A veteran cruise attendee at simply 24 years previous, Julia Wilcox is used to her inbox flooding with promotional emails from cruise traces courting loyal clients. However Wilcox, who vlogs her cruise experiences on TikTok, mentioned one cruise line takes a extra idiosyncratic strategy to their advertising: Two or thrice a month, she’ll get thick and shiny paper envelopes within the mail from Viking Cruises, the luxurious cruise line which with she took a 10-day journey in January 2023. It’s the one cruise firm that sends her paper mail—and it does so persistently.
“I get a lot paper mail from Viking. I’m like, that is insane,” she advised Fortune. “You could possibly ship me on a free cruise for the quantity of paper and issues that you simply ship me.”
Whereas anomalous in its advertising technique, the logic behind Viking’s insistence on sending snail mail makes extra sense after Wilcox, a Gen Z TikToker, admitted she’s not the corporate’s target market. The truth is, she was 4 a long time youthful than the cruise friends’ median age of 60 or 70. That’s simply how Viking needs it.
“They’re the richest group we now have round,” Viking CEO Torstein Hagen mentioned in a Could 1 CNBC Squawk on the Road interview. “They’ve the cash; they’ve the time.”
Hagen, who at 81 surpasses his child boomer target market, has tailor-made the cruise to the tastes of the older demographic that holds 70% of the nation’s disposable earnings. There are not any youngsters underneath 18 allowed, and no casinos aboard. As an alternative, Viking’s line of 92 vessels—touring to all seven continents and using a workers of 10,000—provides strolling excursions of European cities and cheese tastings.
“It’s a fairly serene atmosphere for folks up of their ages,” Hagen mentioned, “and for curious individuals who need to go to locations, not [who want] to go on waterslides and the like.”
Hagen’s technique has definitely labored to this point. Viking, with a $10.4 billion valuation, raised $1.5 billion in its preliminary public providing on Could 1, the very best of any firm this 12 months. Per an SEC submitting from final month, Viking skilled 14.4% progress from 2015 to 2023, the largest leap of any luxurious river or ocean cruise throughout that interval.
“We’ve a really, very clear focus, and that’s mirrored in all our buyer scores, the rewards we get, and so forth,” Hagen advised CNBC. “It doesn’t make us as giant because the others, however it definitely makes us extra engaging to the patron.”
Viking didn’t reply to Fortune‘s request for remark.
The precision and analytical strategy Hagen brings to the corporate displays his preliminary pursuit of physics from the Norwegian Institute of Know-how earlier than he got here to the U.S. and bought his MBA at Harvard. Initially from outdoors of Oslo, the Norwegian developed his enterprise instinct via failure earlier than success. As CEO of cruise line Royal Viking within the Eighties, Hagen organized for a $240 million administration buyout that failed when a competitor made a shock buy of the corporate. He was quickly ousted from the function.
Hagen, who operates the corporate alongside daughter Karine Hagen, based Viking in 1997 at 54. He thought of it a humble enterprise composed of “two guys with two cell phones and 4 river ships,” in keeping with the corporate prospectus. From its maiden voyage, Viking’s objective was, in Hagen’s phrases, to be a pondering individual’s cruise, not a consuming individual’s cruise.
The circulate
Viking has benefited from opportune timing for the cruise trade, specifically its restoration from pandemic lockdowns that had rich vacationers itching for indulgent respites. Patrick Scholes, managing director of lodging and leisure fairness analysis at Truist Securities, is bullish on the trade’s future due to that prime demand.
“Folks desire a trip,” he advised Fortune. “They’re on the lookout for one thing completely different that they hadn’t finished for the primary two, three years of COVID, which definitely was happening a cruise ship.”
Cruises developed a popularity in the course of the pandemic, as their closed quarters, conducive to contagious illness, typically resulted in boats docking early. Even Viking took successful after 100 passengers on a June 2023 cruise battled norovirus. Firms sweetened offers to win again clients, providing reductions and guarantees of personal seashores. Whereas eating places and lodge resorts have been gradual to get well from the pandemic due to labor shortages, cruise ships’ presence on overseas waters meant not having to abide by U.S. wages and using ample workers of principally overseas employees. Throughout Wilcox’s Viking cruise, she marveled on the constant and frequent turndown and cleansing providers.
“In that worth proposition is the excessive, constant degree of staffing and repair on a cruise ship,” Scholes mentioned. “You’ve been to a restaurant, you’ve been to a lodge—staffing is an issue, is a problem after COVID. And cruise traces haven’t had that downside.”
Bob Levinstein, CEO of journey company CruiseCompete, advised Fortune Viking particularly lives as much as its worth promise, mastering meals, service, excursions, and communication right into a dependable product.
“They only actually have it nailed down,” he mentioned.
Extra progress for the corporate is on the best way. Having weathered the pandemic, Viking has 24 ships on order, an choice for one more dozen, and impressive plans to broaden its Chinese language buyer base to 150,000 passengers by 2025. Viking’s resilience in a tricky time for the trade made the choice to go public a no brainer for Hagen.
“The personal fairness companies, at some stage, should create liquidity from their investments, and so they’ve been in now for eight years—so it was pretty much as good a time as any,” Hagen advised Fortune final month. “Throughout the pandemic, it was not simple, and I believe now popping out of that and having good outcomes, that was the pure factor to do.”
The ebb
However tides flip, and the financial waters buoying the cruise enterprise are not any exception. As cruise corporations accommodate rising demand by commissioning extra ships, the promotional packages and corporations’ pricing energy will ebb, Scholes predicted.
“That is simply financial capitalism,” he mentioned. “Come 2029, we’re going to see numerous new ships, and that’s going to be numerous cabins to fill. It’ll be tough to boost costs.”
There’s a motive for Viking to remain level-headed via the trade’s maturation, Levinstein argued. The corporate’s $1.5 billion IPO was effectively timed, he mentioned, however it seemingly received’t make waves for Viking’s future. It’s seemingly only a manner for possession to remain liquid and pad their wallets.
“That’s solely about 4 of the ocean ships—possibly rather less if costs have gone up since they made their final deal,” he mentioned. “Nevertheless it’s not game-changing cash.”
The cruise’s humble however established facilities aren’t foolproof, both. “The meals positively was a miss,” Wilcox mentioned of her time aboard a Viking, ensuing within the “worst” room service sizzling canine she’d “ever had.” She heard from different cruisers that the specialty menus the cruise promised to alter nightly, however the meals objects provided have been the identical for a decade.
The slip-up in Viking’s popularity of rock-solid facilities could also be a strike towards the “cookie-cutter” mannequin Hagen touts as a motive for the cruise line’s success, however the CEO stays clear-eyed on the corporate’s philosophy of streamlined, steadfast service.
“In my perception, the second you attempt to do every little thing for everyone, you already know what occurs?” he mentioned. “You do nothing effectively.”
