COMPETITION in Europe’s river cruising sector is likely to heat up with the news of Celebrity Cruises’ entry into the category, according to analysts.
Truist Securities Managing Director Lodging & Leisure Equity Research C. Patrick Scholes believes Celebrity’s initial flotilla of 10 river ships will primarily compete with smaller cruise lines, rather than established players such as Viking.
Scholes believes Celebrity parent company Royal Caribbean Group (RCL) was likely attracted to the river sector by the strength of Viking’s now-public financial results (CW 20 Nov 2024), following the line’s IPO last year (CW 03 May 2024).
The travel industry analyst also suggested RCL is not the only cruise company to investigate entering the river cruise market, with several of its competitors said to be close to buying into the market pre-pandemic, before passing on the opportunity.
“Given the high ROIC and profitability of luxury river cruising, it is not impossible to believe that CCL/NCLH/RCL may enter the sector, though we are not aware of any immediate plans to do so,” Scholes wrote at the Viking earnings launch last year.
“RCL made it clear that they have plans to do so with 10 initial ships…by comparison, [Viking] currently has 82 river ships and has plans to have 93 by 2027.”
The size of Celebrity’s initial river fleet is unlikely to move the financial needle for RCL immediately, Scholes considered, also noting the low capital expenditure required.
“We ballpark the cost of a river cruise ship at around US$30 million, so approximately US$300 million for 10 ships, which is [a] fraction of the spend for Star of the Seas,” he said. MS