Norwegian Cruise Line Holdings is pivoting toward 2025 with cruise bookings, and the company has strong pricing power, says CEO Harry Sommer. Unexpected demand is rolling in for Europe and Alaska summer itineraries.
The cruise company exceeded several expectations this quarter and found itself in the upper range of its optimal booked position on a 12-month forward basis. Strong pricing is expected to continue throughout the year, Sommer said during NCLH's Q2 earnings call Wednesday.
"We don't take record booked positions to the bank, we take yields to the bank, and we have calibrated our tools such that sometimes it's OK to slow down bookings in order to raise prices," he said.
Onboard revenue continued to be robust, with a 15% increase in pre-booked onboard revenue per capacity day in Q2. But cruise fares alone have been particularly strong, said Sommer.
"We have really seen robust pricing for 2025, up significantly compared to this time last time for 2024," he said.
The company beat several expectations this quarter, including for net income, net yield growth and net cruise costs excluding fuel. That has led the company to raise its full-year expectations.
NCLH -- parent of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises -- reported record Q2 revenue of $2.4 billion, an 8% year-over-year increase on a 4% rise in capacity. Net income was $203.7 million, up from $137 million a year earlier.
The company has zeroed in on costs and efficiencies, an effort that paid off, said Truist Securities analyst Patrick Scholes.
"While Q2 revenues were roughly in line to slightly below Street expectations, it was costs that came in better than expected," he said.
The company sailed with a 105.9% load factor for the quarter, slightly above expectations and up from 104.9% a year earlier. Before the pandemic, load factor reached 108.4% in Q2 2019.
Sommer said he was less concerned about load factors, noting the priority is booking cabins rather than filling them with thirds and fourths.