NCLH’s Del Rio On Strong Demand & Free Air

CruiseWeek

Leading this past week's third quarter earnings call, NCLH CEO Frank Del Rio dove straight into several topical issues pertaining to the trade side of the business. The following are some highlights as reported by CruiseWeek.

Business is Better than Last Fall

"Booking volumes accelerated over the past 13 weeks for all three brands," said Del Rio in his introductory remarks to the financial community.

That statement is in line with what retailers are reporting to Cruise Week. Year-over-year business for the last three months is up significantly, but there is a caveat.

One retail leader told us following the call: "Yes, we're up, but is it in line with expectations? Is it in line with new capacity? Is pricing holding to a degree for which they really planned? Those are the more important questions, because business over the past two months this time last year was low due to the Caribbean hurricanes."

Strong Demand Continues

Those questions weren't asked or answered, but Del Rio's overall comments indicate that it's more than just easy comparisons:  "2019 is indeed shaping up very well, and I want to reiterate a statement I made on our last call, which is that the robust macroeconomic environment that is driving strong demand to our three brands shows no signs of weakening."

During the Q & A session, Del Rio was asked, "You talked about the past 13 weeks. I think they have been great and accelerating. But what about in the last four or five weeks, really since we've started to see a lot of the volatility creep into the [stock] market?"

In response Del Rio said, "We track the last 16 weeks, the last 12, last four, last week, and yesterday. And I can tell you that we don't see any marked difference in bookings and consumer behaviour and what they're booking.

"We didn't see it when the market went down 600 points. We didn't see it when the markets go up 500 points. It's pretty stable. And I think it speaks to the overall resiliency that the cruise industry is known for. It takes a lot more than three or four weeks of volatility in the stock market to affect our overall booking patterns."

Latest On Free Air

Of the free air program launched by NCL recently, Del Rio explained numerous benefits tied in with other aspects of the business model, including, "It overcomes a major hurdle of what high-yielding long-haul customers need and want: easy to book and affordable air transportation."

That apparently is a different tack than taken by Carnival Cruise Lines, which has a strong drive market.

Del Rio continued, "The offerings strategically focus on capturing more long-haul guests -- reinforcing our strategy of sourcing the highest quality, as long-haul guests tend to be higher paying consumers both in ticket purchase and in onboard spend versus short-haul drive cruise customers."

He then added: "The more inclusive the offering, the more it enables us to drive higher pricing and better margins."

Look for the strategy to expand. 

"The program has proved a great success, and we have been selectively rolling our Free Air across additional itineraries where air transportation is a major purchase consideration," said Del Rio. "With the program's success, we will look to provide even more avenues for guests to take advantage of this special value add offering in the near future."



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