Looking for a deal on a cruise? Don't expect one from these three lines
Not every cruise line is rolling out deals galore to lure back customers.
While many cruise brands have been slashing prices to fill ships in recent months, Norwegian Cruise Line, Regent Seven Seas Cruises and Oceania Cruises have been holding the line on pricing and even increasing fares. And that's unlikely to change anytime soon, according to the top executive at the parent company of the three lines.
In a conference call with Wall Street analysts on Thursday, Norwegian Cruise Line Holdings president and CEO Frank Del Rio suggested the company would rather operate its ships a little more empty than normal than to fill them by offering heavy discounts.
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"We have not and will not chase short-term occupancy by sacrificing price, which only results in long-term and perhaps even permanent damage to brand equity, as we have seen over the years in other situations," Del Rio said during the conference call, which took place after the company reported quarterly earnings.
Del Rio suggested he'd rather spend more on marketing to sway people to book cruises than to lure them onto ships with big discounts -- a "market-to-fill" philosophy he has long championed.
"Look, it goes back to our core going-to-market principle of market-to-fill and not discounting to fill," Del Rio said. "At this stage of the recovery, having four or five more [percentage] points of occupancy at the expense of lower pricing, which could have a very negative long-term effect on the brand's equity, is not the right move."
As TPG has written about quite a bit in recent weeks, many cruise lines have taken to discounting significantly to fill ships in the short term as they ramp up operations that were shut down due to the COVID-19 pandemic. The discounts are coming both in the form of outright reductions in fares and the offering of free "value-added" extras with new bookings such as free drink packages, Wi-Fi, gratuities and shore excursions.
Del Rio suggested he disapproved of the fare discounting, in particular, during the conference call.
Related: The ultimate guide to Norwegian Cruise Line
"It wasn't hard for us to resist following others and dropping prices to levels that I've never seen before," he said.
Del Rio noted during the conference call that average ticket prices at Norwegian Cruise Line Holdings brands for the fourth quarter of 2021 were about 10% higher than during the fourth quarter of 2019, the last normal year for cruising. Onboard spending for the fourth quarter was "over the top," he added; at one point in the conference call he said it was at record levels.
As a result, total net revenue on a per passenger basis at the company was up over 20% during the fourth quarter of 2021, Del Rio said
"Some of our competitors had flat improvement," Del Rio noted.
Related: The 5 best destinations you can visit on a Norwegian ship
Like all major cruise companies, Norwegian Cruise Line Holdings shut down operations around the world in March 2020 as COVID-19 swept the world. The 28 vessels operated by its three brands began returning to service in July at a measured pace of one to three ships a month. As of the end of December, the company had 16 of its 28 vessels back in operations.
Del Rio said the company plans to have all 28 of its ships back in operation by the end of May.
Del Rio noted that bookings for cruises had begun to rebound solidly in October and November after the delta variant of COVID-19 began to wane only to turn down again after the omicron variant appeared.
"Omicron did not pick the best of times to make its appearance," Del Rio quipped, noting that it arrived just after Black Friday and Cyber Monday promotions began boosting bookings.
Del Rio noted that Norwegian Cruise Line was forced to cancel a number of sailings in January due to the omicron wave as travel restrictions grew and "ports began implementing difficult, sometimes onerous requirements for docking."
At the same time, "booking volumes slowed and cancellation of existing bookings increased." However, as the surge abates, bookings for the second half of 2022 are now in line with the comparable 2019 period, the company said.
Related: The ultimate guide to Norwegian Cruise Line's loyalty program
Del Rio also had positive things to say about the company's health and safety record. The three cruise lines, which initially implemented very strict COVID-19-related protocols, carried 230,000 passengers during the five months its ships operated in 2021 with very few cases of the illness detected on the vessels, Del Rio said.
"Our COVID positivity rate was minuscule and certainly a fraction of what has been the case in the population at large," he said.
Del Rio echoed reports from other cruise line CEOs that customer satisfaction on cruise ships right now is at stunningly high levels.
Norwegian Cruise Line Holdings brands during the fourth quarter "achieved the highest customer satisfaction scores in our history," Del Rio said, calling it "a reflection of the deep commitment from our crew members, who are as energized as ever to be back in the high seas serving our guests."
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