This month's announcement that Richard Branson and Bain Capital will launch a new cruise line has sparked a lot of speculation about what Virgin Cruises ships will be like, what the itineraries will be, and whether the boats will draw young cruise newbies out to sea. None of these questions will be answered for certain before Virgin's debut, expected to happen about five years from now with two new ships. In the meantime, there are three groups of people who are particularly excited about Virgin's cruise news.
South Floridians anticipate Branson magic
The Miami-Fort Lauderdale area sees a lot of cruise travelers passing through on their way to the Bahamas and the Caribbean. The three largest cruise operators, Carnival (NYSE:CCL), Royal Caribbean (NYSE:RCL), and Norwegian (NASDAQ:NCLH), all homeport ships in South Florida, and North America remains -- for now -- the world's largest cruise market. But with China's domestic cruise market growing faster than any other, the big lines have been making overseas overtures that could knock some of the shine off of the Port of Miami.
Royal Caribbean, with much fanfare, is sending its newest, flashiest ship, Quantum of the Seas, to homeport in Shanghai next year. And Carnival COO Alan Buckelew recently relocated to China, where Carnival and Italian shipbuilder Fincantieri have agreements with the government to expand China's shipbuilding and domestic-cruise industries.
In that climate, the appearance of Richard Branson seems like a fresh breeze for South Florida. Fort Lauderdale Sun Sentinel writer Daniel Vasquez enthusiastically described Branson's ability to "bring sexy back to cruise ships," make cruises "hip, fun, and cool," and boost the region's cruise-industry profile.
It's an expectation with some merit. The combination of Branson's image-building skills, Bain money, and the Disney Cruise Line experience of Virgin Cruises' new CEO, Tom McAlpin, is promising, and it could help Virgin get new cruisers on board.
Travel agents expect fresh offerings, more interest
Agents are pinning big hopes on Virgin Cruises to raise the industry's profile. "Richard Branson has a legacy of using creative marketing and has developed a travel empire while building sexy brands," said Vicky Garcia, co-owner and COO of the Cruise Planners travel agent network. "His travel industry experience makes him relevant and he is being backed by really deep pockets."
According to travel industry site TravelPulse, other agents feel much the same way. There's a widespread hope that Virgin will revamp the image of the industry to appeal to under-40 vacationers and adventure travelers who might be drawn in by hoped-for cool shore excursions at unusual ports of call. That's important because millennials now travel more than their older counterparts, spend a bit more per trip, and gravitate toward adventurous and individualistic itineraries. These younger travelers also have decades of potential vacations ahead of them.
The three major cruise lines have been upgrading their fleets and improving wireless access at sea, but the industry still skews toward older travelers. For example, Norwegian hosted singer Jimmy Buffett earlier this month to announce that its next ship, set to homeport in Miami next fall, will have a Margaritaville-themed restaurant and bar that will eventually be added to other ships in the fleet. Buffett is a business whiz in his own right, and his Parrothead fan base is large and loyal. But Margaritaville was released in 1977 and is unlikely to inspire bookings by younger travelers.
The competition hopes for a bigger pond
The oceans are huge, and the cruise industry is not, so there's plenty of room to grow. For that reason, future competitor Carnival is glad to see Branson and Bain getting on board.
"The cruise marketplace represents only a small percentage of the overall vacation market today," Carnival spokesperson Claire West told The Motley Fool via email. "Anything that can help stimulate new cruising guests is good for the industry as a whole. We view our primary competitors to be land-based vacations, not necessarily other cruise companies, and there's room for all of us to be successful."
There are still several years until Virgin's first ships set sail. But if it hooks young and first-time cruisers on the experience, the company could lift a lot of boats.
Casey Kelly-Barton has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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