After 27 years of being a privately owned company, Viking has made the decision to go public. This move has been met with mixed reactions, especially among travel advisors. The company’s founder and chairman, Torstein Hagen, made it clear in the IPO registration form that the core business of the cruise line will remain the same. However, one particular aspect of the registration form caught the attention of travel advisors – Viking’s plan to focus on growing direct bookings.
Viking stated in its IPO that it intends to expand its direct bookings, citing a database of over 56 million North American households. The company believes that increasing direct bookings will contribute to the overall growth and value of the business. While this may be a strategic move for Viking, it has raised concerns among travel advisors who have played a crucial role in generating bookings for the cruise line.
In the midst of emphasizing its plan to boost direct bookings, Viking also acknowledged the significance of the travel advisor channel to its brand. The company highlighted that travel agencies are responsible for a significant portion of bookings for Viking cruises. Therefore, Viking is committed to maintaining and strengthening this distribution channel.
Viking mentioned that it has established preferred relationships with major travel agency consortia and employs sales managers in key markets to keep travel advisors informed about its products. The company also cautioned that any disruption in these preferred relationships could potentially impact its travel agent distribution system and, consequently, its business.
In response to Viking’s stated intention of increasing direct bookings, Zane Kerby, president and CEO of the American Society of Travel Advisors (ASTA), underscored the pivotal role that travel advisors play in selling cruises. Citing a Phocuswright study, Kerby pointed out that travel advisors booked nearly 59% of all cruises in the U.S., with projections indicating that they could be responsible for selling up to 71% by 2026.
Kerby emphasized that the river cruising market is highly competitive, with numerous options available to customers. He suggested that Viking would be wise to prioritize U.S.-based travel advisors as their primary distribution channel, given their significant impact on cruise sales.
Viking, which operates 81 river ships globally along with nine oceangoing and two expedition ships, has historically relied on a diverse distribution strategy to fill its ships. In a feature on Hagen and Viking in Travel Weekly back in 2013, Hagen acknowledged the company’s aggressive pursuit of direct marketing. He mentioned that Viking employs direct mail campaigns and accepts direct bookings, regardless of where customers choose to book. Hagen reassured that travel agents receive commissions on all bookings made through Viking.
Despite Viking’s impressive revenue growth of almost 150% since 2017, totaling $4.7 billion in 2023, the company also reported a significant net loss of $1.9 billion. The loss was mainly attributed to the challenges faced during the pandemic-induced pause in cruise operations. Viking managed to sail with an occupancy rate of 93.7% last year, marking an improvement from the 78.4% occupancy rate in 2022.
Overall, Viking’s decision to prioritize direct bookings has sparked a debate within the travel industry. While the company aims to leverage its vast database for growth, the potential impact on travel advisors cannot be overlooked. As the cruise line navigates through this transition, finding a balance between direct bookings and maintaining relationships with travel advisors will be crucial for sustaining its success in the competitive cruise market.