Norwegian Cruise Line Holdings‘ Chief Financial Officer, Mark Kempa, has called for the cruise industry to use the post-pandemic cruise rebound to raise pricing to be more competitive with land-based resorts.
NCLH is the parent company of the three cruise brands, Norwegian Cruise Line in the contemporary market, Oceania Cruises in the premium sector and Regent Seven Seas Cruises in the luxury segment.
Speaking to investors in New York, Kempa said NCLH’s Q2 results were up 11% over 2019, while revenue had risen 40% (fuelled by a 20-plus percentage capacity increase) and that pricing improved 20%.
“Pricing was significantly up for next year at the same load factors that we saw in record 2019. So everything we’re seeing from our customer base – and I think that’s important to hit on – our customer base is not the same as our peers,” Kempa said from aboard Norwegian Prima in New York.
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“Our customer base across our three brands tends to be a higher level customer. They’re more insulated, they’re more resilient. Our customers are there. They’re booking. They’re paying.”
He said pent-up demand from customers has seen them actively take advantage of special offers where they are “getting value and a deal,” he said.
Kempa also told shareholders that there is a “huge opportunity for the industry to change the pricing dynamics”.
Speaking of the recovery from the pandemic after the global cruise industry came to a grounding halt, Kempa said: “The industry has never been stopped like this.
“Let’s take that jump. Let’s reset the index on pricing for this severely undervalued product v[ersus] our land-based competitors and get the consumer, and the broader community, used to higher pricing.
“We’re all seeing it across the board. Why shouldn’t we participate?” the CFO questioned.
Earlier in the presentation, Kempa said: “We’re going to continue to push on pricing. We’re going to continue to spend marketing to make sure we are getting pricing power because this is an opportunity for the industry.
“This is an opportunity for the industry to change the paradigm, to change the level of pricing that the consumer is getting for this phenomenal value”.
Kempa’s comments were backed by NCLH’s CEO Frank Del Rio who said “We think our product supports a higher price, and we’re getting it.”
Del Rio had earlier stated that Norwegian Cruise Line Holdings would achieve record-breaking yields in 2023.
“[20]’23 will be the best ever,” he said. “Better than what ’20 was going to be before the pandemic.”
Del Rio also compared the daily average pricing between that of NCLH and its other “Big 3” peers, Carnival Corporation and Royal Caribbean Group, referring to them as the “red” and the “blue”.
He said NCLH’s Q2 daily net revenue cost was US$278 per person, compared to US$201 per person (38% less) of the blue and US$154 (80% less) than the red.
“At $277, we still have a lot of headroom to grow,” Del Rio commented.
“The gap between us and alternative vacations to cruising. Everyone talks about ‘Oh we’ve got to close the gap‘. We’re the ones closing the gap,” he told analysts and investors.