Tag Archives: Norwegian Cruise Line Holdings Ltd.

Diversification and Norwegian’s bottom line

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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.

Nine weeks on the dock for fire-damaged cruise ship

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The damage caused by a fire that broke out on Oceania Cruises’ Insignia will take nine weeks to repair.

On December 11th 2014, the engine room of Insignia went up in flames while the vessel was docked in St Lucia, during its ten-day voyage that departed from San Juan in Puerto Rico.

Two contractors and an Insignia crew member who had been working in the engine room died as a result of the fire. One other crew member suffered injuries and was treated in hospital for smoke inhalation, but released a day later. Fortunately, no passengers were hurt.

Subsequently, the remainder of the sailing was cancelled and those on board were evacuated and flown to Miami.

The ship has been taken out of service, with the expected nine-week repairs leading to the cancellation of a 24-day voyage which had been scheduled to depart Miami on December 17th 2014, along with the first three legs of Insignia’s Around the World in 180 Days cruise, which was scheduled to leave Miami on January 10th 2015.

A picture of the Oceania Insignia fire

Insignia’s Around the World cruise has been rescheduled to commence on March 22nd 2015 and will depart from Singapore.

Kevin Sheehan, president and chief executive of Norwegian Cruise Lines – parent company of Oceania Cruises – said: “The timing of repairs has unfortunately required the cancellation of Insignia’s holiday voyage along with the modification of the world cruise.

“We understand how disappointing this news must be to our valued guests and we extend our sincere appreciation for their cooperation and understanding.”

Passengers who have already booked to embark on the world cruise can choose to go on the new date and receive a full refund for the cancelled days, along with an additional 25 per cent of the refunded amount in the form of a future cruise credit.

Or, they can opt for a full refund and a 25 per cent future cruise credit based on the pro-rata cruise fare on the three cancelled segments.

For those who choose to continue with the cruise, Oceania will provide free business class airfare to Singapore and a one-night pre-cruise hotel stay.

Travel agents seek details on Norwegian-Prestige merger

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By Tom Stieghorst
Norwegian EpicNorwegian Cruise Line moved up its regular Wednesday webinar by one day this week to address the agent implications of its $3 billion acquisition of Prestige Cruise Holdings.

Agents listening to the webinar asked Norwegian’s executive vice president, Andy Stuart, and Prestige President Kunal Kamlani about its effect on commissions, about how the loyalty programs will be handled and whether they will see a cheapening of Oceania Cruises and Regent Seven Seas Cruises to make the acquisition produce financial savings.

Both said several times that it will be “business as usual” for agents and consumers. “In our minds, it all starts with the clients,” Kamlani said.

On commissions, Kamlani said there are no plans in the next three months to change commissions for 2015. He said this is the traditional time of year to review agency agreements but that nothing should change because of the merger. “It is business as usual,” he reiterated.

The two executives said that how or whether to make Norwegian’s past guest loyalty benefits available to Oceania and Regent cruisers, and vice versa, was high on the list of things to consider but no decisions have been made.

Kamlani said in response to a question that he doesn’t expect to begin offering solo cruise rates after the merger. “We probably would never measure very well on that metric,” he said.

A question about merger savings hurting product quality at the Prestige brands drew a strong response from Kamlani.

“That travesty will not occur on any of our watches of anyone involved in this transaction. That’s as direct as I can be,” he said.