Without Cuba cruises, Royal Caribbean lowers profit outlook

Harmony of the Seas

Royal Caribbean Cruises Ltd. said eliminating Cuba from the itinerary of various sailings will reduce 2019 earnings by $52 million to $73 million.

“While the affected sailings impact only 3% of our 2019 capacity, the extremely short notice period for this high-yielding destination amplifies the earnings impact,” said Jason T. Liberty, executive vice president and CFO. “The result of this policy change has created a short-term impact on our guests, operations and earnings; fortunately, we have many alternative and attractive destinations for our guests to choose from.”

The other major cruise companies affected by the decision to ban U.S. cruises to Cuba haven’t commented on the financial impact.

Cuba accounts for 1% of capacity at Carnival Corp. and 4% at Norwegian Cruise Line Holdings, according to a note from Wells Fargo Securities, which estimated the economic impact on Carnival at $21 million to $42 million and on Norwegian at $26 million to $60 million.

Advertisements

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.”