Norwegian Cruise Line entered the Chinese market last year with the Norwegian Joy.Norwegian Cruise Line Holdings CEO Frank Del Rio told analysts that his ships were “in the right place at the right time” in 2017 but admitted that there were plenty of spots on the map he’d like to cover with new ships.
“We have so many markets that are unserved by us or grossly underpenetrated by us,” Del Rio said in a question-and-answer session with analysts to discuss fourth quarter and 2017 earnings in February.
“We don’t have a presence in the Mid-Atlantic states,” he said. “We’re not in Baltimore. We’re not in Charleston. We don’t have a presence at all in the world’s second-largest port, which is Fort Lauderdale.”
And the list kept growing.
“We don’t have a presence in the Gulf states of Texas or Alabama,” he said. “We don’t have a year-round presence in Tampa or New Orleans or Los Angeles. We only have three ships in Alaska, which is a very high-yielding market. Some of our competitors have up to eight vessels.”
Del Rio said that given the fleet size and the company’s intention to build only one new ship a year for its Norwegian Cruise Line brand, it could be a couple of years before he would consider adding a second ship in China, because, although profitable, it was not a banner year in China in 2017.
“I don’t think China is hitting on all cylinders as it can,” he said, referencing the continued tensions with South Korea and the resulting uniformity of short cruise itineraries, which only visit Japan.
Del Rio said that the Wave season for 2018 started strong and the company’s outlook is bullish, driven by a strong economy and consumer demand.
“Our overall booked position during the first seven weeks of 2018 further improved compared to the same time last year,” he said.
In addition to Norwegian Cruise Line, NCLH owns Oceania Cruises and Regent Seven Seas Cruises. The three lines operate a combined fleet of 25 ships with some 50,400 berths, offering itineraries to more than 450 destinations.
On average, guests of NCLH brands are booking five weeks earlier than they did at the end of 2016, Del Rio said.
NCLH net income rose 23% last year, to $780 million, as European pricing and bookings recovered faster than expected and the booking curve extended to a near-optimal length.
Revenue rose 10.7%, to $5.4 billion.