Diversification and Norwegian’s bottom line


By Tom Stieghorst
The benefits of diversification in the cruise industry will be evident this week when Norwegian Cruise Line Holdings reports its results for the fourth quarter and calendar year 2014 on Tuesday.

Norwegian, until recently a single-brand company, is heavily tied to the Caribbean in the fourth and first quarters. According to analyst Rachel Rothman, of Susquehanna Financial Group, Norwegian’s results will be pulled down by its high exposure to the Caribbean relative to its competitors Carnival Corp. and Royal Caribbean Cruises Ltd.

Norwegian does not benefit from growth in Asia, which is also helping those two companies, Rothman notes.

In a positive light, Norwegian is aided by not having any cruise brands that do business in currencies other than the dollar. That means the relatively strong dollar affects it less than Carnival, with its Costa, Aida and P&O subsidiaries, or Royal Caribbean, which owns Spain’s Pullmantur and France’s CDF.

From that perspective, Norwegian’s recent acquisition of Prestige Cruise Holdings is ideal. The two Prestige brands, Regent Seven Seas Cruises and Oceania Cruises, both do business in U.S. dollars, so their results won’t be a drag because of currency exchange.

And as destination-oriented luxury lines, Oceania and Regent do relatively less sailing in the overcrowded Caribbean and have more itineraries in Asia, although neither is set up to source business there.

Rothman expects Norwegian to earn about $76 million in the fourth quarter and about $508 million for 2014. The company is building ships just about as fast as is practicable, which should help it diversify its itineraries further away from the Caribbean to areas like Brazil in the winter.

Norwegian has come a long way in a short time. Tuesday’s results may show it has further to go.

Preview 2015: Cruise

The 4,200-passenger Norwegian Escape, due late in the year; it is one of two big ships that will be delivered in 2015.

Royal Caribbean opens new terminal in Bayonne

Royal Caribbean opens new terminal in Bayonne

By Tom Stieghorst
Royal Caribbean Cruises Ltd. held a dedication ceremony for a new 125,000-square-foot terminal at Cape Liberty in Bayonne, N.J.

The new terminal is located adjacent to the original 2004 terminal and will serve as the passenger processing center for Quantum of the Seas when it arrives on Nov. 10.

The new facility is the first phase of a $55 million expansion and includes a 950-space parking garage. Bayonne already earns an estimated $500,000 a year from a parking tax inaugurated in 2008.

Cape Liberty Cruise Port Opens New Terminal

PHOTO: Cape Liberty Cruise Port has opened a new terminal to house Royal Caribbean’s new Quantum of the Seas. (File photo courtesy of Cape Liberty Cruise Port)

The first phase of the $55 million port expansion includes a state-of-the-art guest terminal, with 125,000 square feet of check-in, customs and immigration, and luggage-processing space, as well as a 950-car parking structure. The new facility is at 4 Port Terminal Boulevard, adjacent to the first terminal that opened in May 2004. Royal Caribbean Cruises Ltd. and the Port Authority of New York & New Jersey have dedicated the second cruise terminal at Cape Liberty Cruise Port in Bayonne, N.J., which will house the new Quantum of the Seas starting Nov. 10.

Cape Liberty is about 15 minutes from Newark Liberty International Airport and seven miles south of Manhattan. The port has been the year-round home of Royal Caribbean International’s Explorer of the Seas and seasonal homeport for Celebrity Cruises’ Celebrity Summit.

Quantum of the Seas will sail to the Caribbean and Bahamas starting in November, but will move to Shanghai, China, in May. It will be replaced by Liberty of the Seas for the summer and then Quantum’s sister ship, Anthem of the Seas, for winter 2015.

Cape Liberty has the second-largest passenger volume among Northeast and Mid-Atlantic coast ports, according to a study titled “The Contribution of the North American Cruise Industry to the U.S. Economy in 2011.” The facilities generate an estimated $500,000 per year to the City of Bayonne and help generate $390 million annually.