Last week, Richard Branson's Virgin Group announced the launch of Virgin Cruises to compete against Carnival, Royal Caribbean, and Norwegian Cruise Line.
The company said it will offer a cruises experience that is more connected to the ocean and will feature more informal environment that is hip and cool. Virgin Cruises plans on the delivery of two new 4,200-passenger cruise ships late this decade and begin selling Caribbean voyages.
So, doesn’t the cruise industry already have enough ships in the Caribbean --which is the number one destination for cruises? Maybe not for some.
What it Means for Cruisers
More cruise competition in an already crowded market will mean better deals for cruisers, but don’t expect to see that reflected in the Virgin Cruises product, at least initially. One thing we can learn from current cruise pricing is this: when a new ship, like Royal Caribbean’s Allure of the Seas debuts, it commands premium pricing far in excess of it’s slightly older sister ships or competitive set. That premium can be 40 percent or more than a slightly older vessel that has many of the same attributes of the newer ship.
Travelers pay for the bragging rights of saying they have been on the latest and greatest ship, but that might not be your best cruise bet.
What it Means for Non Cruisers
There has been a continuous stream of negative news coverage on cruising; something that often deters non cruisers from experiencing this type of vacation product. Most of the news reinforces perceived stereotypes that don’t truly reflect today’s cruise experience. For instance, many falsely believe that they will feel “cooped up” or confined on a cruise, despite the reality that cruise ships today are destinations unto themselves, with great variety and open spaces.
The entry of Virgin Cruises into the market, with the iconic Virgin brand, will have the potential to draw people in who may not have considered a cruise in the past. This isn’t a new phenomenon in the cruise industry, as Royal Caribbean lead earlier efforts to highlight it’s “Get Out There” cruise concept by showcasing activities that had been unique to them. Everything from rock climbing, kayaking to zip lining has been utilized by Royal Caribbean to position cruises as much more than simply sitting on a deck chair with a drink. This campaign was introduced by Royal Caribbean, and centered around innovation (something they do to this day), but it benefitted the entire cruise industry as a whole.
Expect to see more people who haven’t considered a cruise in the past to make the leap and get on board. As of the start of this year, less than 20 percent of American’s have ever taken a cruise, leaving a large, untapped market, still in place.
What a Virgin Branded Cruise Company Means for Other Cruise Lines
Increased competition will force existing cruise lines to look at how they are serving the traveling public and make sure that they are on the innovation curve. That’s always good in any industry, as it forces the various players to continue to up their game. But don’t expect much of an impact, beyond the news making capabilities of Richard Branson, as his new line is a small entrant in a much larger business. To put it in perspective, there are more than 200 ships in the Cruise Lines International Association, making a new two-ship company, at least initially, not much of a player in the space. The new Virgin Cruises will make a lot of noise and expand demand, but much of that demand may be felt across all sectors and companies, not just Virgin.
Looking for a Cruise Deal?
The best cruise deals will continue to be based on that earlier generation of ships that are not quite the latest and greatest, but still offer very similar experiences for cruisers. Many will travel to the same islands and ports giving cruisers the exact same off ship experience, but doing so at a fraction of the cost of the newer vessels. On another note, less well known brands like MSC Cruises, a division of MSC Shipping, can give travelers an opportunity to experience a cruise at a great value due to it’s limited brand recognition. This is despite the fact that MSC has introduced a number of new ships in recent years.
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