Norwegian Cruise Line has secured an operating license in
China that it allows it to sell directly to consumers rather than through
wholesale travel companies.
In a conference call with analysts to discuss third-quarter
financial results, CEO Frank Del Rio said the license had been granted within
the last 10 days.
"Now we move into efforts to monetize that," Del
Norwegian will lean heavily on its partnership with Chinese
e-commerce giant Alibaba Group and its data-mining expertise to locate retail
customers in China, Del Rio said. 'We are very conscious of that opportunity,"
Del Rio said.
To date, Western cruise operators have had to charter their
ships to Chinese wholesalers, who then fill the ships. Pricing is worked out in
"Certainly, having another strong channel to distribute
our branded products directly to consumers where the cruise line has more
control over pricing would be a good thing," Del Rio said.
In addition, Norwegian would gain more control over how
cruises in China are marketed. Del Rio said they're currently pitched as
shopping excursions, so the cruise line benefits from higher onboard retail
spending, but gets no shore excursion revenue, a high-margin product according
to Del Rio.
He said that if Norwegian can resume calls in South Korea,
which were suspended earlier this year in a dispute with China, that could
help. Currently Norwegian's four-day cruises go to Japan, using up a sea day on
each end, and leaving little time for both shopping and shore excursions. Being
closer to China, South Korea could help with the shopping/shore excursion mix,
Norwegian began sailing in China on July 1 with the debut of
the new Norwegian Joy in Shanghai.
Norwegian said it set single-quarter records for profit,
revenue and passengers carried in this year's third quarter. Net income was
$400.7 million, up from $342.4 million. Revenue rose 11.2%, to $1.65 billion.