Tag Archives: Frank Del Rio

NCL Holdings forecasts ‘strong demand so long as it’s safe’

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NCL Holdings forecasts ‘strong demand so long as it’s safe’
Norwegian Cruise Line Holdings chief executive Frank del Rio reported “strong demand for future cruises” as the company recorded a half-year loss of $2.65 billion this week.
Del Rio dismissed a suggestion the Covid crisis could put many cruise-focused travel agencies out of business, but he described the Covid infection of passengers and crew on Hurtigruten’s MS Roald Amundsen as “disappointing”.
He suggested Norwegian Cruise Line Holdings could see a “limited” return of sailing in November and December.
The company’s sailings are currently suspended through to the end of October.
Del Rio insisted: “There continues to be strong demand for future cruises despite our reduced marketing. Consumer demand is evident across markets.”
He forecast: “The last two months of 2020 could see a return of sailing with limited capacity.  We’ve taken important initial steps.
“We’re developing safety protocols with the formation of the Healthy Sail Panel which demonstrates our commitment to combating the spread of Covid and bringing back cruising sooner rather than later.”
The Healthy Sail Panel of experts, set up in collaboration with Royal Caribbean International in July, is working to develop recommendations for a safe resumption of cruising.
Del Rio said: “The panel will submit its initial recommendations to the [US] government and Centers for Disease Control (CDC) for evaluation.”
He acknowledged: “Things will be different, of course. We’ll be mindful of how measures impact on the cruise experience.”
NCL Holdings chief financial officer Mark Kempa said: “We expect to launch with a handful of ships at first with low occupancy.
“Our break-even [on operating ships] is at around 40% of normal revenue. Layer on corporate overheads and it would require 60% of normal revenue.”
Asked whether the crisis could transform cruise distribution, which remains overwhelmingly through travel agencies, del Rio said: “We have seen smaller travel agencies folding and larger ones furloughing employees. We’ve seen an uptick indirect business.”
But he argued: “It might be exaggerated because of the partial closures of agencies. We think travel agencies will survive. Travel agencies have shown their resilience over the long term.
“Not too long ago people were predicting the demise of travel agencies, but they came back stronger. Long term you won’t see much change.”
Del Rio insisted: “We enjoy a very loyal customer base in the cruise industry. Between 15 million and 20 million people have not been allowed to cruise this year – there will be a lot of pent-up demand.
“People are booking. We’ve not seen any major shifts in consumer behaviour. We’ve not changed our itineraries. If people favour cruising closer to home or not going to Asia, we’re not seeing it.
“My instinct is we will be [operating] somewhere in the range of 75% of capacity for the full year 2021. It might start at 50%-60%, with the limitation being concern about the spread of Covid more than about consumer demand.
“So long as we can ascertain cruising is safe we’ll have customers coming back in droves.”
Del Rio added: “We’re hopeful we’ll be able to put together a comprehensive set of health and safety protocols that get us back quickly.”
Asked about the Covid outbreak on the Hurtigruten ship which infected more than 50 passengers and crew, Del Rio said: “It’s disappointing – the re-emergence of Covid aboard vessels.
“But it’s an opportunity to learn something. The cruise companies and ports which suffered these setbacks have handled it well. We’ve not had a repeat of what happened at the start of the crisis.”
Kempa reported the group paid out $725 million in cash refunds to customers in the three months to June, more than the company’s cash burn of $575 million during the quarter.
He said future cruise credits make up 30% of advance bookings and monthly cash burn had fallen to about $160 million.
The company ended June with $2.26 billion in liquidity after raising $2.3 billion during the second quarter.
Norwegian Cruise Line Holdings operates 28 ships like Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.

Royal Caribbean and Norwegian to Partner on Health Protocols

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RCL and NCL Logos

Royal Caribbean Group and Norwegian Cruise Line Holdings announced a collaboration to “develop enhanced cruise health and safety standards in response to the global COVID-19 pandemic,” according to a press release.

The companies have asked Governor Mike Leavitt and Dr Scott Gottlieb to serve as co-chairs of a newly formed group of experts called the “Healthy Sail Panel.”

The panel is tasked with collaboratively developing recommendations for cruise lines to advance their public health response to COVID-19, improve safety, and achieve readiness for the safe resumption of operations, according to a press release.

The expert panel has been working for nearly a month and will offer its initial recommendations by the end of August.

The cruise lines said its work will be “open source,” and could be freely adopted by any company or industry that would benefit from the group’s scientific and medical insights.

“This unprecedented disease requires us to develop unprecedented standards in health and safety,” said Richard D. Fain, chairman and CEO of Royal Caribbean Group. “Bringing aboard these respected experts to guide us forward demonstrates our commitment to protecting our guests, our crews and the communities we visit.”

