A trader works in a booth with screens displaying the logo of the Viking cruise company on the floor of the Recent York Stock Exchange.
Stefan Jeremiah | Reuters
Viking is not your typical cruise operator.
You won’t find any children aboard the smaller, upscale ships. In fact, the cruise line makes no secret of the fact that it’s preying on wealthy baby boomers.
Casinos? Not on these cruise ships.
In Viking Holdings’ prospectus, the company said its cruises were intended for the “thinking person,” highlighting efforts to appeal to the baby boomer traveler who is looking for adventure and up-to-date experiences.
“They have money, they have time and, in my opinion, the moment you try to do everything for everyone, you know what will happen? You’re not doing anything right. So we’re very, very focused,” Torstein Hagen, Viking’s CEO and president, told CNBC.
The luxury cruise line was expected to reach a valuation of $10.4 billion in its initial public offering on the Recent York Stock Exchange on Wednesday, making it the third-largest cruise operator after Royal Caribbean AND Carnival. Norwegian cruise line is the fourth largest. Viking’s trading began on Wednesday at $26.15 per share under the ticker “VIK“at a price of $24 per share.
The company ended its first trading day with a gain of over 8%, ending at $26.10 per share.
Viking increased its IPO after existing shareholders decided to sell an additional 9 million shares amid sturdy demand from mutual fund investors, according to a source familiar with the situation.
A trader walks past a screen displaying the logo of the Viking cruise company located on the floor of the Recent York Stock Exchange.
Stefan Jeremiah | Reuters
In 1997, Viking had four ships. It quickly expanded its fleet to 92 ships, 80 of which were riverboats plying the world’s largest rivers, including the Seine in France and the Nile in Egypt.
“We are different because if we talk about huge cruise lines, they are huge in the Caribbean,” Hagen said. “We have a little piece in the Caribbean. The rest is Europe.”
The timing of Viking’s IPO coincides with a sturdy enhance in cruise bookings. April 25 Royal Caribbean raised its guidelines for 2024 with good prospects for the sector.
“Cruising has really come to the forefront as a competitive transportation choice,” Jason Liberty, CEO of Royal Caribbean, said in a recent interview with CNBC. “The overall value of the tourism industry is $1.9 trillion. The cruise industry is a $56 billion industry. I think cruises are at a much different level than they were before the pandemic.”
Although the company’s prospectus showed that Viking had $4.71 billion in sales in 2023, it reported a net loss for the year. Investors are excited about the company’s revenue per passenger of $7,251, far more than any other publicly traded cruise line. Viking’s high pricing allows it to earn more from each customer.
Investors will also be looking for details about Viking’s expansion plans. Earlier this month, the Norwegian cruise line said it had ordered eight up-to-date ships, scheduled for delivery over the next 12 years.
A model of a Viking cruise ship is listed on the Recent York Stock Exchange.
Stefan Jeremiah | Reuters
Carnival, Royal Caribbean and MSC Cruises have sturdy portfolios, which has raised concerns that excess fishing capacity will impact demand. But for now, the industry is focused on how well demand has rebounded from the pandemic and that even with higher prices, cruises are still cheaper on average than hotel vacations.
UBS leisure analyst Robin Farley said land-based hotel rates are 25% higher than in 2019. Over the same period, cruise rates are up 10%.
“The gap between cruises and hotels is wide. That makes cruising attractive right now,” Farley said.
