NCL on the Move for More Growth

With new financing in place, the Star Group is prepared to continue the newbuilding program for Norwegian Cruise Line (NCL), according to NCL President and CEO Colin Veitch. "The funding is intended to support additional growth," he told Cruise Industry News. And, while NCL has a good mix of ships, it is "deficient in post-Panamax ships," Veitch noted, when asked if NCL will consider building larger ships.

This has been a busy summer for NCL which recently also announced a June 6, 2005 delivery date for the Pride of America and also that the first of its two newbuildings under construction at Meyer Werft will be named the Norwegian Jewel to be followed by the Pride of Hawaii. In addition, NCL has also announced the expansion of year-round cruises from New York with the Norwegian Spirit ( ex-Superstar Leo) sailing 10- and 11-day cruises starting in November 2005.

NCL America

The Pride of America will be delivered more than a year late, after she partially sank at the dock while under construction at Lloyd Werft Bremerhaven during a storm this past January.

While the ship was refloated a few weeks later, and salvage work has been underway, construction stopped while NCL, the yard and insurers negotiated a settlement and a detailed repair specification and new work schedule. The cash cost for the salvage work and repairs are covered by insurance.

Equipment that has to be replaced includes all the electrical wiring and switchboards as well as the pods.

Meanwhile, NCL launched its new brand, NCL America, with the Spirit of Aloha, ex-Norwegian on July 4.

"We have started from scratch - there was no (labor) pool to draw from - and on a scale that has not been done in 35 years," Veitch added with reference to staffing with U.S. crew and officers.

"We have built up a good core crew," he continued. "They are hard working, service-oriented and friendly. The product is well received.

"We have had some turn-over. There are people who have had totally different expectations.

"The U.S. population contains people who are hard working and service-oriented and some who are not," Veitch said.

"One big difference is that crew on the Spirit of Aloha can literally walk down the gangway and take the bus borne if they are unhappy," Veitch explained.

Thus, the atmosphere onboard and the management systems have to be supportive and geared to retain crew, according to Veitch.

Not only do all labor law, overtime rules and minimum pay apply, NCL also bas to comply with Hawaiian standards, which Veitch said are higher than federal standards for minimum pay.

NCL bas to have 100 percent U.S. crew and officers of which 75 percent must be U.S. citizens and 25 percent can be green-card holders. All licensed seamen must be citizens.

The only job that came up short was for high voltage electronics, as there are few U.S. ships running diesel-electric power plants as powerful as on modem cruise ships. But since this is not a licensed position, NCL is able to hire green card holders.

"The officers have already served on NCL's international ships which have also included training in NCL's safety management and environmental systems.

To cover the higher wages, NCL has instituted a $10 charge per passenger, per day, which is automatically charged to their onboard account. No tipping is required or expected, according to Veitch.

"Many of the officers and crew onboard the Spirit of Aloha have been training on our other ships, and they are now very proud to run their own ship," he explained.

After the Pride of America joins the Spirit of Aloha in 2005, NCL America will receive the second of the two 92,000-ton, 2,400-passenger newbuildings under construction at Meyer Werft, the Pride of Hawaii, in summer 2006.

By 2006, NCL America will have 6,500 beds under U.S. flag in Hawaii. "All three ships will sail seven-day cruises out of Honolulu, with at least one ship offering a seven-day itinerary that can be split, enabling package tourists and others to take a three- or four-day cruise," Veitch noted.

Also sailing year-round in Hawaii is the Norwegian Dream, featuring 10- and 11-day itineraries that include calls at Fanning Island.

The combined annual capacity of the four ships will be close to 500,000 passengers or approximately one third ofNCL's business.

"In three years, we will go from carrying 130,000 to 500,000 passengers a year," Veitch pointed out, adding that he thinks Hawaii has even more potential.

Veitch is not concerned about stressing the infrastructure, noting that airlift, for instance, tends to follow cruise demand.

"Cruising is good business for the airlines," Veitch explained. "Cruise traffic is predictable, allowing the airlines to plan on reliable traffic at good prices. We have found that we can persuade the airlines," he continued. "We have been able to increase the lift out of Denver and Chicago with United Airlines."

NCL's U.S. flag ships can also sail from U.S. ports to Hawaii, according to Veitch.

While casino gaming is not allowed on ships sailing in Hawaii, Veitch said that Hawaii is a premium priced destination that generates higher per diems than the Caribbean, for instance.

NCL bas also opened a customer service center at the Waikiki Beach Marriott Resort and SPA in Honolulu, offering NCL and NCL America passengers pre-cruise check-in and handling shore excursions coordination, advance spa and dining room reservations and cabin upgrade requests.

New York

NCL introduced year-round cru1smg from New York with the 2,200-passenger Norwegian Dawn in 2003. In 2005, the 2,000-passenger Norwegian Spirit will take over the Dawn's 10- and 11-day Caribbean program, while the Dawn will sail 10- and 11-day cruises to Jamaica, Honduras, Belize and Mexico during the winter months, but seven-day cruises to Florida and the Bahamas in the summer.

The Spirit is working out very well in Alaska, according to Veitch, who said NCL put a "dream-team" crew together and that feedback from passengers has been very good.

While considerable work was done on the Spirit during drydock in Hong Kong in the spring before entering the North American market, some additional work - rearrangement of some public areas - will be done before the ship enters the New York market - "to increase its earnings potential."

In addition, the Norwegian Crown will be sailing to Bermuda from May 22 through September 18, 2005. "We are into our second year with the Dawn," Veitch said, "and in our judgment the market can take a second (year-round) ship."

He noted that the New York year-round market has grown from virtually nothing to more than 400,000 passengers sailing to the Caribbean and the Bahamas in less than a year's time.

The Dawn originally sailed seven-day cruises but that program was extended to 10- and 11-day cruises in the depth of winter. ''Now, going as far south as Barbados, we can guarantee warm weather even if there happens to be a cold spell in Florida," Veitch pointed out.

"We have to differentiate ourselves," Veitch explained. "We make sure we have good ships in Florida but the big guys dominate the mass trade, and they are so big we cannot catch up. While we intend to stay in the mass trade, we will build up in other areas where we can be the leader. It comes down to select deployment of good, large ships."

Norwegian Jewel

The Norwegian Jewel will launch Caribbean seven-day service in late summer 2005 from Miami before spending the 2006 summer in Alaska.

The Jewel will be NCL's fourth purpose-built Freestyle Cruising ship and will feature 10 restaurants, two garden villa suites, and what NCL calls a "brand new style of accommodations - 10 courtyard villas with a private courtyard and sundeck on Deck 14.

Both courtyard and garden villa guests will have a concierge lounge available to them. Dedicated butlers will offer continental breakfast, refreshments all day and canapes and drinks before dinner.

Among the many unique features will be a beer and whiskey pub with a contemporary bar with low seating and tables along with mood lighting that compliments the backlit artwork themed around whiskey and beer production. In addition will be a martini and cocktail bar and a champagne and wine bar.

Before arriving in Miami, the Jewel will be shown during a series of inaugural events in Europe and a 14- day Mediterranean cruise primarily for the European market and a trans-Atlantic crossing out of London.

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