Opportunity along America’s riverbanks

Last week’s announcement that Viking River Cruises is planning to build six new vessels for the Mississippi River signaled more than just continued growth of the river cruise industry: The move opens up additional economic opportunities for the communities along America’s most fabled inland waterways.

In Europe, the booming river cruise industry contributes about $1.1 billion in passenger revenue to Western European economies annually, according IG River Cruise, an association of river cruise lines based in Basel, Switzerland.

Imagine if the small and large towns along the Mississippi River began to see even a fraction of that contribution?

Michelle Baran
Michelle Baran

In fact, they have already been experiencing a boost. The cities on the banks of the Mississippi River System have been witnessing something of a tourism economy revival since Mississippi River cruising was resurrected in 2012 with the relaunch of the 436-passenger American Queen and the christening of American Cruise Lines’ 150-passenger Queen of the Mississippi.

For instance, when the Great American Steamboat Co. decided to make Memphis the homeport of the American Queen in 2012, the deal created 250 new jobs as well as the promise of $1.5 million in annual taxes and fees to Memphis, 10,000 filled hotel rooms each year and $90 million in annual economic impact for the city, the Memphis-based Riverfront Development Corp., which was overseeing the revival of the city’s waterfront, projected during the relaunch of the American Queen.

And Louisiana is hoping that the addition of not just one, but six new Viking vessels that will call New Orleans home will indeed give its tourism economy — which has been making significant recovery strides since Hurricane Katrina — yet another bump. Viking’s new venture is expected to result in the creation of 416 new jobs for Louisiana-based operations and crews, and an additional 368 new indirect jobs, for a total of more than 780 new jobs in southeast Louisiana, according to the Louisiana Economic Development (LED).

“Viking’s project will generate major opportunities for our citizens, boost our tourism industry, and continue to turbocharge the Port of New Orleans,” New Orleans Mayor Mitch Landrieu said in a statement.

With Viking’s plans to build six vessels on the Mississippi, starting with two in 2017, and American Cruise Lines having unveiled its own ambitious strategy to begin building a fleet of modern river cruise vessels alongside its existing and forthcoming paddlewheelers, the Mississippi is about to see a significant increase in capacity.

And according to Bruce Nierenberg, CEO of United Caribbean Lines, who served as president of former Mississippi River heavyweight the Delta Queen Steamboat Co., that could mean awesome opportunities for the smaller towns along the rivers if they work together with the river cruise lines to really develop interesting and innovating on-shore experiences and programs and highlight this country’s culture and heritage.

“I hope that Viking and the others really start to spend a lot of time developing the stories in the cities and the towns [along the Mississippi],” said Nierenberg. “There’s a tremendous amount of relationship between the birth of this country and the river. If you can really tap into that … there’s an opportunity there.”

As to whether U.S. river cruising can ultimately be as successful as European river cruising, Nierenberg said, why not?

“There are no Vienna opera houses on the Mississippi,” said Nierenberg, “but there are a lot of things that you wouldn’t find anywhere else in the world.”

MSC Cruises’ Two New “Seaside” Vessels

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It’s hard to believe that a decade ago, the MSC Cruises fleet was only made up of a handful of ships, most of which were second-hand tonnage. Now, the line has just announced a deal with Italian shipyard Fincantieri for two brand-new ships to join the popular cruise line’s current fleet of 12 modern megaships. What a difference a decade makes.

MSC's new "Seaside" class of cruise ships will debut in 2017-2018. Rendering courtesy of MSC Cruises.
MSC’s new ‘Seaside’ class of cruise ships will debut in 2017-2018. Rendering courtesy of MSC Cruises.

Dubbed Seaside, these two ships will be the largest vessels ever constructed by Fincantieri, and the largest to ever sail for MSC. Purpose-built to cruise the Mediterranean, Caribbean and South America, each vessel will be 1,060 feet in length, with a width of 135 feet. Towering 230 feet in height, they will carry up to 5,300 passengers along with a crew of 1,413. The new vessels will have a total gross tonnage of 154,000.

For MSC Cruises, it’s a special moment. The company says the two ships represent the last piece of its plan to double the capacity of its fleet by 2022. With the arrival of the new ships MSC Cruises will reach a capacity of about 80,000 passengers a day.

The €700 million vessels will boast sea-level promenades that will circumnavigate the sides of the ships with outdoor deck spaces, shops and restaurants. They will also combine the best features of MSC’s previous vessels, including the highly-popular MSC Yacht Club, along with new technology that allows for greater efficiency including reduced fuel consumption and advanced safety systems that the company says go “beyond what is required by international regulations.”

In addition, both ships will feature expanded deck space and panoramic glass elevators.

Below the MSC Video of Both Classes; Seaside and Vista Class

 MSC Two New Ship Classes Seaside and Vista

Both ships are as-yet-unnamed. The first Seaside-class ship will debut in November of 2017, with MSC taking delivery of the second in May, 2018. MSC also holds the option for a third Seaside-class vessel with Fincantieri that could be exercised if the company wishes.

