Virgin Voyages partners with LVMH’s Starboard as Harding+ departs

Cruise retailer Harding+ will phase out Virgin Voyages between April and July this year in a bid to cut losses after a difficult start for the British cruise line. LVMH-owned Starboard Cruise Services will take Harding’s place later this year.

The move comes just as Virgin Voyages is set to add two more ships to its current fleet of two and the situation will be disappointing for both parties, who have been partners for six years.

When billionaire entrepreneur Richard Branson first announced in 2014 that he was entering the cruise business with Virgin Voyages, excitement was high. The Virgin brand is synonymous with originality and creative flair, and the new line was intended to shake up a somewhat predictable and serious cruise business.

Unfortunately for Virgin Voyages, the Covid-19 pandemic has come at the worst possible time, as has their first ship, which has a capacity of 2,700 scarlet lady, was ready to launch in March 2020. The debut was canceled and the ship only made its maiden voyage in August 2021.

True to form, Branson brought novelty and an edge to the offering. Some of the line’s firsts at sea included: adults-only ocean vacations (for hip travelers 18+), banning the traditional buffet, daring cabaret performances, and an all-inclusive price at more than 20 restaurants, gratuities, Wi-Fi, essential drinks, and more group fitness classes.

From a retail perspective, the same rules of unconventionality applied. Harding began planning back in 2017 to mark the cool cruise customer Virgin Voyages wanted to attract. Scarlet Lady had a limited edition record shop on board, the first MAC Cosmetics store at sea, as well as a karaoke studio and products by the late punk fashion icon Vivienne Westwood.

In line with Branson’s sustainability aspirations, Virgin Voyages also insisted on purpose-driven brands and Harding+ secured a range of ethically sourced labels. For example, the trendy sunglasses from Coral Eyewear made from recycled sea plastic and the hand-woven hammocks from Yellow Leaf, which are on every balcony of the Sea Terrace and are also sold on board.

time for difficult decisions

Sally Barford, Associate VP, Hotel Partnerships at Virgin Voyages, said: “We have enjoyed an incredible partnership with Harding+ and their team, but together we have decided it is time for both brands to explore the next steps.”

Harding CEO James Prescott added that while it’s been “great fun” to lead the cruise retail offering, it also requires “making some tough decisions about what’s right for the company.” In Harding’s case, it appears that its key private equity backer couldn’t wait any longer for returns that were initially blown out of the water due to the pandemic. Prescott added: “We wish everyone at Virgin Voyages the very best and will be working hard to redeploy the members of the Harding+ team who have been part of the Virgin ship teams.”

Harding’s decision to leave comes after a six-year partnership that has not yielded the financial fruits either side expected. A source familiar with the business told me the cruise trader was “bleeding money” even though two ships were now in operation –Scarlet Lady and Brave lady. It seems the retailer couldn’t wait for the next two ships to go live: Resistant lady will be inaugurated in Athens, Greece in May Brilliant lady will start later this year.

The source said: “Virgin Voyages’ occupancy rate has been very low over the last 18 months and certainly not enough for an onboard retailer to make money. Harding+ hasn’t reported back for several years, so it’s not surprising that the company pulled out.” Neither Harding nor the cruise line disclosed the terms of their deal.

Virgin Voyages — a private company whose investors include Virgin Group, Bain Capital Private Equity and others (most recently BlackRock with a $500 million cash injection) — did not disclose its occupancy rates when asked. A spokesperson told me: “Demand continues to grow and we have just celebrated another record week in bookings. Occupancy continues to increase and we expect a healthy and strong fourth quarter.”

A limited audience

Occupancy rates at other, more conventional cruise lines are rising fast, and several, like Norwegian Cruise Line and Royal Caribbean, have predicted they will return to historic levels this summer or sooner, no doubt helped by offers and incentives. Virgin’s expensive adult-only positioning and somewhat alternative offering – making it unique and distinctive in a buoyant market – could hamper it now that the target audience is limited and therefore could weigh on business.

Virgin Voyages will now be working with cruise retailer Starboard Cruise Services, a very experienced luxury brand supplier, as might be expected when it is part of LVMH stable Moët Hennessy Louis Vuitton, which has just announced record sales. However, Starboard doesn’t have the whimsicality or humor that Branson’s brands are known for, so this will make for an interesting pairing. Starboard made no official statement about its new partnership.

In the meantime, Harding+ will turn its attention to 13 other ships on which it will launch as a commercial partner. The UK-headquartered company currently operates around 300 stores on more than 100 cruise ships operated by over 20 cruise partners and claims to be the number one operator in the industry in terms of operator size.