This week found the folks at Norwegian Cruise Line reporting their fourth-quarter earnings and summing up how 2016 had fared before offering up their thoughts and expectations on 2017. And if President and CEO Frank Del Rio had done so by bursting into song, he’d probably have crooned, “The future’s so bright, I gotta wear shades.” As he explained, NCL saw “a near doubling of revenue since 2013, the year of our initial public offering.” But what, exactly, did the company’s financial update mean for cruisers? Let’s break it down.
1. The American market might get a ship with go-karts of its very own.
In discussing the new ships Norwegian recently contracted to have built, Del Rio said that the fourth Breakaway Class vessel would be designed “as a sister ship to Norwegian Joy. And while he didn’t get into specifics, he did say this decision was based on the “resounding feedback and popularity” of that ship’s “many unique and first-at-sea guest-facing features.” That sounds a lot like go-karts to us!
2. Look for ships to be moved around in the future.
In discussing the next generation of ships, the executive said that their addition to the fleet would allow the line “to substitute newer state-of-the-art vessels with a richer state room mix to our premium destinations, which in turn will allow us to redeploy existing vessels to other domestic and international homeports where we currently do not have a presence.”
3. They’re keeping an eye on Carnival’s technology.
Like everyone else in the business, Norwegian has been watching Carnival’s recently-announced medallion technology. “We’re very impressed,” admitted Del Rio. “We think it’s a step in the right direction.” He also indicated that in the meantime, they might tinker with their mobile app. “It’s proven pretty popular with our guests,” he said, adding that they were looking at “enhancing it in ways that allow us to do a lot of what the other technology tries to accomplish, perhaps at a lower cost.”
4. Norwegian is coming for you.
Del Rio shared that one revenue avenue they want to pursue harder is “mining our own past guests.” That means passengers who’ve sailed Norwegian in the past should expect to see themselves being marketed directly to. “We know who they are, we know where they live, we have all their contact information,” the exec said.
5. Bargains could be tougher to find.
“2017 is off to a solid start,” said Del Rio, adding that the company was “in the best booked position in the company’s history.” He also said that the company’s “revenue management bias has shifted to increased pricing” by focusing on capacity. In other words, it’s the law of supply and demand. The fewer cabins they have available, the better (for them!) price they can charge for them.
6. Europe’s back, baby!
Thanks to instability in some foreign markets, cruise lines took a few hits in 2016. But Del Rio said that thanks to “the geopolitical climate remaining calm” and “a resurgence in demand from North American consumers for European sailings,” booking volumes had increased. “The [Mediterranean] last year took the biggest blow,” he admitted, “and this year, it’s taking the largest increase.”
7. Cuba is a question mark.
While the line only recently announced a whole new slate of Cuba-bound itineraries, Del Rio said it was “too early to determine” if the premium price being charged for these sailings would be “sustainable” over the long run given the additional capacity now being offered. “While the opening of Cuba is an exciting development,” he elaborated, “it’s important to note that Cuba-related inventory represents less than two percent of our total capacity.”
8. China’s the next big thing.
With the line introducing Norwegian Joy into the market this summer, it’s not surprising that Del Rio was bullish on China’s potential. “We continue to be big believers in the potential of China as an important source market,” he declared.
What do you think of Del Rio’s comments and predictions? How do you think the future looks for NCL?
