While some longtime cruise industry leaders and observers said some critiques of Norwegian Cruise Line Holdings levied by activist investor Elliott Investment Management were fair, others said they lack nuance and context about the industry.
Robert Kwortnik, a business and hospitality professor at Cornell University, likened it to "Monday-morning quarterbacking" and said that Elliott had in general failed to acknowledge how dramatically the pandemic impacted the cruise industry.
"Cruise leaders had to make decisions facing unprecedented economic, regulatory and market uncertainty," he said. "From that perspective, the harsh criticism of NCLH's management and strategic direction since 2020 is, arguably, Monday-morning quarterbacking."
Elliott, which said it has built a more than 10% stake in NCLH, said on Feb. 17 it was seeking a strategic overhaul of the company, including a replacement of the board of directors.
It released a nearly 60-page slideshow titled "Norwegian Now," offering a glimpse into the blueprint Elliott will use to advocate for change at NCLH's three brands: Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises. In it, the investor cited what it said was wasteful spending and routinely missed financial targets and said the cruise company is falling behind competitors in the development of private islands.
While NCLH's net cruise costs, excluding fuel, grew 44% between 2013 and 2025, Royal Caribbean Group's increased 30% and Carnival Corp.'s 21%, Elliott said. During that same period, NCLH's operating costs grew 248%, nearly double that of Royal Caribbean's and more than triple that of Carnival's, according to Elliott.
NCLH routinely missed cost targets, the investor said, citing company filings and transcripts, and as those misses accumulated over the last decade, a $700 million gap emerged between the company's planned and actual cost growth.
Elliott questioned why this happened when, it said, NCLH had elements working in its favor that should have made it more cost-competitive, including greater capacity growth than Royal and Carnival and a reduction in the percentage of luxury berths in its fleet.
In a statement issued Feb. 17, NCLH said its board and management team "regularly engage with our shareholders to hear their views on our strategy and progress, and we appreciate their perspectives. … We are committed to delivering durable, long-term value creation, which will be led by our recently appointed CEO, John Chidsey." It declined to comment further.
Access to capital
One element missing from Elliott's snapshot, said Larry Pimentel, a former CEO at Azamara Cruises, SeaDream Yacht Club, Cunard Line and Seabourn, is NCLH's access to capital, particularly regarding private island development.
As Royal Caribbean ramped up private island investment, it had more capital available than NCLH, which had less financial flexibility than competitors when restarting operations after the pandemic, he said.
NCLH also had more limited financial resources than Royal Caribbean and Carnival well before Covid, said Art Sbarsky, a former executive at Norwegian Cruise Line, Celebrity and Crystal.
"When Covid hit, the betting was that if any of the major cruise lines were going to go out of business, it was going to be NCL," said Sbarsky, who was executive vice president of sales and marketing at NCL in the late 1990s. "Didn't happen."
Pimentel said the comparison of expenses is "the most compelling and defensible point Elliott makes."
"The numbers don't lie, and Elliott is right to put them at the center of its argument," he said.
Elliott also criticized NCLH's spending beyond operational expenses, highlighting the Norwegian Prima's inaugural festivities in Iceland in 2022 and the company's emphasis on art curation.
In the category of "strategic errors and poor execution," Elliott claimed that NCLH held off on further development of Great Stirrup Cay while Royal Caribbean invested in Perfect Day at CocoCay and disproportionately bet on Europe and Alaska rather than the Caribbean. And as its competitors built bigger ships, it didn't compete on size.
Kwortnik countered that while Royal Caribbean did "set a new bar" with Perfect Day, Carnival Corp.'s Celebration Key didn't open until 2025 and MSC Cruises recently announced upgrades to Ocean Cay. He questioned whether NCLH is really "late to the game" with its proposed upgrades to Great Stirrup Cay.
He also said NCLH had successfully repositioned its flagship brand as a more premium mainstream offering, leading to price premiums and strong yields, and that Oceania Cruises and Regent Seven Seas Cruises are well aligned "with the continued strength in luxury and experiential travel demand."
"Oceania's move to go adults-only sharpens the brand's competitive positioning, and Regent just had the strongest booking month in the brand's history in January, despite new entrants in the ultra-luxury sector," Kwortnik said.
Elliott seeks a new board
Elliott also said the company's board over-rewarded its CEOs, calculating they were paid $111 million from 2020 to 2024, a period when shareholder value decreased 56%. The investor wants a new board whose members have held executive leadership positions in the cruise industry.
Former Royal Caribbean International CEO Adam Goldstein confirmed on Feb. 19 that he is in talks with Elliott to be nominated as a board member.
"Financial results follow the guest experience, not the other way around," Goldstein wrote in an opinion piece about NCLH for Fortune. "When the product delivers clear value and distinctive experiences at sea and ashore, travel agents feel confident recommending the brand."
What remains unclear is what types of product changes Elliott would seek. And delivering a quality product amid any major corporate changes is crucial, Sbarsky said.
"If people go onboard and they don't have a good time on any of the brands because of something that corporate has done in pursuit of revenue, those people aren't coming back," he said.