There's going to be a new player in the river cruise market, and Celebrity Cruises is coming at it with a big plan.
Celebrity made headlines when it announced it will start offering river cruises in 2027, starting with a fleet of 10 ships. There's already hints that there's much more to come, both in expanding the fleet and destinations.
The expansion into river cruises is about offering more choices to customers, and giving its existing customer base a brand-friendly approach into a new way to cruise.
They believe already about half their guests have either tried a river cruise or would want to, and that's the impetus for branching out.
During Royal Caribbean Group's Fourth Quarter earnings call with Wall Street investors on Tuesday, executives shared additional insight into what we can expect in the coming years from the new venture.
New opportunities
Celebrity River Cruises is a bold plan to take advantage of a "fragmented market", according to Royal Caribbean Group CEO Jason Liberty.
"Beginning in 2027, Celebrity River Cruises will provide yet another opportunity for guests to explore even more destinations with our leading brands," said Liberty during the call.
"That's the driving force behind this change. Give people familiar and happy with Celebrity an opportunity to try something different."
When the river ships will be ready
AI generated concept
Mr. Liberty was asked when the new ships will be ready, and he laid out the plan.
"A couple of ships" will be ready for service sometime in 2027, and then we can expect an additional four ships each year to be ready.
He also strongly hinted that 10 ships is only the initial order, and more are likely, "I'd also point out because we are very intentful in our words. The word put in front of it was initial order was 10 ships. And so this is not a hobby for us."
Each ship holds about 180 passengers.
He also said more ships will be ordered before 2027, "you're not going to wait till 2027 to order more. This is our initial order."
The river ships will be designed to look like Edge Class ships
The 10 river ships that Celebrity has ordered so far will be designed with their ocean going Edge Class ships in mind.
The Edge Class ships are the latest class of ship design for the brand, and they've re-defined Celebrity in a lot of ways.
Having first debuted in 2018 with Celebrity Edge, they are stylish ships that incorporate modern technology, and a focus on immersive experiences. They are best known for its outward-facing design connects passengers more closely to the ocean.
"There's an incredible opportunity to take these beautiful small ships and through design, improving in culinary and entertainment staterooms, etc., and really bring it up to the level of what you see on Edge," Mr. Liberty commented.
That design difference is one factor in why the company believes Celebrity will succeed in the river space because having Edge Class level design is "far superior to anything else that's in that space."
All inclusive fares?
River cruises today tend to be all-inclusive, and Celebrity might be headed in that direction with their river cruises.
Mr. Liberty talked about that issue in a round-about way in comparing a Celebrity River Cruise to a luxury river cruise, "I think it's important when you're comparing what Celebrity gets today versus what you might see what Viking gets today as an example, it's important to note that on the Celebrity side, it's not an all-inclusive product."
"So as you start adding in some of the inclusivity that comes with river, we expect those APDs to also elevate."
Celebrity to start, maybe SilverSea in the future
Wall Street analysts were curious if it makes even more sense for Royal Caribbean Group's luxury cruising brand, SilverSea, to get in on the river cruise market.
Mr. Liberty didn't rule it out, but did say they would need to wait and see, "as we build up this kind of engine for river under Celebrity, it will certainly provide opportunity for our ultra-luxury guests to consider a river experience under Silversea."
"We're going to start off with Celebrity. We're going to see that's where we think that there is great scale opportunity. And then of course, we'll be looking to see if there's other ways to expand it for our other brands as it sees fit."
River cruises will not operate year-round
One thing Mr. Liberty was quick to note was that the river cruise market is seasonal, unlike the Caribbean.
"[It] will be a little bit different is usually the river boats do not operate year-round. So there will be parts of the year where the ships are laid up."
He then went on to say, "that's under the kind of the current model," so it's possible Celebrity is envisioning something different.
"We will obviously be studying that to see how we can make them as productive as we can during the off-season when it's cold."
Celebrity's ships may not just be in Europe
The focus of many questions centered around European river cruises, but Mr. Liberty tossed in a quick mention there are river cruises elsewhere.
"I also think that sometimes we always think about certain rivers inside of Europe, but there are also rivers around the world. And we're trying to make sure that we are being able to provide the experiences that our guests are looking for," he said.
Celebrity isn't going after Viking River Cruises
From the start of the call, many Wall Street analysts began making comparisons to the market leader, Viking River Cruises.
Royal Caribbean Group respects the product Viking offers, but said they have a different intent.
"We feel very confident that this isn't about chasing Viking customers or another customer," Mr. Liberty said.
He sees this as a way to getting more people who cruise with the Royal Caribbean Group brands to try a river cruise too, "this is about leveraging this incredible sort of business that we have, this incredible flywheel, this incredible leading brands in each one of their segments and making sure that we keep them inside of our ecosystem."
He believes because of the attractive nature of the ocean going cruises they have, they have a built-in audience that's ready to try a river cruise.
In the announcement of Celebrity River Cruises, the company said half of their customers have expressed an interest in trying a river cruise or already have, and when you combine that with the strong customer loyalty program that allows loyalty matching between each brand, it's a strong case for getting people onto a river ship.
"We're adding more and more things like enterprise loyalty on the reciprocity and so forth. So it really incentivizes our guests and recognizes our guests to stay inside of our ecosystem."
