Richard Branson looks to disrupt cruise industry with Virgin Voyages

From Virgin Atlantic in the skies to Virgin Galactic in space, Richard Branson has now set his sights on the high seas.

The business tycoon who started Virgin Group, the company behind dozens of Virgin-branded ventures, is looking to disrupt the $100 billion cruise industry — at a time when the major established operators are still figuring out how to manage Covid.

Virgin Voyages, the first cruise line to launch since Azamara in 2009, began service this past summer in the U.K. It had been due to launch last year in the United States until the pandemic hit. Virgin Voyages’ first U.S. sailing, from Miami, is set for Oct. 6.

Branson said the fact that he had never enjoyed cruising is what actually motivated him to start Virgin Voyages. “Do you know I was never interested in going on cruise ships, and I suspect there’s something like 90% of people who are listening are not that interested in going on cruise ships,” he told CNBC. “That’s the reason I started a lot of businesses over the last 50 years.”

Despite the challenges facing travel and hospitality operators, which are still in the midst of a recovery from the pandemic, Branson remained confident his cruise line will stand out from the rest. “We want to try to attract a lot of people who would never, ever dream of going on a cruise ship,” he said. “It’s just going to be a fun ship for adults. No kids allowed on board, and I think people have a great time.”

Private equity firm Bain Capital is Virgin Voyages’ largest investor. Sources familiar with the arrangement said the total investment, largely from Bain, made in the cruise line and its three ships is around $3 billion, with each ship costing around $800 million.

“We’ve got an amazing equity story, and I think a lot of people are going to be keen to participate in that. I think the public markets are a really viable option for us,” Bain consumer and retail head Ryan Cotton told CNBC. “In some ways, it’s a pure play on new ships, and you don’t have to buy all the legacy fleet.”

Virgin Voyages is attempting to build a narrative that its ships will be cooler and edgier than what’s currently on the market. Industry experts said the challenge will be figuring out how to set itself apart from the big brands to attract younger customers while not alienating cruise loyalists.

“We want young-at-heart people,” Branson said. “So I don’t want to exclude myself from coming on board, but we want it to be a fun ship. We want people of all ages to come on the ship and have a great time.”

Cruise lines have done better at getting highly spirited millennials on board in recent years, but it remains a longtime struggle. According to Morgan Stanley, the average age of U.S. cruise passengers has come down and is currently 49. Cruise Lines International Association, an industry trade group, said the average age is closer to 47.

One way both Carnival and Royal Caribbean have been able to get younger folks to book cruises is offering shorter sailings versus a full week on…