Skift Take
Norwegian Cruise Line executives say they have a number of advantages over hotels to keep guests spending.
Key Points
- Norwegian Cruise Line reported no decline in guest spending, with onboard amenities and pre-cruise bookings up 15%.
- The company rerouted its Oceania and Regent brands from the Middle East due to conflicts, with no impact on demand.
- Norwegian has equipped 50% of its fleet with short power technology, aiming for full implementation by 2025.
Summary
Norwegian Cruise Line Holdings reported no decline in guest spending, with onboard amenities and pre-cruise bookings seeing significant increases. The company has rerouted its Oceania and Regent brands from the Middle East due to regional conflicts, which did not affect demand. Additionally, Norwegian has accelerated its adoption of short power technology to reduce emissions, with 50% of its fleet already equipped. Europe and Alaska are the top destinations for the third quarter, driven by strong demand from North American customers. The company's total revenue for the second quarter was $2.4 billion, an 8% increase from the previous year.
Norwegian Cruise Line Holdings executives say they aren’t seeing a reduction in guest spending.
“We are seeing absolutely no decrease in onboard spend,” said Mark Kempa, chief financial officer for Norwegian Cruise Line, on an earnings call Wednesday. “Overall, the short answer is no cracks, no deterioration.”
Analysts asked about a slowdown after Marriott executives reported in a slight softening in hotel guest spending in the second quarter.
Spending on Norwegian Cruise ships remained strong thanks to onboard amenities like speciality restaurants. Pre-cruise bookings for amenities were up 15%.
Norwegian benefits from the fact that they have more time to sell to guests. Kempa pointed out that guests on cruises remain on a ship for their entire trip whereas at hotels they will “come and go.”
In addition, guests book their trips much further in advance, making it easier for the cruise company to market onboard activities.
“There are fundamental things that work in our favor that make our business quite a bit more resilient than the hotel in the ancillary/onboard spend category,” he said.
Total revenue amounted to $2.4 billion in the second quarter, up 8% from last year.
Norwegian Cruise Stays Out of the Middle East
In the second quarter, Norwegian executives rerouted its Oceania and Regent brands from the Middle East to avoid ongoing conflicts in Israel, Gaza and the Red Sea. The itinerary changes did not impact demand.
“Despite the setback, results for this quarter were strong enough to offset this, underscoring the robust demand environment for cruises and the agility and effectiveness of our team to overcome difficult challenges,” said Harry Somer, CEO and president of Norwegian.
Emissions Reduction Technology Adoption Speeds Up
Norwegian made significant progress toward equipping its ships and terminals with more short power technology. Short power technology allows ships to connect to local electrical grids and shut down their engines, reducing carbon emissions and cutting fuel costs.
About 50% of Norwegian’s fleet now use short power. “We remain on track to equip our fleet with this technology by 2025,” said Sommer.
Europe and Alasksa Dominate Norwegian’s Bookings
For the third quarter, Europe and Alaska are shaping up to be the popular destinations for customers.
“Over 70% of our sailings in the third quarter are in Europe and Alaska, regions where we are experiencing strong demand from North American customers,” said Kempa.
Cruise and Tours Sector Stock Index Performance Year-to-Date
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Tags: earnings, indigo airlines, norwegian cruise line, norwegian cruise line holdings