Norwegian at cruise capacity ‘tipping point’

Norwegian at cruise capacity 'tipping point' Norwegian Cruise Line is coming to a “tipping point” in terms of new capacity arriving and needs to “get serious” about growing international markets to ensure it fills it.

The line, which recently launched Breakaway (pictured) and Getaway, will add another four new ships between 2015 and 2020.

Francis Riley, director of international markets, said: “We need to be looking at the long-term strategic investment in international markets; whether that’s through marketing, buying more charter seats, or how we’re driving more distribution.”

He said getting more agents selling Norwegian, and more training and education to make sure they are targeting the right customers, was key.

“The biggest opportunity for us is to support the capacity growth that’s coming in with all our new ships by developing our international business – and that bodes really well for the UK as it’s our biggest single market outside the US.”

Riley added: “I think my biggest fear is that typically, there’s only one cruise specialist in any agency. That keeps me up at night.

“Every agent sells a package but not every agent feels comfortable selling a cruise, and that has to be my biggest concern as the sector grows. It’s our responsibility as an industry to tackle this issue.”

He said he understood agents had a lot of pressures so said it was “important to make them understand the differentiation between the cruise brands”.

Riley claimed Norwegian’s Partners First scheme was enjoying huge success by rewarding agents that work in true partnership with the line to grow both their businesses.

He claimed that despite reducing base commission to 10%, Norwegian had paid out “just as much if not more” in rewards to those key agents that had performed really well for the line.

“Agents have the opportunity to earn well in excess of the base rate and many do. Many of them are retaining more commission than they ever have done with us,” he said.

Riley claimed Norwegian, having posted 24 quarters of consecutive growth, could now truly claim to be “industry leading rather than industry following”.

“By any measure, whether it’s EBITDA, net per share, net revenue, Norwegian is now best in class,” he said.

Carnival Corp. CEO: Competitors’ newbuilds may hurt pricing

By Tom Stieghorst
MSC Cruises’ order book of four big new ships is an example of a trend that could spell trouble for an industry struggling to raise prices, Carnival Corp. CEO Arnold Donald said.

“We’ll have to see how it all plays out,” Donald said in a recent teleconference with reporters. “In an ideal world, you wish it wasn’t happening.”

Arnold DonaldDonald was not singling out MSC’s expansion for criticism, but he happened to be making his comments on the day the line ordered two 4,170-passenger ships. That came on the heels of an order for two 4,500-passenger ships, part of a plan to double MSC’s capacity by 2022.

Asked how prices can rise if Carnival Corp. restrains its own brands’ capacity growth while other lines don’t, Donald said he was confident that Carnival’s strategy was sound. It includes incremental growth in onboard revenue and ticket prices spread over 78 million passenger days, coupled with shrinking expenses by employing best practices culled from its 10 brands.

But, he said, if any competitor resorts to “super-aggressive pricing” to fill its ships, “then it can become a problem for the industry.”

Donald said travelers come to view the industry’s lowest prices as a gauge of how much they should pay for any cruise.

“People say, ‘I’m not going to go on that ship, but cruises only cost this much, and I don’t want to pay more than that because I don’t want to get ripped off.'”

On the other hand, he said, the upside of new capacity is more attention being paid to cruise products.

“It just allows them the opportunity to put cruise front and center, to help all of us close on [those] new to cruise,” he said.

MSC Cruises USA President Rick Sasso said that the real pricing stress this year has been in the Caribbean and that MSC wasn’t the initiator of the fare discounting there.

“It should not be a surprise to anybody that we’ve been successful and we’re going to continue to invest in our brand,” he said.