Norwegian Cruise Line and Royal Cruise Line Plans

“We have concluded that Norwegian Cruise Line and Royal Cruise Line are central to the future of the company,” said Adam Aron, President and CEO of NCL and RCL and their parent company, Kloster Cruise.

Aron added that a conclusion has not yet been reached about Royal Vuong Line, Kloster Cruise’s third division.

In the meantime, Aron said he is doing everything to get Kloster back in a position to order new ships. He underscored that fleets can change fast. “In 18 months, NCL has proved it can change and upgrade its fleet dramatically,” Aron said. “If we can improve our performance and sustain it, we can gain access to the equity market – at the right time and at the right price,” Adam added. “Then, things can happen fast” he said.

But Aron has no visions of making NCL the biggest line, which it was once was. Instead, Aron projected an eight-ship NCL fleet by the end of the decade – “known for its excellent product; thought of as an innovator; and a force to be reckoned with,” Aron said.

Royal Cruise Line

Aron said that he saw a great opportunity to grow RCL by turning the line into a strong national brand as well as marketing overseas. He noted that NCL gets 10 percent of its revenues from overseas markets, while RCL gets practically no revenue from overseas.

He said he intended to focus more attention on RCL, but that its success was not based on how many hours he would spend behind a desk in San Francisco. “However, we will be adding depth to the management in San Francisco,” Aron said. He added that “not all the cards have been turned over yet.”

While Aron conceded that RCL has been consistently profitable, he noted that the line has not been “wildly profitable.” He also said that the prices “we have been getting have not been commensurate with the quality of the product.”

By the end of the decade, Aron said he could envision a five-ship RCL fleet, perceived as strongest in the premium market, but also straddling the luxury market.

Norwegian Cruise Line

“When I took the job, I said that a turn-around would begin in the third quarter of 1994,” said Aron. He explained that it takes months to implement new programs and then that it takes months before the results are reflected in bookings as passengers often book months in advance.

“We had to clean out a lot of problems,” said Aron. He said that NCL’s reservation system had a long hold time, that the 1993 brochure was cumbersome and that the pricing system then in place was incomprehensible. “This is what agents told us,” Aron said. “The company was suffering from what was essentially self-inflicted wounds.”

Aron said that he was very optimistic about the outlook for NCL and said that bookings for the second half of the year were strong. He also said that passenger ratings were up dramatically from last year following a series of product improvements.

Aron also cited cost control as essential to NCL’s tum-around. “We have taken a lot of costs out of this company,” said Aron.

Regarding the sale of the Southward, Aron said that Los Angeles/Mexico was a low-yield market and he had no regrets leavlllg it. “Alaska and Bermuda are strong and our position in the Caribbean has improved dramatically,” Aron said.

Aron said he did not know yet whether the Starward would be sold. He said that passenger reviews were favorable and that the ship was profitable. “I think we will look at the cash flow and make our decision based on how much it will cost to keep her properly maintained,” Aron said.

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