Viking River Cruises is sailing into blue seas, but observers say it could be a rough ride. The Woodland Hills-based company recently announced that it is expanding from its niche business as leader in river cruising into the crowded market of luxury ocean cruise lines, many of whom don’t make a profit. Though Viking is only adding two new ships, the move will more than double Viking’s capacity since each ocean-going ship is to carry more than six times the number of passengers that a river boat carries. Filling those slots may not be easy. “It’s a tough business,” said Rod McCleod, co-founding partner with McCleod Applebaum & Partners, a management consulting firm that advises the vacation travel industry. “All the significant players are owned or controlled by deep-pocketed companies.” Viking signed an agreement in April to buy two new luxury vessels from Italian shipbuilder Fincantiari. The deal includes an option for a third vessel. The renowned shipbuilder is the one many luxury lines turn to for their opulent boats. Each of the new Viking ships will have a capacity for 998 passengers in 499 cabins. The first ship is scheduled for delivery in late 2014; the second one in late 2015. The parties said they have reached an agreement on the financial and technical aspects of the deal and expect to sign a contract shortly. Viking chairman Torstein Hagen was not available for an interview. He said in a statement, however, that Viking is “excited to bring this same destination focus back to ocean cruising.” Hagen is no stranger to ocean cruising. Though he is best known for introducing North American consumers to European river cruising, the former McKinsey & Co. consultant had previously worked at Royal Viking Line, a San Francisco luxury cruise operator that went out of business in 1998, McCleod said. It was a well regarded company with a good product and brand, but in the race against Royal Caribbean International, which was founded the same year, Royal Caribbean won, he said, partly because the latter focused on mass market cruising. Royal Caribbean has its own luxury brand – Azamara Club Cruises, with two ships carrying 694 passengers each — but the brand is heavily supported by the parent company, McCleod said. “I have a high regard for Torsten,” McCleod added. “But he’s going up against some of the biggest operators, including Carnival and Royal Caribbean and the Norwegian prestige operators. There are no dumb operators, and in this business, size counts.” Others say Viking has a distinct opportunity, especially as the economy recovers. Ron Kurtz, owner and president of the American Affluence Research Center, says the luxury ocean cruising market is underserved at the moment. Roughly 15 percent of the wealthiest 10 percent of U.S. households plans to go on an ocean cruise in the next 12 months — about 1.7 million households, he said, which amounts to 3.4 million people. While the number is down from its peak of 22 percent in the fall of 2007, he said the number still exceeds the capacity of luxury carriers, which is roughly 500,000 to 600,000. Kurtz said that number does not include luxury suites aboard mass market ships, which if counted would probably double the capacity. “It’s not a slam dunk for Viking by any means,” Kurtz said. “There is a fair amount of discounting going on which suggests softness in the market. But there is an opportunity there.” One challenge facing Viking is how it will differentiate itself in a sea of competition. There are numerous luxury cruise lines from Royal Caribbean’s Azamara to Seabourn Cruise Lines, owned by Carnival Corp., to Regent Seven Seas Cruises and Oceana Cruises, owned by the investment management firm Apollo Investment Corp., and Crystal Cruises, owned by a large Japanese conglomerate. Almost all have perfected the art of luxury cruising from the high level of service to the gourmet food, choice wines and exotic destinations. In its initial announcement, Viking said it hopes to differentiate itself with intimate cruises. In addition, its small boats will be able to pull into smaller ports that the large ships can’t enter. But these may not be enough to help the company stand out. In addition to the small luxury cruise lines, the premium mass market ships offer luxury three- and four-bedroom suites for a price tag similar to what the luxury lines charge, but with many more amenities such as gaming, nightly shows or even water parks. Many wealthy cruisers choose these large ships because of the extras. One reason the smaller luxury lines have a hard time turning a profit is that they typically lack the ability to make extra revenue on gambling or drinks. Their all-in-one price is typically much higher, but often not enough to offset the cost. Viking is a seasoned operator and knows how to run efficiently. But McCleod said no one is as efficient as Royal Caribbean and Carnival, and even they have a hard time eking out a profit in luxury cruising. Kurtz said what Viking has going for it is a customer base familiar with its product — people who have tried its river cruises and may now want to try its version of ocean cruising — and deep relationships with travel agents who will want to promote the new cruises.