Americans already making far-flung bookings for next year, says cruise line CEO
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
As Americans return to travel in the coming months, many industry watchers think they’ll be looking for destinations that are close to home and easy to reach. Driving trips will be popular. So will weekend getaways. More ambitious travel that involves long-distance flying will be out.
But Frank Del Rio, the president and CEO of Norwegian Cruise Line Holdings, isn’t convinced.
The hard data that he sees — and in his position, he sees a lot of it — is showing that vacationers still are interested in travel to far-flung destinations such as Asia and beyond. And they’re willing to get on long-haul airplanes to do it.
“This notion that people aren’t going to want to cruise to faraway places or exotic destinations … what we’re seeing is defying that,” Del Rio said Thursday during a conference call with Wall Street analysts. The call came after the company released its quarterly earnings.
In response to a question about whether vacationers don’t want to fly to cruises anymore and were opting for sailings out of drive-in ports, Del Rio said the data he’s seen shows no evidence of that. In fact, he said, the top itinerary in terms of demand right now for the coming winter at the company’s Oceania Cruises and Regent Seven Seas Cruises brands is in a place about as far away as can be for a U.S.-based traveler: Japan.
“It’s Japan, it’s Dubai, it’s several of the world cruise segments,” he said, ticking off the itineraries that have been selling the best in recent weeks. “So, therefore, you have to fly there.”
Norwegian Cruise Line Holdings is the parent company of Oceania and Regent as well as its namesake, Norwegian Cruise Line. It operates 28 ships in all that sail to every continent.
In general, the destinations that customers have been choosing recently when making new bookings are the same destinations they chose before the coronavirus pandemic began, Del Rio said.
“We’re not seeing any particular area of strength, other than these Japanese itineraries, these world cruise segments, [which] are sold out, literally,” he said.
Del Rio didn’t elaborate on what, if anything, was driving the boost in bookings for Japan sailings.
Like all cruise companies, Norwegian has been hard-hit by the coronavirus outbreak. In advance of the conference call, it announced an adjusted loss of $211.3 million, or 99 cents a share, for the quarter that ended on March 31. That compares to a net income of $181.8 million, or 83 cents, in the same quarter a year ago. Second-quarter numbers are expected to be far worse.
Worries about the coronavirus outbreak have prompted many of Norwegian’s customers to cancel upcoming bookings, and the company itself has canceled many sailings. Norwegian halted all cruise operations in mid-March, as the coronavirus outbreak spread around the globe. The company already has canceled every sailing through June 11.
Still, through it all, customers have continued to book new sailings for later this year and beyond. Indeed, in recent regulatory filings, Norwegian has said its bookings for 2021 remained “within historical ranges” of where they would normally be this far in advance, something Del Rio reiterated on Thursday. What’s more, he said the bulk of bookings for 2021 were new bookings — not just rebookings by people who recently had their cruises canceled. That’s something the company had not said before.
Norwegian has been offering customers on canceled sailings a choice of a full refund or a future cruise credit worth 125% of the amount they paid, and about half of them are choosing the credit. But Del Rio said those credits weren’t what’s driving the solid booking situation for 2021.
“The vast majority of the booked position today [for 2021] … is good old cash bookings,” Del Rio said, suggesting that many people with the credits had yet to apply them to future sailings. “Over time, as people finalize their future plans, we hope that they do take advantage of those future cruise credits, which you know are good through the end of 2022.”
Thursday marked the first time since the coronavirus outbreak began that Del Rio has talked in such detail about bookings for 2021.
When pressed for more color on the pace of new bookings by an analyst from Barclays, Del Rio did note that bookings for 2021 in recent weeks have been running below where they normally would be for this time of year. But that’s after being way up early in the year before the coronavirus outbreak took center stage. It’s by blending together the two periods — pre- and post-coronavirus — that the overall situation of bookings for 2021 remains “within historical ranges,” he said.
“We started the year at an incredibly booked position … we had a huge lead at the end of February,” Del Rio said. “As the COVID-19 pandemic has worked its way through the booking process, we’re taking less bookings than we were this time last year.”
Still, Del Rio was upbeat about the bookings that the company was getting for 2021, given all that has happened. He noted the company’s sales and marketing efforts have basically shut down since the coronavirus outbreak began, which means these bookings are coming in with no prompting from advertising or marketing dollars. Travel agencies also aren’t working at full strength, he noted.
For more TPG news delivered each morning to your inbox, sign up for our daily newsletter.
That said, over time, the company will fall further behind on 2021 bookings, he acknowledged.
“As time goes on, and we take on less bookings in the current period … you’re going to see a deficit being built over time as we continue to be shut down,” he said. “It’s not until we open all the sales and marketing activities, and the travel agents reopen for business, etc., [that] you will see a pivotal acceleration of new business.”
In an extended, one-on-one interview with TPG last week, Del Rio said his best guess was that the company’s ships would begin sailing again late in the third quarter of the year.
Additional resources for cruisers during the coronavirus outbreak:
- Why you shouldn’t expect bargain-basement cruise deals anytime soon
- How to cancel or postpone a cruise due to coronavirus
- Expecting a refund for a canceled cruise? Here’s how long it will take
- Good news for cruisers worried about strict new boarding rules
- Some of the year’s hottest new ships could be delayed
- Stream these 13 movies, TV shows to get your cruise ship fix
Feature image courtesy of Norwegian Cruise Line.
Welcome to The Points Guy!
WELCOME OFFER: 80,000 Points
TPG'S BONUS VALUATION*: $1,650
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
- Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
- With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
- Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.