Viking, renowned for its luxury river and ocean cruises, has been operating as a private company for 27 years. Recently, the company has made the decision to go public. Founder and chairman, Torstein Hagen, assured in the IPO registration form that the core essence of Viking’s business will remain unaltered. However, one aspect of the revelation might have caused concern among travel advisors. Viking disclosed its plans to escalate direct bookings, citing a vast marketing database consisting of more than 56 million North American households.
While the company expressed confidence that direct bookings will continue to escalate in the future, it also emphasized the significance of the travel advisor channel to the brand. Travel agencies play a pivotal role in generating bookings for Viking’s cruises. The company declared its commitment to sustain and reinforce this distribution channel, highlighting the presence of preferred relationships with major travel agency consortia and the deployment of sales managers in key markets to keep travel advisors informed about its offerings.
It is worth noting that a substantial number of Viking’s guests opted for direct bookings last year, indicating a growing trend towards bypassing travel advisors. In addition, a significant percentage of the brand’s ocean and expedition guests made their next cruise reservations while onboard in 2023.
Industry Response
In responding to Viking’s intention to boost direct bookings, ASTA president and CEO, Zane Kerby, underscored the pivotal role of travel advisors in selling cruises. Citing a Phocuswright study, Kerby revealed that travel advisors facilitated nearly 59% of all cruise bookings in the U.S., with projections indicating a rise to 71% by 2026. This data emphasizes the enduring relevance and effectiveness of travel advisors in the cruise industry.
Kerby further stated that river cruising, in particular, is a fiercely competitive market with numerous exceptional options available. In light of this competition, he suggested that Viking should prioritize U.S.-based travel advisors as their primary distribution channel, recognizing their unparalleled value and contribution to the industry.
Viking’s fleet consists of 81 river ships globally, along with nine oceangoing and two expedition ships. Over the years, the company has relied on a diverse distribution strategy to maximize bookings and fill its ships. In an article about Hagen and Viking published in Travel Weekly in April 2013, Hagen acknowledged the company’s proactive approach towards direct marketing. Although Viking pursues direct bookings through initiatives such as direct mail campaigns, Hagen emphasized that travel agents remain essential partners in the booking process, ensuring they receive commissions for all bookings made through them.
Despite experiencing substantial revenue growth, soaring from $1.9 billion to $4.7 billion since 2017, Viking reported a significant net loss of $1.9 billion in 2023 due to the lingering impact of the pandemic-induced operational pause. However, the company managed to achieve an occupancy rate of 93.7% last year, a considerable improvement from the 78.4% rate recorded in 2022.
Viking’s decision to prioritize direct bookings while acknowledging the critical role of travel advisors underscores the evolving dynamics of the cruise industry. As the company embarks on its public listing journey, balancing direct bookings with travel advisor partnerships will be crucial in sustaining growth and navigating the competitive landscape successfully.
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