Norwegian has no plans to reduce China service, Del Rio says

Norwegian Joy
It’s full speed ahead in China for Norwegian Cruise Line.

Despite recent announcements by other lines that ships once scheduled for year-round service in China would move to Australia for part of the year, Norwegian Cruise Line Holdings chairman Frank Del Rio said his company has no plans to follow suit.

“I’m glad to see that the others are leaving,” Del Rio said. “That leaves us perhaps the last man standing, and that’d be great. I’ll take all the demand.”

Del Rio’s comments came during a conference call with analysts to discuss first-quarter financial results.

Cruise selling in China has been disrupted since March by the Chinese government’s move to halt travel to South Korea, a protest of a decision by the South Korean government to install a U.S.-made missile defense system.

“The disruption caused travel agents to be distracted from focusing on contracting charters further out into the year, then trying to book, in some cases rebook, [and] find new customers [for those] who no longer wanted to go on sailings that didn’t include Korea,” Del Rio said. “But it’s also had a bit of a chilling effect on overall demand.”

He added that sales for new cruises had started to pick up in the past two weeks. “The South Korea situation, we believe, is a temporary bump in the road, and time will tell,” he said.

Norwegian Cruise Line is scheduled to start sailing the 3,883-passenger Norwegian Joy, its first ship custom-designed for the Chinese market, from Shanghai in late June.

Princess Cruises recently said that its Majestic Princess, also custom-built for the Chinese market, will be deployed to Australia for six months in 2018-19. The move follows the redeployment of the Sapphire Princess from China to Europe in the latter half of 2018.

Because Norwegian is new to the Chinese source market, Del Rio said he’s being cautious about predicting the impact of the Norwegian Joy on the company’s performance in the second half.

“So in many ways, all the good things that I have to say about how our business is operating on the other 24 ships is being somewhat tempered by the potential that could arise in China,” Del Rio said.

A strong Wave

Del Rio said on the call that this year’s Wave was “the best Wave season that we and likely the industry has experienced in quite some time.” As a result, NCLH brands have fewer cabins to sell for the rest of 2017, and it expects higher prices on those bookings than last year.

NCLH, which also includes Oceania Cruises and Regent Seven Seas Cruises, posted Q1 net income of $61.9 million, compared with $73.2 million a year earlier. Revenue rose 6.8%, to a record $1.15 billion.

Del Rio attributed the net-income decline to higher-than-expected maintenance and repair costs, particularly for the Norwegian Star, which broke down in Australia for five days in February.

Outside of that, CFO Wendy Beck said the results were driven by “strong close-in demand in the Caribbean, coupled with strength in onboard revenue.” Cuba itineraries are now available on all three brands, and “the performance of that itinerary is just astonishing,” Del Rio said. NCLH is also doing better than it planned in Europe this year, which Del Rio attributed to a combination of less inventory to sell than at the same time last year and positive market conditions. “That is resulting in very, very strong sales in Europe at significantly higher prices than the same time last year,” he said.

Innovations keep Norwegian sailing as it celebrates 50 years

Norwegian Cruise Line president and CEO Andy Stuart, second from right, with passengers on a mid-1990s sailing in Hawaii.

Fifty years ago, a new name in travel was launched, along with a new concept for a vacation.

The first voyage of Norwegian Caribbean Line (now Norwegian Cruise Line) marked the birth of the regularly scheduled Caribbean leisure cruise.

It was impossible to anticipate the outlines of today’s cruise industry in that beginning.

A 1968 ad for the Sunward, with a seven-day price starting at $175.
A 1968 ad for the Sunward, with a seven-day price starting at $175.

The line’s first ship, the Sunward, was a converted ferry of 8,666 tons that carried 558 passengers and offered none of the modern amenities or luxuries associated with cruising.

But after that first voyage on Dec. 19, 1966, travelers would begin flocking to the Caribbean, and travel agents would find a new source of income.

“I don’t think we would be talking about cruising today like we are had they not had that idea to be in cruising in the Caribbean 50 years ago,” said Brad Anderson, co-owner of Avoya Travel.

To mark the line’s 50th anniversary, Travel Weekly asked some agents to recall memorable moments in Norwegian’s history, events that were significant or shaped the line that passengers know today.

Norwegian was a pioneer in many areas of developing the cruise product. It was the first to have a private island, in the Bahamas, the first to package cruises with included airfare and the first to create a department for corporate and incentive sales.

