Thomas Foods
San Diego

NCLH Seeing Upside in China

Norwegian Cruise Line Holdings is seeing positive momentum in the Chinese cruise market, according to President and CEO Frank del Rio, speaking on the company’s first quarter earnings call.

“Internally, the go-to-market initiatives we’ve recently launched for our China source business could result if successful in meaningful pricing and onboard revenue improvement,” he said.

In addition, Norwegian will start packaging offers with its ticket price in China, similar to other markets where guests receive a free beverage or shore excursion package, for example.

“We’re optimistic about our ability to meaningfully increase onboard spend in China from the introduction of our Joy At Sea promotion which is a – the same concept of bundling that we’ve been able to introduce successful in North America and throughout Europe,” del Rio siad. “We’re going to test to see whether the Chinese consumer likes free stuff just like the rest of the world does, and I’m hopeful that they do.”

Overall, del Rio continues to be encouraged about the Chinese market.

“I feel better about China today than I certainly did six months ago,” he remarked. “The reduction in capacity in China that’s coming up starting in Q3 of this year without any new additions is certainly helping the situation in terms of the supply demand balance.”

He said pricing was up for the Joy following the ship’s introduction in 2017. This was important, he continued, as ships often see a dip in yield growth in their second year of operation. 

Like its peers, Norwegian is also working hard to shift away from the charter model.

“One of the most important functions of a cruise line is its ability to yield manage,” explained del Rio. “And in essence, the charter business doesn’t allow you to yield manage anywhere near the way that you can in the more traditional model that we have in North America.”

Some 20 percent of the line’s business aboard the Joy in 2018 will be full ship charters, and that number will be below 10 percent in 2019.

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