Branson looks to make waves with expansion into cruising

After toying with the concept for many years, Richard Branson finally took the plunge and committed his Virgin brand to a new cruise venture, to be known as Virgin Cruises.

The startup will be the first major cruise line to be created from scratch with newbuilds since Walt Disney Co. unveiled its cruise plans nearly 20 years ago.

Though sometimes controversial, Branson, the founder of Virgin Group, has earned international respect in the business world as a visionary entrepreneur.

But one cruise veteran said Disney’s experience demonstrated what kinds of challenges Virgin faces.

“It’s not an easy business to break into,” said Mark Conroy, former Regent Seven Seas Cruises president. “It took Disney four or five years to get it where it needed to be.”

Branson’s vision and business acumen should help overcome obstacles. His Virgin Atlantic Airways provides a distinctive product in a fairly uniform industry, and the Virgin label is a part of more than 400 businesses worldwide, including entries in travel, entertainment, telecommunications, media, financial services and healthcare.

“We plan to shake up the cruise industry and deliver a holiday that customers will absolutely love,” Branson said in a statement announcing the formation of Virgin Cruises.

In that statement, Virgin Group said the line planned to start by building two “world-class” ships. The size of the vessels was not disclosed, nor was a date mentioned for the start of operations. Virgin said those details were being withheld for competitive reasons.

Conroy estimated it will take 36 to 40 months to design, build and deliver a ship that will serve as a prototype for the line.

The new cruise line plans a headquarters in the Miami-Fort Lauderdale area, which could be seen as a sign that it will be more focused on selling to the North American market initially than to the U.K., where most of Branson’s other businesses are based.

In the U.K., cruise tours are sold under the Virgin Holidays Cruises label, combining a land vacation with a cruise on a variety of established U.K.- and U.S.-based cruise lines.

Conroy said starting a cruise line has become a dauntingly expensive proposition, estimating it will cost $750 million to $1 billion to build the ships that Virgin disclosed.

“In the olden days, you could start a cruise line with $20 million or $30 million,” Conroy said. “Not today.”

To help with financing, Virgin Group said it has enlisted Bain Capital, a well-known private equity and venture capital firm, to be its lead investment partner. Notable investments in startups by Bain Capital’s venture arm include DoubleClick, LinkedIn and Shopping.com.

For cruise expertise, Virgin has hired Disney alum Tom McAlpin as CEO of Virgin Cruises. McAlpin helped found Disney Cruise Line and was its president from 1996 to 2009. He subsequently became CEO of The World, Residences at Sea. A Miami native, he started his cruise career at Royal Caribbean International.

“Opportunities like this do not come often, so I am very excited to lead this business and introduce the Virgin brand to the cruise industry,” McAlpin said in a statement.

Adam Snitzer, principal at Peak Revenue Performance, a Miami Beach cruise consulting company, said Disney’s continued success in the cruise business was partly due to McAlpin.

“He’ll bring a lot of fresh ideas to the Virgin brand,” Snitzer said. “Getting a new cruise line off the ground is a lot of work. Tom’s done it before for Disney. I see no reason to think he can’t do it again.”

Snitzer said that Branson’s arrival is good news for a business on the hunt for new and younger customers.

“To the extent that many people still see cruising as ‘food fests for seniors,’ having a cool, hip, well-known entrepreneur like Branson as an owner will only help to further break down that old misperception,” he said.

Branson’s interest in cruise was well known in the industry. “He’s probably talked to everyone in the business over the years,” Conroy said.

Ray Cotton, a principal with Bain Capital, said the cruise industry needs what Branson’s got.

“With a small number of global players, an experience in need of refreshing and consumers ready for something new and exciting, the industry exhibits all the characteristics of one ripe for a new entrant,” Virgin’s statement quoted him as saying.

But Conroy said cruise lines are already doing some interesting things without any outside pressure, citing ships such as Royal Caribbean’s Quantum of the Seas and Norwegian Cruise Line’s Norwegian Breakaway.

“Norwegian is a transformed company,” Conroy said.

Although the Virgin brand is a strong marker for hip and youthful, Conroy said he was uncertain whether it would command the same premium as Disney does in the family market.

“It all depends on what it delivers,” Conroy said.

Virgin Atlantic has cultivated a loyal following, but if anything its transatlantic fares are lower than those offered by old-line competitors such as British Airways or Lufthansa.

Conroy said that Branson’s dealings with travel agents are encouraging. “I know a lot of agents who know him, and he seems to be agent-friendly,” he said.

Evan Lovell, a partner at Virgin Management Ltd., said in a statement that the cruise line will benefit from Virgin’s “extensive travel and leisure experience,” which includes passenger train service in the U.K. and a new hotel brand that is scheduled to open its first property in Chicago next month.

Much like Disney, Virgin can benefit from mining its existing databases to market the cruise venture to customers who have already tried some of its other travel-related products.