businesses as disparate as banking, railroads, and health clubs, is now ready to take on the cruise lines. Virgin is negotiating to raise funds for at least two new ships to launch a cruise venture, according to media reports.
Cruising would become the latest travel industry for Virgin, having found success among consumers with Virgin Atlantic and Virgin America, two highly regarded airlines. Virgin is also launching its first hotel this fall in downtown Chicago, with plans for a second in Manhattan. Virgin spokesman Nick Fox would confirm only that the company is exploring opportunities that include hotels and cruises. “We believe both markets lend themselves to creating a new proposition, based on Virgin’s history of doing things differently,” he wrote in an e-mail.
With cruises, at least, the company sees an industry that is concentrated largely among giants Carnival (CCL), Royal Caribbean (RCL), and Norwegian Cruise Line (NCLH), according to Sky News, which first reported the Virgin effort. Those three lines control about 80 percent of passengers and 72 percent of revenues. And the cruise business is growing, with 21.7 million passengers expected this year, up from 21.3 million in 2013, according to the industry’s trade group, Cruise Lines International Association.
The cruise business could fit well with Virgin’s long-term strategy of licensing its name and owning a small stake, as it has done numerous times. The company is, as much as anything, an enterprise that offers consumers the feeling of upscale, saucy fun embodied by founder Richard Branson. A Virgin cruise line would market toward younger people who haven’t previously cruised, perhaps because they’re leery of either the cost or the various stereotypes about the industry.
“We’re trying to create the kind of cruise ship that would be attractive to the kind of people who would never consider a cruise at the moment,” Branson told The National, an Abu Dhabi newspaper. The line will be based in Miami and launch in 2019, according to the newspaper. North America is the world’s largest cruise market, with the Caribbean representing the biggest share of global ship itineraries, at 37 percent.
“I think it’s a really interesting approach to go after the twentysomething market, but it’s certainly not an approach that cruise lines haven’t been taking for the past five to 10 years,” says Carolyn Spencer Brown, editor-in-chief of Cruise Critic, an online magazine that covers the industry. She noted the proliferation of skydiving, bumper cars, surfing, and other activities on new ships aimed at younger cruisers. The industry is trying to appeal to first-time cruisers, given that most people have never taken a cruise and that those who take a cruise tend to book a second one.
Virgin is also a known quantity for many leisure travelers and could attract many people curious as to how the brand would design a cruise, says Bob Levinstein, chief executive officer of CruiseCompete.com, which helps travel agents place bids for cruise itineraries. He notes that Walt Disney (DIS) has never struggled to sell its cruises because parents know what they’re buying with that company. “To have a brand that has its own character already, there’s a lot to be said for that,” Levinstein says.
If it comes to fruition, Virgin’s cruise line won’t be the first launched by a wealthy British serial entrepreneur. EasyCruise, an offshoot of British budget airline EasyJet (EZJ:LN), had a brief run in the Mediterranean with budget cruising until its demise in 2010. “The EasyCruise concept follows a pattern similar to the rest of the easies: Make it basic, make it affordable, give it a hip edge, and they will come. Oh, and paint it orange, the company’s signature color,” Frommer’s wrote before the line’s launch.
Unfortunately, travelers did not come en masse. Still, EasyJet founder Stelios Haji-Ioannou—like Branson, a British knight—never dressed up as a cabana boy to serve fruity cocktails on the Lido Deck. That’s one thing easy enough to imagine Sir Richard doing for the maiden voyage of any Virgin cruise ship.