NCLH Results Show Good News On Commission Front

Cruise Week

Like all the publicly-traded majors, Norwegian Cruise Line Holdings is a global company with business sourced from several continents. Within that general context however, NCLH is seen as having a higher percentage of North Americans sailing with them than Carnival Corp. or Royal Caribbean Cruises Ltd.

So when it come to the "commissions, transportation and other" bottom line reported to Wall Street every quarter, NCLH is seen as a better indicator than other publicly traded cruise companies in terms of how North American agents are faring. All of which is why the numbers recently reported by NCLH are good news for the trade.

In 2016 NCLH reported $813,559,000 for its "commissions, transportation and other" operating expense item. In 2017 NCLH paid out $894,406,000 for the same expense item. That's a 9.9% -- almost a 10% increase -- one of the largest commission indicator increases we've seen in our 25 years of following this bottom line item.

Arguably of equal importance, from an agent's standpoint, is that the 10% increase was in step with the percentage increase in Norwegian's passenger ticket revenue, so direct business does not appear to be growing.

Moving forward to NCLH's first quarter 2018 report this past week, once again the "commissions, transportation and other" line item is up, with record numbers for the company.

In the first quarter of 2017, NCLH paid out $194,140,000 and for the first quarter of 2018 NCLH paid out $218,340,000. That's a whopping 12.5% increase, on top of the big 9.9% increase in 2017, and once again, the number is much in line with NCLH's passenger ticket revenue increase.

In 2017, NCL passenger ticket revenue totaled $786,694,000 for the first quarter. For the first quarter of 2018, the number climbed to $889,866,000, an increase of 13.1%.

We hear regularly from agents telling us their business is doing OK but direct business is growing. It's not as bad as six or seven years ago, when the siphoning to direct business was so bad that agents began moving market-share away from cruises. The issue created a lot of anxiety.

Now, it's more of a new normal observation and these latest numbers should assuage agents, at least when it comes to NCL, Regent, and Oceania.

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