It daringly bought the liner France for use in the Caribbean in 1979 but floundered until its acquisition in 2000 by what was then Star Cruises, now Genting Hong Kong.

It was the acquisition by an Asian line that led to what travel agents said was the most significant development in Norwegian’s history: the advent of Freestyle Cruising on the Norwegian Sky in 2000.

“Freestyle Cruising really was a turning point for [Norwegian],” said Rich Skinner, president of Cruise Holidays of Woodinville, Wash.

Significant milestones in Norwegian Cruise Line history

1966: First voyage of Norwegian Caribbean Line from Miami on Dec. 19.

1979: The France bought and converted to the Norway at a cost of $100 million.

2000: Company acquired by Star Cruises; Freestyle Cruising developed.

2005: Interisland cruises in Hawaii launched by NCL America.

2013: The company, now called Norwegian Cruise Line, goes public.

2014: Regent Seven Seas Cruises and Oceania Cruises join Norwegian under Norwegian Cruise Line Holdings.

The decade preceding the sale had not been auspicious. Norwegian was weighed down by debt dating to the $80 million conversion of the France into the Norway.

It acquired Royal Viking Line and Royal Cruise Line to no great advantage. There were layoffs, a revolving door in the executive suite and a scattershot marketing message. Norwegian also faced two dynamic competitors in Carnival Corp. and Royal Caribbean Cruises Ltd.

After Star Cruises completed its purchase in February 2000, there were immediate discussions about how to differentiate the brand, said Andy Stuart, then Norwegian’s vice president of sales, now the line’s president and CEO.

Star Cruises chairman KT Lim, having sailed on Western-style cruises in the early 1990s, decided that the rigid, two-seating dining format wouldn’t work in Asia because his customers would not show up on schedule, Stuart said.

Star’s dining was flexible, and Norwegian studied it and then opted to adopt it as a point of difference for its line.

“The operations team believed they could execute it on the existing fleet,” Stuart said. “And then the opportunity was [that] we would have the ability to design ships for it on a go-forward basis.”

The idea almost sank at first on the Sky, Stuart said, because no one had prepared the guests.

The  Norway, acquired in 1979, was advertised by Norwegian Cruise Line as a $100 million resort.
The Norway, acquired in 1979, was advertised by Norwegian Cruise Line as a $100 million resort.

“It was all based on the existing marketing, which was about first- and second-seat dining and so forth,” he said.

After a near-riot on the first cruise, Stuart said, guests were given the option of either set dining times or showing up when they liked.

“People started to take advantage of the new freedom and flexibility,” he said. “While people I don’t think knew Freestyle Cruising was what they wanted, once they were presented with the option, with the right tone, they were thrilled. And so was born the new experience.”

Agents said Freestyle is clearly Norwegian’s identity now.

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Ross Spalding, president of Crown Cruise Vacations, Princeton, N.J., said, “The creation of Freestyle Cruising has not only changed the thought of cruising from ‘my grandparents’ vacation’ to one the entire family can enjoy but also to one that lets me spend my vacation as I would like to, with whom I’d like to, doing what I would like to.”

Spalding and Rob Clabbers, president of Q Cruises + Travel in Chicago, also cited the creation of the high-end Haven enclave on many Norwegian ships as another milestone.

“It is a popular option for people who want to have a more upscale experience while still enjoying the amenities of a big ship,” Clabbers said.

Norwegian’s cultivation of cruises in Hawaii, starting in 2005, also stands out to Clabbers.

“It brought us new clients who wanted to explore multiple Hawaiian islands from the convenience of a modern cruise ship,” Clabbers said.

While the initial three ships in Hawaii proved too ambitious, Norwegian remains the only major cruise line in the market with the Pride of America.

Alex Sharpe, president and CEO of Signature Travel Network, said that the 2011 introduction of the Partners First program, coupled with de-emphasizing direct sales, has been a key to Norwegian’s growing popularity with travel agents.

He cited the Breakaway class of ship as “a demonstrable jump up, and creative on many fronts.”

An ad from 1981 for Norwegian Caribbean Line’s four ships.
An ad from 1981 for Norwegian Caribbean Line’s four ships.

“Finally,” he said, “I think the appointment of Andy Stuart as president and now CEO was as applauded a move as any in the industry. A longtime veteran of [the company]gets his shot and has done a great job.”

