Norwegian Cruise Line customers booking early, spending more

Norwegian Cruise Line customers booking early, spending more

Like Royal Caribbean last week, Norwegian Cruise Line Holdings reported a banner second quarter, with CEO Frank Del Rio saying "the stars aligned" to deliver record revenue and earnings for Q2.

Extremely favorable business conditions, plus the addition of two ships in 2016 (Oceania Cruises' Sirena and Regent Seven Seas' Explorer), propelled NCLH to a 13.3% increase in revenue from a year earlier, to $1.34 billion. Passenger ticket revenue rose 14.6% while onboard revenue increased 10.2%. Net income surged 36.7% to $198.5 million, up from $145.2 million in last year's Q2.

Del Rio discussed a "robust booking environment" during the company's earnings call on Tuesday, saying that ticket prices were up for all three brands -- Norwegian Cruise Line, Oceania, and Regent. And customers are booking earlier than they ever have -- an average of seven months before departure, Del Rio said.

With customers booking so far out, there isn't much inventory left for 2017, said CFO Wendy Beck, and the lion's share of available space is lower-priced cabins on Norwegian ships.

Higher lead-time bookings are benefiting the Norwegian Bliss, a ship that will enter service next April and sail Alaska itineraries from Seattle during the summer months. Del Rio said advanced bookings are brisk and pricing is strong for the new vessel.

Last year at this time, Europe cruising was soft, with attacks in France and Belgium scaring guests away. That is not the case this year. Del Rio said demand is way up and the North American passenger has returned. Del Rio noted that North America is the most lucrative source market for Europe cruises, with Americans and Canadians outspending Europeans on cruise fares and onboard purchases.

Del Rio called the Norwegian Sky's Cuba cruises a "home run" and said Norwegian was "very fortunate to maximize presence" with the addition of a second ship next year. The Norwegian Sun will operate Cuba itineraries from Port Canaveral, complementing the Sky's sailings from Miami.

The only bad news: China's ban on trips to South Korea has negatively affected cruise prices and onboard spending for the Norwegian Joy, a ship purpose-built for the Chinese market that entered service in April.

NCLH's good results prompted the company to improve its outlook for the year. The company now sees full-year earnings per share of $3.93 to $4.03, up from $3.79 to $3.89.

"Strong booking volumes and firm pricing have benefitted our booked business for the next four quarters," Beck said.


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