This article was first published in the Autumn/Winter 2015 issue of International Cruise & Ferry Review.
Will he, won’t he, will he join the cruise dance? The long wait is over. Virgin Cruises has signed a binding Letter of Intent with Fincantieri for three 2,800-passenger, 110,000gt newbuilds for delivery in 2020, 2021 and 2022. The plan is to offer a range of seven-day Caribbean itineraries out of Miami with Sunday as the sail day.
Asked why Virgin is now entering the cruise market, Tom McAlpin says: “Richard Branson has been looking to get into the business for a long time. It was not about now in terms of the euro or fuel prices but about trying to time the market. We had to have the right business plan, a strong brand to enter the market and capital so it has taken a while to put those things together.” Industry stalwart Bain Capital is lead shareholder in the deal.
“We have done significant research as to who our customers are and what size of ships to build, to try and understand that target market and how to go after it,” says McAlpin. “We made a conscious decision to build mid-size ships. We think that is the sweet spot for us. There has been a big trend in the industry to build massive ships but that is not for us. This allows us to give passengers variety but in a more intimate environment.”
Virgin is targeting both those who cruise and the new to cruise. For the latter he says: “The name Virgin might get them over the hump of cruising. They trust the brand and see it in another environment. We will be different. Virgin has a secret it knows how to create. Friendly, innovative, edgy. The Virgin brand allows us to do things that others don’t. We want people to say that they went on a Virgin cruise.”
While acknowledging that the industry is doing very well, he explains that its “business model is different to ours”. He mentions the large number of ships appealing to a wide variety of people. The Virgin experience, he says, will be a culmination of the attributes of the ship and the rich experiences that will be provided onboard.
McAlpin is excited about the fact that Virgin Cruises is “starting from scratch” with an inbuilt ability to be different. However, despite the layout of the ship having been completed, he is not giving much away at this stage, with four years to go before the first delivery. For the interiors, Virgin is in talks with a series of architects both from within and outside of the industry. He comments: “What is important is to listen to our customers. We have asked them to tell us what we can do to make it the best vacation ever.”
What appears certain is that these ships will have a quite different feel. “The brand allows us to do things that others cannot. We are a little bit cheeky, we have a bit of fun and we are proud of that. This will be reflected in the ships, absolutely.”
Branson, who is synonymous with the brand and successful businesses, is a “big influence and passionate” when it comes to this latest venture. McAlpin comments: “He has a great eye for products, is very excited about this and we will leverage that.”
Hailing from Disney Cruise Line, McAlpin says he brings a “learning curve of things that have been done well and those that can be changed”. The first task was to build a team. “Our strategy is to bring a combination of people with Virgin experience, who know the brand and how to maximise Virgin, and those with industry experience. It takes skilled people to build and operate these ships and also people from outside to keep it fresh.”
It is also about creating a culture: “one that has an inspirational spirit, that is guest-centric. If we focus on the guest then, at the end of the day, we will create an experience and the best vacation they have ever had.” Put simply: “Word of mouth is a very strong marketing tool. You make profits by providing great experiences for people.”
You also “fish where the fish are” which for Virgin means North America right now. “As a small company we have limited resources so we have to focus where we will get the biggest bang for our buck.” Europe is likely to be next on the radar for the brand is strongest in these two places. With Asia being the cruise byword these days, what are the prospects in that region? “Asia is a great market too but we cannot do all three at the same time,” is McAlpin’s response.
The company already has 50 million customers, which will bring mutual benefits. Not surprisingly the ideal package in his view is for a passenger to fly into Miami on a Virgin aircraft and stay in a Virgin hotel before getting on a Virgin ship. Virgin Holidays too comes into the mix and will be involved in the distribution.
The Virgin brand is a powerful one and McAlpin believes it will bring Virgin customers into cruising and “validate the experience”. Typically many like to be “off the beaten path and explore on their own” but also to relax. “We can do a variety of different itineraries with three ships. It is not ‘one size fits all’. Even though we are sailing out of Miami there are some exciting new places to go to and things to do.”
And finally he says: “We are still developing the strategy and the ships. We have come a long way in a few months. Today we number 11, when I came onboard there were just two of us. I am very proud of what we have done with a very small team.”
This, however, is just the beginning: “We certainly believe three ships is not the end of it. We are going to be a boutique operator focused on a specific market.”
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