NCLH: More Ships to China?

Building up efforts in China, Norwegian Cruise Line Holdings (NCLH) will soon have office space for 60 employees in Shanghai as the Norwegian Joy will arrive in Shanghai next June.

With a significant effort in the market from the Miami-based company, the foundation is being laid for expanded deployment and more capacity from Norwegian.

“We will put our ships wherever we think we can make the most money,” said Frank del Rio, president and CEO. “Even though the yields in China are dropping year-over-year like you’d expect them to drop given the increase in supply, China is big and China is strong.”

Del Rio said the next ship to be considered for the Chinese market will be the company’s 2019 newbuild, with the 2018 newbuild already allocated to the North American marketplace.

“It (the 2019 newbuild) could go to China if things work out,” del Rio told Cruise Industry News. “And my guess is, if it did go to China, it would go to Tianjin.”

Norwegian will be the first brand to put a new ship specifically designed for China into the marketplace, promising a number of unique features for the Joy. Among them is the lack of a traditional pool deck, with the company opting for a green park-like space instead.

With its buildup in China, del Rio also noted the company has large offices in the UK, Germany and Australia, which are sales and marketing focused.

He said he expects the China office to grow past 60 employees.

Coming into the market after a number of competitors, del Rio said: “We observed what they’ve done right and what they’ve done wrong and we’ve planned accordingly. Every single cruise line that came before us sent old tonnage, old ships. Maybe many years ago, when the industry started here, that strategy may have worked, but today given the level of competition and sophistication of the Chinese consumer … that won’t work and that is why we are introducing Norwegian’s largest, most expensive and more sophisticated vessel in a very customized manner for the Chinese consumer.”

He added: “That’s the strategy: brand new, state-of-the-art ships customized for the Chinese customer in a real way, not just painting a wall red and saying ‘ok now it’s Chinese.'”

While the Joy spends its inaugural season in Shanghai, it will rotate to Tianjin on a six-week program.

“Tianjin is a very important city to us,” said Harry Sommer, executive vice president for international business and operations. “Beijing is a very large market. All of our brands call on Tianjin as a port of call and while the Joy spends much of its first season in Shanghai, it has a six-week season in Tianjin in August and September of next year.”

David Herrera, president of NCLH China, said the Tianjin deployment was driven by excitement and demand from travel agents based in Beijing.

“We felt compelled to share the Norwegian Joy with the north,” he said. “The demand is there and we’re excited to fulfill that demand.”

Addressing Chinese media, Sommer said it was likely the Chinese cruise market could surpass the U.S. cruise market in 10 years.

Genting Hong Kong, a significant shareholder in NCLH, and former outright owner of Norwegian, is not involved in the company’s expansion into Asia.

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