Norwegian Cruise Line Holdings said Monday that its financial outlook for the year has fallen "significantly below" prior expectations because of effects from the Iran war, and the company is taking cost-cutting measures to improve the bottom line.
John Chidsey
CEO John Chidsey said during NCLH's Q1 earnings call that the company is "streamlining the shoreside organization," a move that is expected to reduce salary and benefits expenses by approximately 15% on an annualized basis.
Chidsey added that the company has piloted "select offshoring initiatives across different areas of the company."
"These efforts are in their early stages and we are testing and learning as we go. We plan to utilize this lever as we move ahead, expanding upon and scaling our efforts where and when appropriate and most beneficial to the business," said Chidsey, who was hired in February to improve the company's performance, particularly for the Norwegian Cruise Line brand.
Throughout the call, Chidsey and CFO Mark Kempa emphasized that the company's two luxury brands, Oceania and Regent Seven Seas Cruises, are performing well, and that it's NCL falling short. Chidsey said NCL's marketing has been inefficient and not as effective as it could be, and that the company is taking steps to reduce and optimize marketing spending.
He said the company will be "very careful about where we take cost out to have it not impact in any way revenue-producing opportunities."
Later in the call, Chidsey said that in the last three or four years, NCL's marketing spending "increased dramatically" and that its marketing efficiency wasn't as good as competitors.
Further, the company will continue to look for cost-cutting opportunities over the next two to four quarters. "We keep turning over rocks, and there's plenty more to go there," Chidsey said.
Fallen demand for Europe cruises
On the revenue side of the business, the Iran war is pressuring demand, predominantly in Europe -- as cruise sellers have reported.
Kempa noted that 26% of NCLH's deployment is in Europe in Q2, and that the company's exposure is even greater in Q3, with 38% of deployment in the region.
Kempa also noted softened demand for Alaska cruises and a general "weaker than anticipated domestic demand as consumers reevaluate travel plans."
As a result, NCLH now expects 2026 net yield to be 3% to 5% lower than last year. Last quarter, it had anticipated net yield to be flat compared to 2025.
It also lowered its forecast for adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to between $2.48 billion and $2.64 billion, down from $2.95 billion.