River Cruise Lines Are Launched, with Low Capital Investment and High Fares

One of the fastest growing segments in the cruise industry is river cruises, which offer smaller craft that traverse major rivers such as the Rhine in Europe; the Volga in Russia; the Yangtze in China; and the Nile in Egypt. Popular river cruise companies include Viking River Cruises, Uniworld River Cruises and Avalon Waterways. As with the small ship, ocean-going cruise lines, the fact that these river ships are of limited scope, with lower passenger counts than their big-liner competitors, may give these ships a distinct competitive advantage among future passengers who want more social distancing. Viking, long one of the leading river cruise firms, successfully expanded into ocean-going cruises. Other River cruise companies include AmaWaterways, Tauck and Aqua Expeditions.

Onboard life on these very small ships can be quite luxurious. Uniworld’s SS Maria Theresa, for example, surrounds its 150 passengers with $2 million in art, decorating cabin-suites of 162 to 410 square feet each. The suites provide expensive Savoir beds, blue-marble bathrooms and French balconies.

Entertainment venues are limited, and tend to focus on cultural presentations, craft demonstrations and lectures. However, unlike large ocean-going cruise ships, Wi-Fi, meals, alcohol and most excursions are often included in the fare.

Small ships, including river cruises are a very different business model from giant cruise ships, and branching out into this business may not appeal to all major cruise lines. Consequently, both river cruises and small luxury ships are in a sector where a small competitor have an excellent chance to launch a niche business. The capital expense of building a relatively small river cruise ship is vastly less than building a major, oceangoing ship. The crews and administrative staffs are likewise vastly smaller. At the same time, revenues per cruise can be relatively small in a 400-passenger ship, compared to a giant, modern 6,000 passenger ship. Likewise, operating efficiencies can be lower in smaller ships. One of the benefits, however, is that many of the smaller cruise lines, particularly in river cruises, charge very high fees per cruise, and thus may earn substantial profits per passenger.

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River Cruise Lines Are Launched, with Low Capital Investment and High Fares, Business and Industry Trends Analysis

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