Skift Take

Norwegian Cruise Lines is minimizing the business damage from the cancellation of its Red Sea sailings through 2025.

Norwegian Cruise Line Holdings doesn’t expect expect to see his a slowdown in its revenue, executives said Wednesday.

“As we’ve said on the last call and this call, we are not, and I will repeat this, we are not seeing deceleration,” said Mark Kempa, chief financial officer and executive vice president, during an earnings call.

“I don’t know how many more times I can say that across different calls and conferences,” he said. “We are getting back to a more normalized yield growth in terms of our business, which we’ve always said will be somewhere in the low to single digits. We obviously continue to pursue much better than that.”

(“Yield” refers to the average amount of revenue earned per passenger per day.)

Norwegian Cruise forecasts net yield growth to be 4.3% in the second quarter, down from 16.4% in the first quarter. Kempa said the drop has more to do with the second quarter being impacted by the new conflicts in the Middle East and Red Sea in April.

“It’s not really a deceleration issue. It’s a comparison issue from quarter to quarter,” Kempa said.

Middle East Impact on Cruises

The conflicts in the Middle East and the Red Sea have impacted yield growth in the fourth quarter. Despite the geopolitical impacts, Norwegian expects to see healthy pricing and yield growth.

The cruise operator, whose brands include Norwegian, Oceania, and Regent Seven Seas, has canceled all its Red Sea itineraries through 2025 and rerouted all its ships to avoid the region. 

In the first quarter, the company generated total revenue of $2.2 billion, a 20% increase from last year. Consumer demand across all three of Norwegian’s brands remains resilient and healthy. Pre-cruise purchases are up 16% over the same period in 2023, said Harry Sommer, CEO and president of Norwegian Cruise Line Holdings.

Electrifying Norwegian Fleet

Norwegian also successfully converted at least half of its fleet have adopted technology that helps them reduce emissions. “We’re also proud to announce that 50% of our company-wide fleet is now equipped with shore-side technology, achieving our year-end 2024 target well ahead of schedule,” said Sommer.

“This is key to our journey to minimizing emissions during port stays and contributing to cleaner air in the port communities we visit,” said Sommer.

Investments in Private islands

Norwegian executives plan to increase their investment in their private islands Harvest Caye (in Belize) and Great Stirrup Cay (in the Bahamas) once they get more access.

“Once we have confidence that we can visit there almost 100%, we certainly believe that it will be worth making the investments to continue to improve the guest experience as long as we focus on the things that get value,”  said Sommer.

Cruise and Tours Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of cruise and tours sector stocks within the ST200. The index includes companies publicly traded across global markets including both cruise lines and tour operators.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more cruise and tours sector financial performance.

Read the full methodology behind the Skift Travel 200.

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Tags: climate change, cruise earnings, cruise industry, norwegian cruise line, sustainability

Photo credit: Robert Noreiko on Unsplash Robert Noreiko / Unsplash

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