Cruise line operators make a big play for millennial travellers
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Cruise line operators make a big play for millennial travellers

Royal Caribbean and its peers are pulling out all the stops to appeal to millennial consumers. This cohort, which has risen to prominence in the last few years as all of its members are now working age, might best be summed up as “all adults under 40”. What will get them onto the high seas? According to Royal Caribbean, the Sky Pad: a bungee trampoline experience with added virtual reality! The company is spending hard to roll out updates like this across 10 of its ships in the next four years, to the tune of $900 million.

Royal Caribbean’s share price has appreciated by 5% over the last 30 days

graph 1408 cruise

SOURCE: Yahoo Finance

Bungee trampoline experiences are only the tip of the proverbial iceberg: Royal Caribbean is bringing more of these “adventurous” and “fun” experiences to its ships, it’s offering shorter cruises, and featuring more live bands and sports bars that stream live events – all to appeal to millennial consumers, and their need for experiential travel in bite-size pieces.

The company’s president and CEO, Michael Bayley, said: “From an investor perspective, this is about growing a market and attracting the next generation.” Wall Street agrees with him – bur many analysts view it as an investment into tomorrow’s cruisers. The worry is that millennials will find other pastimes that hurt the industry’s longer-term prospects, but catering to them now is an insurance that this won’t happen. As to today’s revenue, it’s all still about the Baby Boomers – neither the Street nor the cruise lines have forgotten that.

Robin Farley, managing director and research analyst with UBS Investment Bank who specializes in travel and leisure praised Royal Caribbean’s awareness of future consumers before reiterating the importance of their parents:

“Baby boomers are still the largest cruise demographic, and the nice thing is, with 10,000 boomers retiring every day, they have the time as well as the money to take cruises. There are some other sectors we look at where the aging baby boomer is a negative trend (such as buying motorcycles at a lower rate), but aging boomers seem to be good for cruise demand. And they control half of household income in the U.S.”

Disclosure

Dominion holds Royal Caribbean in its Global Trends Luxury Fund


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