Norwegian CEO Del Rio enthused about return to Turkey

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Norwegian Cruise Line Holdings CEO Frank Del Rio said the company’s decision to return to the Eastern Mediterranean in 2019 is working out so far.

After pulling out of the region in 2016 because of terrorism fears and political instability in Turkey, NCLH has scheduled 12 sailings this year and has an additional 20 on the calendar for 2020.

“All 12 sailings in 2019 are better loaded and at higher pricing than the surrounding sailings that do not include Turkey,” Del Rio said.

He told investors on a conference call to discuss fourth quarter and 2018 earnings that Turkey is the key to the itinerary.

“The fact that the North American consumer, who is the one booking most of these Eastern Mediterranean cruises, seem to want to come back to the eastern Med and is willing to pay a premium price bodes very well for 2020,” Del Rio said.

The risk is that itineraries must be developed and sold 18 to 24 months in advance of sailing, he continued.

“So you test the waters, you see what happens, and it takes you a while to really ramp up. So at this point, assuming there are no other disruptions — reasons to not go to the Eastern Med — I expect that we along with the rest of the industry will probably increase the number of deployments to the Eastern Med beginning in 2020 and even more in 2021.”

Del Rio, who has a hand in all itinerary planning at NCLH, said that when the eastern Med is good, “it’s as good as any, if not the best, of all itineraries.”

On the call, Del Rio said NCLH enters 2019 in the best-booked position in its history, giving yield managers more leeway to raise prices.

“We’re pushing prices higher wherever we can,” Del Rio said. “While we still have a lot of cabins to fill, the emphasis will be on raising prices — on all three brands.”

In addition to Norwegian Cruise Line, NCLH operates Oceania Cruises and Regent Seven Seas Cruises.

The company had net income of $954.8 million in 2018, up 25.6% from the $759.9 million recorded a year earlier. Revenue rose 13% to $6.1 billion.

Last year, NCLH decided to redeploy the Norwegian Joy from China to Alaska, where it will cruise starting in April alongside sister ship Norwegian Bliss. That will increase NCLH’s presence in Alaska to 9% of total capacity, up from 7% last year.

Capacity in the Asia Pacific region will drop to 6% from 12% last year. NCLH will have six ships in Europe this summer and capacity there increases to 23% from 20% last year, while year-round capacity in the Caribbean is pegged at 36%.

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Fincantieri to build a new ship for Regent Seven Seas Cruises

Fincantieri to build new ship for Regent Seven Seas Cruises
Fincantieri is building a new cruise ship for Regent Seven Seas Cruises

Fincantieri and Norwegian Cruise Line Holdings have signed a contract to construct an ultra-luxury cruise ship for Regent Seven Seas Cruises to be delivered in 2023. The value of the agreement is approximately €474M.

The new vessel will be a sister ship to Seven Seas Explorer, delivered in 2016, and to Seven Seas Splendor, due for delivery in 2020.

Fincantieri said that at 54,000 tonnes, the unit will be able to accommodate up to 750 guests on board and that it will be the brand’s sixth all-suite vessel in Regent’s fleet. Like her sister ships, the new vessel will be built using the latest environmental protection technologies. The interiors will be particularly sophisticated, with every attention paid to passenger comfort.

“We are excited to build on the spectacular success of Seven Seas Explorer and Seven Seas Splendor as we embark on bringing to life a new vessel that will set even higher benchmarks for elegance, luxury and style”, said Norwegian Cruise Line Holdings president and chief executive, Frank Del Rio. “This new ship further strengthens our company’s robust yet measured growth profile with vessels now on order for all three of our award-winning brands, enabling us to expand our presence globally, further diversify our product offerings and continue to drive shareholder returns”.

Fincantieri chief executive Giuseppe Bono said “This agreement is the perfect seal of the work our Group has carried out over the years and the role we have gained on the market. We are able to enter and maintain a reference market presence in every niche, including the most unique and competitive as the ultra-luxury one, in which Regent Seven Seas Cruises operates. Quality is the shipowner’s hallmark and it entrusted Fincantieri once again.”

He said Fincantieri has 10 ships on order for Norwegian Cruise Line Holdings in its orderbook, five of which have been secured in the last five months, for all three brands in its portfolio.

Go-to-Market Bundling Paying Off for Norwegian

Free air promotions for Norwegian Cruise Line sailings in 2019 are part of the company’s extension of its go-to-market bundling strategy, according to Frank del Rio, president and CEO of Norwegian Cruise Line Holdings.

Del Rio said it was an extension of the brand’s Free at Sea offering, which allows guests to bundle in various offerings, from internet access to food and beverage and shore excursion packages.

“The advantages of this next evolution of our unique bundling strategy are many. First, it overcomes a major hurdle of what high yielding long-haul customers need and want, easy to book in affordable air transportation,” Del Rio said, on the company’s third-quarter earnings call. “The success of Free at Sea has demonstrated that there is overwhelming demand for an inclusive contemporary cruise product. Free Air is the natural extension of that strategy.”

He said that travel agents are further incentivized to sell Norwegian products, earning an additional commission on air-inclusive packages.

“The offerings strategically focus on capturing more long haul, fly-cruise guests, reinforcing our strategy of sourcing the highest quality guests as long-haul guests tend to be higher paying consumers both in ticket purchase and in onboard,” Del Rio added.

Andy Stuart, president and CEO of Norwegian Cruise Line, explained that the free air promotion for Norwegian Joy’s 2019 Alaska sailings drove bookings, and moved pricing up.

“Because what you get is you get some people who booked inclusive product and some people who buy cruise only,” Stuart said. “And the result of that mix is that you end up with a higher overall pricing outcome. So we’re very happy with it. We are in the early days of the initiative. It’s a 100per cent strategic initiative. Our goal here is to evolve the bundling strategy that has been so successful for us.”