NCLH Canadian Penetration & Agent Focus Leads To Significant Gains

Cruise Week

February was an exceptional month for Norwegian Cruise Lines Holdings. Its stock climbed more than 15% during the month, with the share price topping $50 for the 1st time. When the company started trading 2 years ago, its share price was less than 1/2 that.

The climb mainly followed an insightful mid-month earnings call, which not only had the usual financial updates, but an unusual amount of information for investors both on agent-related issues and meaningful dialogue pertaining to the premium and luxury side of the business.

The leadership team of Frank Del Rio [CEO, NCLH], Jason Montague [Prestige Cruise Holdings] and the now-departed Drew Madsen [Norwegian] provided colour on recent initiatives.

One major theme was analyzing Prestige's successes and applying them to Norwegian. As one example: “We are investing and expanding Norwegian’s presence in the Canadian market, a rich market for the Prestige brands in which Norwegian has historically lagged,” said Del Rio.

He explained the goal: “If the Norwegian brand can penetrate the Canadian market to the same degree that the Prestige brand has penetrated the Canadian market, it’s 100,000 new passengers a year. So we think there is a lot of opportunity, relatively low-hanging fruit, to increase the business at Norwegian internationally.”

Another recurring theme was the importance of the North American travel agent and how that impacts policies moving forward. It wasn’t just on this call. As Del Rio reminded Cruise Week, “We recently announced that we are increasing the overall size of the Norwegian Cruise Line sales team by 40% in order to ensure the long-term success of our travel partners.”

Also, it’s no secret that there have been a lot of personnel changes of late at Norwegian, but one clear point made on the earnings call is that Executive V.P. (at the time) Andy Stuart is well-regarded by the new management. That was borne out this week as Madsen made a quick exit and Stuart was named NCL President & COO.

“In terms of [agent] relations, I don’t think the relations need any improvement or patching up,” said Del Rio. “I think Andy Stuart and his team are well-respected, liked - loved, if you will - by the agency community. They know him well.”

And the future sounds bright for the agent relations. “I’ve always felt strongly that travel agents are extremely important to our business and our industry,” Del Rio told Cruise Week.

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