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‘Always Working to Raise Prices’

Norwegian Getaway

Driving the highest average ticket prices and onboard spending in the industry, Norwegian Cruise Line Holdings (NCLH) President and CEO Frank Del Rio said the company is always working to raise prices across all three brands (Norwegian, Oceania and Regent).

“We have the highest yields in the industry,” Del Rio said on the company’s recent Q3 earnings call, “not only in tickets but also onboard. That does not happen by chance. It happens because we work every hour of every day, always looking for opportunities to raise prices across our three brands.”

He continued to say that NCLH invests marketing dollars to stimulate demand in the marketplace versus reducing prices.

“Whenever we believe that the booking window will allow us, we take pricing up. We are constantly looking to optimize our itineraries and always moving ships to higher-yielding itineraries.”

As an example, he said that the Norwegian Spirit will be taken out of the historically low-yielding winter market in the Canary Islands and moved to Africa, Asia and Australia following her upcoming refurbishments.

Ships that were moved into Bahamas programs after the ban on Cuba cruises will also be moved to higher yielding deployments.

These moves generate lower marketing costs, higher occupancy, higher yields, more revenue and more earnings per share, according to Del Rio.

Added Mark Kempa, executive vice president and CFO: “We are not afraid of spending marketing dollars when we are going to get a minimum of four to five-times the return.”

The core onboard revenue was up mid-single digits in Q3, according to Kempa.

“That’s strong and we continue to see that. It is the canary in the coal mine. We watch it day-in, week-in, week-out, and we are continuing to see strength,” he said.

“The consumer is alive and well. We are combining that with many of our pre-cruise initiatives where we are getting a lot more of that consumer’s spending before they ever step on the ship.”

Gross revenue per passenger day for NCLH in Q3 2019 was $355.23, with $254.99 from tickets and $100.24 from onboard spending.

Net revenue per passenger day for NCLH in Q3 2019 was $270.99, with $193.57 from tickets and $77.43 from onboard spending.

 

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