Norwegian Cruise Line Drops Vaccination Requirements and Bookings Accelerate

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Norwegian Dawn arriving at the Port of Liverpool, photo credit Spacejunkie2 (Flickr)

Norwegian Cruise Line Holdings announced earlier this week it was dropping vaccination requirements on cruises from the U.S., as well as pre-cruise-related testing protocols for vaccinated guests. The result? Cruise bookings picked up.

“(The) announcement was an instant catalyst, resulting in one of our top three best booking days of the year,” said Frank Del Rio, president and CEO, speaking on the company’s second-quarter earnings call.

The company will no longer have a mandatory vaccination requirement on any of its ships, which include the Norwegian, Oceania and Regent brands.

Del Rio said the company had relaxed testing protocols, regardless of sailing length.

“To put it simply, vaccinated individuals, including those embarking on NCLH ship from U.S. ports will no longer have any pre-cruise related protocols, and those who are unvaccinated or choose not to provide proof of vaccination will be required to test negative within 72 hours prior to embarkation. In addition, all guests 11 years old and younger will be exempt from vaccination and testing requirements of any kind,” he said.

Norwegian Cruise Line Holdings Maintaining Strong Pricing, Won’t Discount to Fill

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Norwegian Cruise Line Holdings won’t be discounting ticket prices to chase short-term occupancy levels, said Frank Del Rio, president and CEO of Norwegian Cruise Line Holdings, on the company’s second-quarter earnings call.

“We could, like others, chase short-term occupancy and sell cruises for crazy prices, but we don’t want to do that. We never have done that. That is not our strategy,” he said.

“I remind you what happened back in ’08 and ’09, when (during) the great recession, certain cruise companies did drop their prices to ridiculous levels. And it took them, in some cases, 10 plus years, and in some cases, they’ve not yet reached those pre-great recession yields. I’m not willing to mortgage the company for 10-plus years in order to window dress the next quarter or so. I just won’t do it. We’re here for the long term,” he said.

“We’re managing the business on a long-term basis. COVID had a major impact. We were shut down for 18 months or so, and the recovery is not instant mashed potatoes. If you want instant mashed potatoes, you got to go elsewhere because we’re here for the long run. And our pricing strategy, how disciplined it is, is proof of that.

“We simply don’t want to chase short-term occupancy at the expense of long-term pricing. Pricing has a long tail,” he added.

Del Rio said the company had 40% more ticket sales on the books right now compared to 2018 despite a 20% increase in capacity.

“And I’ve been doing this for 30 years. I’ve managed cruise companies in good times and in bad times, and I am convinced beyond a shadow of a doubt that you don’t sacrifice the long-term pricing power of your brand in order to achieve short-term load factor gains,” Del Rio continued.

Port of Galveston Preparing for Cruise Growth with Infrastructure Upgrades

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The Port of Galveston serves over one million passengers per year, ranking it fourth in the United States, and plans to expand its infrastructure with strategic updates in the near future.

The port is investing approximately $33 million in cruise-related infrastructure upgrades, with the goal of reaping millions more in future revenues and economic growth for the community and region, according to a statement by the Port Director and CEO Rodger Rees.

Galveston’s capital improvements are part of the port’s strategic master plan, which was approved by the board in 2019 and will last for the next 20 years. Other projects planned by the port include upgrades to accommodate more and larger ships, as well as more passengers. All of these are funded by the port through cash reserves, operating income, loans, grants, and public/private partnerships.

According to Rees, the port’s most significant expansion will be the addition of a third cruise terminal at Pier 10 in November 2022, a project which was brought to life through a public/private partnership with Royal Caribbean International.  The latter is constructing a 161,000-square-foot terminal to homeport its Allure of the Seas and will contribute an estimated $110 million to the project to build the terminal. The port is investing nearly $22 million in pier repairs, site work, utilities, and cruise parking for 1,800 vehicles. This new terminal is expected to generate significant revenue and jobs for the port and regional economy.

As Rees further noted, Galveston also plans to spend about $11 million on improvements at cruise terminals 25 and 28 in preparation for the Carnival Jubilee, which is scheduled to homeport starting in November 2023.

To accommodate the new ship, the port will construct a second gangway, internal improvements to allow for more efficient passenger processing, and a federally mandated facility for US Customs and Border Protection. In addition, beginning this year, the Ruby Princess will sail from December 2022 to April 2023 from cruise terminals 25 and 28.