Avoya’s Anderson said a largely forgotten milestone for Norwegian was its development of homeports outside of Miami, including Houston where it pioneered “Texaribbean” cruises in 1997, and Seattle, where it based a ship for Alaska cruises for the first time in 2000.

Anderson said his first personal memory of a Norwegian ship came touring the Skyward more than 30 years ago.

“I remember thinking, ‘This looks like a lot of fun, and I want to sell more of it,'” Anderson said. “The ship looked gorgeous. Today, obviously, she would look pretty tiny. But back then, 10,000 or 20,000 tons looked pretty big.”

NCL, Oceania and Regent get permission to sail Cuba cruises

The Norwegian Sky will sail Cuba voyages from Miami.

After waiting for six months, Norwegian Cruise Line Holdings (NCLH) finally got the call it had been seeking from the Cuban government allowing it to start cruises to Cuba from Miami, beginning in March.

The authority is temporary and will expire in May. But it covers three brands (Norwegian Cruise Line, Regent Seven Seas Cruises and Oceania), the first time a cruise company has won approval to marshal multiple brands in a strategic foray into the Cuban market.

“We are tremendously excited to have all three of our award-winning brands receive approval from authorities in Cuba to offer cruises to Cuba from the United States,” said Norwegian Cruise Line Holdings CEO Frank Del Rio, who was born in Cuba.

“This is truly a dream come true for me, and I cannot wait for our loyal guests to experience the sights and sounds of my hometown of Havana and get to know its rich culture and its warm and welcoming residents,” he said.

Cruises will sail on the 1,928-passenger Norwegian Sky, the 1,250-passenger Marina and the 700-passenger Seven Seas Mariner.

Image result for seven seas mariner

Seven Sea’s Mariner,

The first Oceania cruise to Cuba will depart Miami on March 7, leaving less than three months to prepare the ship, the itinerary, the crew and to sell the cruises. The Marina voyages will include “many multiple-day calls to allow guests to explore Havana and its environs,” the company said.

The Norwegian Sky will sail a series of four-night voyages over nighting in Havana in May, while Seven Seas Mariner will call on Havana during two cruises in April.

Pricing was not released. On Carnival Corp.’s Fathom, the only other cruise line to gain approval to sail between Miami and Cuba, fares start at about $1,900 for a seven-day cruise.

Fathom’s ship, the Adonia, is older and much less luxurious than the Marina, which was built in 2011. The Adonia is about the same age as the Norwegian Sky.

It isn’t clear why Cuba is giving NCLH such a small window in which to operate. However, Fathom’s authority to sail to Cuba will also expire in May.

The opening for NCLH comes at a crossroads in relations between the U.S. and Cuba with both countries going through a transition in top leadership. Some analysts had expected a pause in new business approvals, while others saw an acceleration to take advantage of the Obama administration’s open stance towards Cuba.

Image result for cuba cruise
Fathom Cruise entering Havana

Cruise tourism to Cuba remains bound by the “people-to-people” framework in place since 1982. That requires shore excursions to be structured to promote exchange activities, such as cultural and humanitarian visits. Norwegian said its cruises would comply with Treasury Department rules.

To sail the new itinerary, Norwegian and Oceania will have to re-accommodate guests already booked. The March 7 Marina departure is currently listed as a 14-day cruise to ports in the western Caribbean, Central America and Colombia. The ship was scheduled to leave for Europe on April 10.

The Norwegian Sky does three- and four-day cruises from Miami that typically attract late bookings.

Image result for regent seven seas explorer
Regent Seven Seas Explorer

NCLH’s application to sail to Cuba has been pending for at least a year. At a July news briefing onboard the new Regent Seven Seas Explorer, also an NCLH-owned ship, Del Rio said he was “literally waiting on a phone call for the final, final approval” from Cuba.

But after the Adonia’s authority was granted in March, no other cruise ship approvals followed until now.

Royal Caribbean Cruises Ltd. is among the cruise companies with applications pending. It plans to use Royal Caribbean International’s Empress of the Seas to ply the Florida-Cuba route.

MSC Cruises sails to Cuba but does not market the cruises to U.S. residents. Celestyal Cruises offers seasonal Cuba cruises that Americans can take by flying to either Havana or Montego Bay, Jamaica, and enrolling in a people-to-people group program for shore excursions.