Viking with new growth opportunities in ocean cruising

By ,   March 31, 2015 ,   Cruise Industry

As it prepares to launch first ocean-going ship in April, the 930-guest Viking Star, Viking Cruises has a new strategy intended to split growth between river and ocean cruising.

At a news conference on board the Viking Skirnir in Rostock, Germany, Viking chairman, Torstein Hagen, announced Viking planned to build 6 new river ships for 2016, which was half of the total delivered in 2015. Hagen said the total growth of the company would not slow, because new ocean cruise ships would be coming on line.

The shift came against a backdrop of weaker sales of 2015 European river cruises than expected. According to Hagen river cruise bookings to date had been running 10% ahead of last year, which he termed a bit slower than they had expected. The slower growth he thought related to Ebola, Paris, and stuff like that. Another factor specific to Viking was the reduced demand for Russian cruises. The Ukrainian and two Russian ships had been laid up, though the staff remained on payroll.

Until the slowdown began, Viking had posted growth of more than 30% per year for the past 5 years. Turnover (line’s gross revenue) was expected to be about $2 billion in 2015. Part of that would be derived from the ocean side of business. 

Hagen said Viking planned running a 10-days shakedown voyage on Viking Star early April. Within 3 months of its 2013 announcement, the Star was 80% booked, and is now 85% booked for 2015. In 2016, when possibly two more ocean cruise ships will be delivered, Viking Ocean is 49% booked.

The 47,000 GT Viking Star, built by Fincantieri Italy, has been estimated to about $300 million, even though Viking has not publicized the price yet. Hagen said that other aspects of getting into business’ ocean side had been easier because Viking already had a sales operation, purchasing department, food and beverage and other functions.

So far this year, the line has hired 1,200 new employees, including 550 for the Viking Star and 650 for the twelve new river ships. They all go through a 3-week training program before starting work. After dedicating the new river ships in Amsterdam, Hagen shared his dream for the ocean cruise side of business including 10 ships (at least).

Viking recently announced plans to enter the U.S. river cruise market with six ships for the Mississippi River. He added they had not yet have a contract for their construction (the building yard would be in the U.S.), but hoped to commence operations towards the end of 2017.

Viking is already running ads promoting its ocean cruises, and the question is how much the river cruise market will be affected by Viking Cruises’ switch in emphasis.