Norwegian Cruise Line’s introduction of a bare-bones “Sailaway” fare in March was a bid to improve business with OTAs, company CEO Frank Del Rio said in a conference call.
The Sailaway fares do not come with the standard value-add options, such as the choice of a free beverage package, and cannot be combined with any such offers. They provide only a guarantee of a category, not a specific cabin, and are about $200 less than other Norwegian fares for a seven-day cruise.
Del Rio said prices for cruises that had bundled value-add features were showing up on OTAs as uncompetitive because of the extra value built into the fares.
He said OTAs are one of the main distribution channels for selling close-in inventory.
“One of the drawbacks of this channel is the difficulty of effectively communicating non price-dependent offers to consumers,” Del Rio said.
The Sailaway offers were intended to give OTAs a fare that would not be priced above offers from competitors for similar itineraries, he said.
“Sailaway rates are cruise-only rates, with no value-adds, that will allow us to capture business that we were temporarily not capturing,” Del Rio said. They represent less than 10% of Norwegian’s inventory, he said.
Cruises in Europe are suffering from a slump in demand from American passengers, Norwegian Cruise Line Holdings confirmed today.
The parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises, followed rival Royal Caribbean Cruises in describing the European demand as being ‘soft”.
Neither company gave a reason but security fears following terrorist attacks in Mediterranean destinations such as Turkey, Egypt, Tunisia plus those in Paris and Brussels are seen as the likely cause.
Wendy Beck, executive vice president and chief financial officer of Norwegian Cruise Line Holdings, said: “Continued strong demand in the Caribbean, Alaska, Bermuda, and Hawaii is offsetting softness in Europe which comes mainly as a result of lower demand from North American consumers.
“While this softness is tempering yield growth mainly in the second quarter, strong bookings and pricing in other core markets, as well as the addition of Seven Seas Explorer to our fleet, are contributing to strong yield performance in the back half of the year, keeping us on track to deliver expected earnings growth of approximately 30%.”
The current booked position for 2016 was described as being “on par” with last year record levels and at higher prices.
This came as the company revealed that booking trends for the first half of 2017 remain strong at higher prices.
Small ship Sirena joined the Oceania Cruises’ fleet in March, with its first sailing in late April following a multi-million dollar upgrade and refurbishment.
Seven Seas Explorer, the first new build for Regent Seven Seas Cruises in more than 13 years, will join the fleet in the third quarter.
Norwegian Cruise Line Holdings also disclosed the disposal of an interest in an unspecified land-based operation in Hawaii.
The company moved back into the black in the three months to March 31 with net income of $73.2 million compared to a loss of $21.5 million for the same winter period last year.
Total revenue increased 14.9% to $1.1 billion compared to $938.2 million year-on-year.
Adjusted net cruise costs increased 1.5%, primarily due to an increase in marketing expense as well as two scheduled dry-docks in the quarter compared to the prior year which had one dry-dock in the period, according to the company.
President and chief executive, Frank Del Rio, said: “We are pleased to report another quarter of solid financial performance and significant earnings growth driven primarily by strong pricing with robust demand in the Caribbean driving net yield growth above our expectations.
“Our recent announcements regarding our China-dedicated ship, Norwegian Joy, have been extremely well-received in the Chinese market giving us strong momentum prior to the ship’s introduction in 2017.”
The top deck of Norwegian Joy will be the home of Serenity Park.
SHANGHAI — David Herrera, president of Norwegian Cruise Line Holdings’ China operations, revealed some of the features that will debut on the Norwegian Joy, a ship being built for the Chinese market.
Herrera made the announcement here during a keynote address at Travel Weekly’s CruiseWorld China.
Although Joy is a sister ship to the Escape, it will offer several “first-at-sea” features related to activities, hotel, service and gaming.
Some attractions — a formal tea room and an upper-deck Serenity Park — are what one might expect on a ship built for Chinese guests.
Guests can ride hover craft bumper cars at the Galaxy Pavilion.
But other features would seem to fit ships sailing the Caribbean equally well. The Joy’s highest-profile attraction, literally, will be a two-level race track on the top decks in which 10 guests in electric carts will compete in a 5-6 minute race. (NCL is in discussion with possible partners whose logos would adorn the cars, Herrera said.)
Autos are also front-and-center in a Formula 1 attraction. Race cars have been converted into individual three-screen simulators displaying famous race tracks from around the world.
Deck 16 activities will include Oculus virtual reality technology in several variations, including walking a plank between buildings, hang gliding and a design-your-own roller coaster module.
Oculus technology will be installed on additional new ships going forward, Herrera said.
Motion simulation will be the attraction in a colorful fleet of Star Wars Battle Pods.
The Haven’s observation deck will have views “as good as the captain’s.”
Laser tag, a giant touch screen for young children, hovercraft bumper cars, wider-than-ever waterslides with transparent panels that go over the side of the ship and several karaoke rooms complete the new activities offerings.
On the hotel side, a new level called Concierge will be built above the Haven. It will not be as luxurious as the Haven but will have unique features, including a new suite class with two bedrooms and a simulated balcony.
Both the Haven and Concierge will have observation decks whose views, Herrera said, are “as good as the captain’s.”
The ship will feature many more family friendly suites and rooms with connecting doors than on any previous NCL ship, Herrera said. He added that the new room configurations reflect the Chinese tendency to travel with multiple generations.
Studio cabins for singles, a feature of every NCL ship since the Epic, will not be on the Joy.
A bathroom in a Concierge suite.
The ship will, however, feature the highest crew-to-passenger ratio of any contemporary-class ship, in part because it will carry 250 fewer passengers than the Escape. (Herrera said that additional staff was also hired.) The space occupied by some cabins that had been on the Escape has been given to the casino and shopping areas.
The 29 restaurants onboard will include one for Korean barbecue as well as a Japanese shabu-shabu restaurant. Herrera declined to say how many of the restaurants will be specialty dining requiring a surcharge.
“It’s about bringing best of east and west together,” Herrera said, summing up all the changes.
More details will be announced in the coming months, he added, including the names of luxury store brands.
A Concierge suite bedroom.
Norwegian Cruise Line Holdings’ executive vice president for international development, Harry Sommer, said that the Chinese operation has renamed itself from “Norway Cruise Line,” as it was known in China, to three characters which phonetically sound like “Norwegian” but which translate to “promising, exclusive and authentic.”
The characters for the word “Joy” represent “Inner Joy,” Sommer said.
The Norwegian Joy is due to enter service in summer 2017.
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