Business has 'taken off' over past eight weeks: Del Rio

'In the last eight-week period since the start of the year, business has really taken off,' NCLH president and ceo Frank Del Rio said Wednesday.

Business has improved as the result of a 'calmer geopolitical environment,' Del Rio said during the company's fourth quarter earnings call. The booking momentum flagged during the company's early November update has 'accelerated.'

Pricing for the first half of 2017 is up mid single digits while pricing for the second half, excluding Norwegian Joy, is down low mid single digits. NCLH has to lap a number of events, including international-sourced business that was on the books at higher pricing before the Brexit vote and the lucrative charter of Norwegian Getaway for the Brazil Olympic Games.

With the past eight weeks 'very, very strong ... should that strength continue, we hope to see the back half sell at higher prices,' Del Rio told analysts.

The inclusion of Cuba on itineraries for NCLH's three brands has produced 'meaningful pricing premiums on the first 10 sailings.' He added it's too early to tell how long the premiums will be sustained given the recent approvals of more Cuba cruises for both NCLH and competitors.

But Cuba represents less than 2% of the company's capacity in 2017, and Del Rio doesn't expect any material benefit.

'Resounding feedback' about Norwegian Joy, due to begin sailing from Shanghai in June, swayed the company to designate a second newbuild for the China market, Del Rio disclosed. That is the ship scheduled for late 2019 delivery from Meyer Werft.

Industry capacity in Shanghai is up 9% this year, a fraction of the 2016 increase, and Del Rio described the 2017 China market as 'more stable.'

The company's recent order at Fincantieri for four of a new type of Norwegian Cruise Line ship, 140,000gt—slightly smaller than the Breakaway Plus series, to give more itinerary flexibility—came with very attractive financing, he said. The ships will have a richer stateroom mix and their arrival will allow NCL to branch out to some homeports it's currently not able to serve.

Asked about capacity increases in the luxury sector, Del Rio indicated he's not concerned.

'Some of those ships talked about in the 2019 to 2022 period I'm not sure will come to fruition,' he said.

When it comes to cruise industry technology advances, Del Rio is 'very impressed' with Carnival Corp. & plc's Ocean Medallion plans. While NCLH will keep an eye on developments and how they're received, he noted NCL has a mobile application that offers some of the Ocean Medallion functions. Also, he pointed to the virtual reality features incorporated in Norwegian Joy and said the company is looking into leveraging those across other ships.

NCLH shares were up nearly 7% at midday Wednesday.

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