The Rationale Behind Norwegian Sky’s All-Inclusive Shift

Cruise Week

The recently announced move by Norwegian Cruise Line to make short sailings on Norwegian Sky a more inclusive product is all about differentiation and shifting the conversation away from price.

“The 3 and 4 day cruise is a product that has been more difficult to differentiate,” says NCL President Andy Stuart. “It’s a short cruise, and the ports for the most part are similar between the 3 brands that do it regularly.”

As a result, a very small difference in price tends to have a very large impact in demand.

“We were really looking at a way to effectively differentiate it for consumers,” says Stuart. “We were also looking at a way that would have travel partners bring more focus on it because when price is really the only item to talk about, and it's a lower priced 3 and 4 day cruise, travel agents were losing interest in that product.”

So, Norwegian tried including the Sky in the Freestyle Choice promotion, and offering the beverage package as a choice. Already, says Stuart, that shift has created additional consumer demand on Norwegian Sky.

“And we have seen travel partners getting on board in a much bigger way, in putting group blocks on the books and in talking to us about marketing plans for Norwegian Sky as we get closer to the booking window, which is clearly closer in for the 3 and 4 day cruises.”

Stuart is viewed as being agent-centric, but how committed as a brand is Norwegian to travel agents being its #1 distribution channel long-term? “I can answer that unequivocally,” says Stuart. “Travel agents are our #1 channel and there's absolutely no view from anyone in this company that that's going to change.”

In dealings with agents, Stuart says the emphasis is on a strategy to move the brand away from price. “The promotional strategy to be much more value-oriented, the product proposition being such that we can move pricing up and travel agents can book with confidence early knowing that pricing is going to move up from where it is today, and that we’re not going to be in a spiral of discounting,” he says.

Norwegian leadership talked about this objective during their annual Partners First meeting. “With our biggest customers [i.e. top producers] we talked about how we are going to move the brand away from price. Also, we are going to give travel partners the tools to really be able to talk about what great value we offer.

“We asked for their help in presenting that value and getting to the goal of the customer saying [after the product is described], `And by the way, how much it is it?’”

Stuart knows that for price to be less of a factor, the onboard product has to exceed its competitors. He says NCLH CEO Frank Del Rio has that in hand. “Frank Del Rio is a product guy first and foremost,” says Stuart. “In every conversation I've had with Frank since he took over the role leading NCLH into the future, he has talked about how absolutely essential it is that every guest walks off the ship saying that was an experience that exceeded expectations.”

Stuart says that cuisine is currently the product element receiving the most focus: “You talk to any cruiser about what's important about their experience, and they'll say the most important thing is food and service," he explains.

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