Norwegian’s Focus on High-Spending Cruise Passengers Paid Off in the First Quarter

Norwegian Cruise Line Holdings experienced onboard passenger spending higher than its 2019 level in the first quarter of 2023, executives said during a Monday earnings call. 

Overall, revenue for the company was $1.8 billion in the first quarter, up from $521.9 million for the same quarter in 2022. Even so, Norwegian still had a GAAP net loss of $159.3 million. Adjusted EBITDA amounted to $23 million.

Harry J. Sommer’s, CEO and president of the Norwegian Cruise Line brand, led the earnings call for the first time as he prepares to take over for retiring Norwegian Cruise Line Holdings CEO and president Frank J. Del Rio. Sommer will officially be at the helm on July 31.

During the company’s first quarter, gross onboard revenue per passenger cruise day was nearly 30 percent higher than its comparable period in 2019. Sommer attributed this to Norwegian’s focus on attracting more higher-spending guests, enhancing its bundled offering and increased guest touch points, starting at the time of booking to capture more revenue and prepayment prior to cabin selection. Guests who made pre-cruise purchases helped drive onboard spending because this group tends to spend more onboard compared to those who don’t make pre-cruise purchases. 

Total revenue per passenger cruise day rose 17.5 percent from the similar 2019 period. Advance ticket sales were a record $3.4 billion, up 26 percent from the prior quarter and 60 percent from the first quarter of 2019. 

The booking window remained strong for the quarter despite the volatility in the banking sector in March, as there was no unusual cancellation levels across Norwegian brands, Norwegian executives said.

Bookings for the remainder of 2023 continue to be at record levels and at higher pricing. “Demand and pricing continues to be strong, not only for 2023, but also as we look further out to sailings in 2024 and beyond,” said Sommer.

In the quarter, occupancy improved by 101.5 percent over the previous quarter, but was still below the 2019 level. Sommer said the company will reach its 2019 level in the next quarter. 

A driver of earnings growth this year for Norwegian will be the delivery of three new ships, which will bring a 20 percent growth in capacity over 2019, said Sommer.

Executives also said they plan to cut their ships’ greenhouse gas emissions by 10 percent by 2026 and 25 percent by 2030.