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How will Virgin Cruises slot into the market?

Already experts in rail and air travel and experimenting with space expeditions; Virgin hope to bring their acumen and knowledge to the cruise industry with two brand new ships launched under the brand's name before the end of the decade. As discussed in previous blog posts, the cruise market is booming - with greater demand than ever before, emphasised through the numbers of passengers; new ships being built; and the size of the new ships.

Total Cruise Passengers Worldwide

Surprisingly, based on the statistics displayed in the graph above, Virgin Cruises will be the first major new entrant into the industry since 1996 when Disney Cruises entered the market. This is a perfect time to invest in the industry, but where will Richard Branson's latest venture fit into the market? And what is he hoping to achieve? We take a deeper look into the current state of the cruise industry and how Virgin Cruises can be a big name in the world of cruise.

Cruise Industry Statistics

Currently, there are many, many firms in the cruise industry; each competing to offer the best level of service for customers. Whilst there are many firms within the industry, a vast number of these belong to just a handful of groups: Carnival Cruise Lines; Royal Caribbean Cruises; and Norwegian Cruise Line. 

In addition to their own services, Carnival Cruise Lines also own cruising giants: Princess; P&O; Cunard; and Seabourn - whilst Royal Caribbean Cruises own: Celebrity; Pullmantur; and Azamara. How can Virgin compete with these two powerhouses? Well, Norwegian Cruise Line operate fewer ships than Royal Caribbean and Carnival and accumulate 1,938,300 passengers in 2014; bringing in a net revenue of $3,054,000,000

2014 Cruise Market Share WorldwideWorldwide Cruise Market Share 2014

The graph above emphasises the influence that Royal Caribbean, Carnival and Norwegian Cruises collectively have on the market. With over 21 million customers in the cruise market; over 17 million sailed with one of these main three cruise families in 2014. From this graph, it is clear that the market needs some additional competition to shake things up a little and the emergence of Virgin could improve the industry as a whole.

What to Expect from Virgin Cruises

Nothing less than big, bold, exciting, refreshing, new, wow-factor. Virgin is a dynamic brand that everybody knows and associates with a sense of quality that is hard to achieve. Everything Richard Branson has sought out to achieve; he has done so and his new ventures with Virgin Galactic and inventing a cheaper type of fuel, whilst experimental, are setting the standard in new technologies.

Currently, the plan for Virgin is to build an introductory two world class cruise ships - which will cost a staggering $2 billion. Virgin hope to attract a new type of cruise passenger; presumably the younger market who may have never embarked on a cruise before. Royal Caribbean have gone to new lengths to try to win over young cruisers on their vessels; with on board amenities including skydiving; bumper cars; surf simulators; and revolutionary technology. It is too early to report the outcome of this approach, but it is more likely that Virgin won't pursue the same route and instead opt for a more sleek and sophisticated approach. 

Worldwide Revenue from Cruise Industry

Additionally, private equity group, Bain Capital, which owns a stake in the 'Toys 'R' Us' retail chain, has agreed to become a major shareholder in Virgin Cruises - pumping a potential £1 billion into the project. Virgin Cruises have also obtained backing from at least one Middle East sovereign and a Singaporean sovereign wealth fund.

Details on the new cruise line remain thin at this time, but several key figures have made statements. Virgin Founder, Sir Richard Branson, stated: “We plan to shake up the cruise industry and deliver a holiday that customers will absolutely love. They’ll be sailing on the latest ships offering a great quality, a real sense of fun and many exciting activities all delivered with the famed Virgin service.” He is also quoted on UAE website, The National, as saying: “We are looking at a very different kind of Cruise Company. 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”.

Tom McAlpin is a proven industry leader, having served as president of Disney Cruise Line, and will join Virgin Cruises as CEO - heading the management team. He said: "Cruise guests deserve something better and different to what is being offered today, and Virgin Cruises is committed to creating breathtaking experiences for them and a new generation of guests. Opportunities like this do not come often, so I am very excited to lead this business and introduce the Virgin brand to the cruise industry, as it has always put customers at the heart of what it does.”

Ryan Cotton, a principal at Bain Capital, stated: “We are pleased to pursue this exciting opportunity with Virgin, one of the world’s most respected and iconic brands. With a small number of global players, an experience in need of refreshing, and consumers ready for something new and exciting, the industry exhibits all the characteristics of one that is ripe for a new entrant.”

Vicky Garcia, CEO of Cruise Planners – a network of travel agents based in Coral Springs, Florida, stated: “Virgin can bring the unexpected, they’re creative, it’s a sexy brand,” she said in a telephone interview.

How Virgin are Likely to Approach the Cruise Market

When thinking about the current demographic for cruise-goers; it's difficult to think where the younger traveller might fit. This is a market slowly being tapped into, however, with many ships going out of their way to offer amenities and shore-based excursions that will excite younger travellers.

Virgin have stated that they want to shake up the industry - which is quite a statement. What they mean by it is uncertain, although it is clear that they will want to attract the first-time cruiser who may not be excited by the options already available. Richard Branson's company are on a mission to become the best in the industry and they will look to achieve this by bringing in new and fresh elements not seen on a cruise before. 

According to ABTA, people within the 16-24 age bracket take 3.4 holidays per year on average; whilst the 25 - 34 age bracket take 3.7 holidays. These figures are considerably higher than the other age brackets; but with over 21 million people taking a cruise in 2014, very few of these passengers were from one of these age groups. The average age of cruisers currently stands at 55.6 years, but with younger people going on more holidays on average - the cruise market is yet to be truly opened up to them.

Sir Richard Branson is by no means a one-trick pony and does not enter business ventures on a whim. Introducing his business sense and flair to the industry could shake up the market before the end of the decade and we at GoCruise will be watching for further updates over the coming months.

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