Viking founder Torstein Hagen on the luxury cruise line especially for baby boomers

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Julia Wilcox, a veteran cruise goer at just 24 years old, is used to her inbox being flooded with promotional emails from cruise lines courting loyal customers. But Wilcox, who vlogs her cruise experiences on TikToksaid one cruise line is taking a more idiosyncratic approach to their marketing: two or three times a month, she gets thick, glossy paper envelopes in the mail from Viking Cruises, the luxury cruise line she took on a 10-day trip in January 2023. It’s the only cruise line that sends its paper mail – and it does so all the time.

“I get so much paper mail from Viking. I’m like, this is crazy,” she said Fortune. “You could send me on a free cruise for the amount of paper and stuff you send me.”

Although deviant in its marketing strategy, the logic behind Viking’s insistence on sending snail mail makes more sense after Wilcox, a Gen Z TikToker, admitted that she is not the company’s target audience. In fact, she was forty years younger than the average age of cruise guests of 60 or 70. That’s exactly how Viking wants it.

“They are the richest group we have,” Viking CEO Torstein Hagen said in a May 1 CNBC Squawk on the Street interview. “They have the money; they have the time.”

Hagen, who at the age of 81 surpasses his baby boom target group, has tailored the cruise to the tastes of the older target group 70% of the country’s disposable income. No children under 18 are allowed and there are no casinos on board. Instead, Viking’s line of 92 ships — which travel to all seven continents and employs 10,000 employees — offers walking tours of European cities and cheese tastings.

“It’s a very serene environment for people their age,” Hagen said, “and for curious people who want to go to destinations not [who want] to go on water slides and the like.”

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Hagen’s strategy has certainly worked so far. Viking, with a Valuation of $10.4 billion, raised $1.5 billion in its IPO on May 1, the most of any company this year. Per one SEC filing compared to last month, Viking experienced growth of 14.4% from 2015 to 2023, the largest jump of any luxury river or ocean cruise during that period.

“We have a very, very clear focus, and that is reflected in all of our customer reviews, the rewards we get, and so on,” Hagen told CNBC. “It doesn’t make us as big as the others, but it certainly makes us more attractive to consumers.”

Viking didn’t respond Fortune‘s request for comment.

The precision and analytical approach that Hagen brings to the company mirrors his own initial search for physics from the Norwegian Institute of Technology before coming to the US and receiving his MBA from Harvard. Originally from outside Oslo, the Norwegian developed his business intuition by failing before finding success. As CEO of cruise line Royal Viking in the 1980s, Hagen arranged a $240 million management buyout that failed when a competitor made a surprise purchase of the company. He soon was removed from the role.

Hagen, who runs the company together with daughter Karine Hagen, founded Viking in 1997 at the age of 54. He considered it a modest venture consisting of “two guys with two cell phones and four river barges,” according to the company prospectus. From his first voyage, Viking’s goal was: in the words of Hagento be a thinking person’s cruise, and not a drinking person’s cruise.

The current

Viking has benefited from favorable timing for the cruise industry, namely the recovery from pandemic lockdowns that left wealthy vacationers craving indulgent getaways. Patrick Scholes, managing director of lodging and leisure equity research at Truist Securities, is optimistic about the future of the sector because of that high demand.

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“People want a vacation,” he said Fortune. “They’re looking for something different that they hadn’t done in the first two, three years of COVID, and that was definitely on a cruise ship.”

Cruises developed a reputation during the pandemic because their enclosed spaces, conducive to infectious diseases, sometimes resulted in boats dock early. Even Viking took a hit after that 100 passengers battled norovirus during a cruise in June 2023. Companies sweetened deals to win back customers by offering discounts and promising private beaches. While restaurants and hotel resorts were slow to recover from the pandemic labor shortagesThe presence of cruise ships in foreign waters meant that they did not have to adhere to American wages and that there were sufficient personnel, mainly foreign workers, employed. During Wilcox’s Viking cruise, she marveled at the consistent and frequent turndown and cleaning services.

“That value proposition includes the high, consistent level of staff and service on a cruise ship,” Scholes said. “You’ve been to a restaurant, you’ve been to a hotel – staffing is a problem, a challenge post-COVID. And cruise lines haven’t had that problem.”

Bob Levinstein, CEO of travel agency CruiseCompete, said Fortune Viking primarily delivers on its value promise by managing food, service, excursions and communication into a reliable product.

“They just really nailed it,” he said.

More growth is on the way for the company. Now that Viking has weathered the pandemic, it has 24 ships on order, with an option for another ten ambitious plans to expand its Chinese customer base to 150,000 passengers by 2025. Viking’s resilience during a difficult time for the industry made the decision to go public a no-brainer for Hagen.

“The private equity firms have to get liquidity out of their investments at some point, and they’ve been at it for eight years now – so it was as good a time as any,” Hagen said. Fortune last month. “During the pandemic it wasn’t easy, and I think it was the natural thing to get out of there now and get good results.”

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The ebb

But the tide is turning, and the economic waters that support the cruise industry are no exception. As cruise lines meet growing demand by commissioning more ships, companies’ promotional packages and pricing power will decline, Scholes predicted.

“This is just economic capitalism,” he said. “In 2029 we will see a lot of new ships, and that will be a lot of cabins to fill. It will be difficult to raise prices.”

There’s a reason for Viking to remain level-headed as the industry matures, Levinstein argued. The company’s $1.5 billion IPO was well timed, he said, but is unlikely to have a major impact on Viking’s future. It’s probably just a way to keep the property liquid and line the pockets.

“That’s only about four of the ocean carriers – maybe a little less if prices have gone up since they made their last deal,” he said. “But it’s not groundbreaking money.”

The cruise’s modest but established amenities aren’t foolproof either. “The food was definitely a miss,” Wilcox said of her time aboard a Viking, resulting in the “worst” room service hot dog she “had ever had.” She heard from other cruisers that the special menus the cruise promised change every night, but the food items offered have been the same for a decade.

The oversight in Viking’s reputation for rock-solid amenities may be an attack on the cookie-cutter model Hagen cites as the reason for the cruise line’s success, but the CEO remains laser-focused on the company’s philosophy of streamlined, steadfast service.

“I believe that the moment you try to do everything for everyone, do you know what happens?” he said. “You’re not doing anything right.”

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