“We compete for the vacationing consumer’s business every day, but we never compete on health and safety standards,” said Frank Del Rio, president and CEO of Norwegian Cruise Line Holdings Ltd. “While the cruise industry has always had rigorous health standards, the unique challenges posed by COVID-19 provide an opportunity to raise the bar even higher.”

Fain and Del Rio said they initiated the panel to assure the plans they will submit to the U.S. Centers for Disease Control and Prevention (CDC) and other regulators apply the best available public health, science and engineering insights. The work of the panel will be shared with the entire industry and regulators.

“In convening the Healthy Sail Panel, we sought the participation of a diverse group of leading experts in areas of science and public health that are directly relevant to the considerations listed by the No Sail Order,” said Governor Leavitt. “We view our work as a profoundly important public health effort. The health and safety of passengers, crew, and the communities that cruise ships visit will be the principal focus of this project.”

Dr Gottlieb said, “We know that the public health issues that must be addressed are complex, and in some areas, tackling them will require novel approaches. Our goal in assembling this team of leading experts was to develop best practices that can improve safety and provide a roadmap for reducing the risks of COVID-19.”

The panel is co-chaired by Governor Leavitt, former Secretary of the U.S. Department Health and Human Services (HHS), and Dr Scott Gottlieb, former commissioner of the U.S. Food and Drug Administration (FDA). The panel’s members are globally recognized experts from various disciplines, including public health, infectious disease, biosecurity, hospitality and maritime operations.

 

NCL Holdings says cruisers eager for exotic sailings

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Oceania Cruises' Marina.
Oceania Cruises’ Marina.

Norwegian Cruise Line Holdings Ltd. (NCLH) said that consumers are booking cruises to far-flung destinations in 2021, with Japan and Dubai among the top itineraries, along with several world cruise segments.

NCLH CEO Frank Del Rio said during the company’s earnings call that for its Oceania and Regent brands, demand for those itineraries in the first and second quarters of next year indicates that people will be willing to take long-haul flights.

“And so, this notion that people aren’t going to want to cruise to faraway places or exotic destinations, what we’re seeing is defying that,” he said. “So we’re not seeing any particular area of strength other than these Japanese itineraries, these world cruise segments that are sold out, literally.”

Del Rio also said during the call that he anticipates it would take about six months to resume service across its entire, three-brand fleet.

“The return to service of a phased approach of roughly five vessels per month is what we believe we operationally could handle in terms of bringing back the ships from cold lay-up, including re-crewing the vessels etc.,” Del Rio said. “Given that we have 28 vessels if you bring back an average of five vessels a month, it’s going to take about six months to get all ships back operating.”

During the earnings call, Del Rio said that timeline assumes that the itineraries those ships would operate are available.

“So the six-month ramp-up assumes more than anything else our operational capability to ramp up and that the ports are open,” he said.

Del Rio said that consumer demand is not a concern.

“We believe consumer demand and the bookings that follow are based on our ability to market, travel agents being back open again, the whole industry being back in operation as opposed to sitting idle,” he said. “There is pent-up demand, let’s not forget that. People only talk about the negative, but the fact that the industry has been shut down now over four months, there’ll be pent-up demand. People will want to cruise again.”

He also acknowledged that it will take time for cruising to come back to where it had been.

“We just have to be patient,” he said, adding that “no one is more impatient than me. But I recognize that this is going to be a recovery effort that’s going to take multiple quarters, perhaps multiple years to get back to the good old days of 2019.”

$211M loss in the first quarter

NCLH reported an expected loss of $211.3 million for the first quarter of 2020, compared with income of $181.8 million one year prior. Revenue decreased 11.2%, to $1.2 billion, compared to $1.4 billion in 2019, for the quarter ended March 31.

NCLH said it had “taken decisive action to significantly strengthen our financial position” in response to the Covid-19 global pandemic, including the company’s $2.4 billion capital raise, which Del Rio said positions the line “to weather an unlikely scenario of over 18 months of suspended voyages.”

“Our guests continue to demonstrate their desire for cruise vacations,” Del Rio said. “And we continue to experience demand for voyages further in the future across our three brands.”

NCLH reported “significant softness in near-term demand and an elevated rate of cancellations for existing bookings.”

But the company also said there “continues to be demand for cruise vacations, particularly beginning in the fourth quarter 2020 accelerating through 2021.”

The company reported that slightly more than half of its guests booked on cancelled sailings had requested cash refunds instead of future cruise credits.

NCLH said that it had begun developing a comprehensive and multifaceted strategy to enhance its health and safety protocols, including “enhanced screenings, upgraded cleaning and disinfection protocols and plans for social distancing.”

NCLH said it had furloughed approximately 20% of its shoreside workforce through July 31.