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David Herrera shares NCL's top-line opportunities

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David Herrera discusses top-line revenue opportunities during Norwegian Cruise Line Holdings' Investor Day
A richer cabin mix, optimized deployment, enhanced revenue management, data-driven marketing and maximizing customer spending are all levers to drive Norwegian Cruise Line pricing and net yield higher.

So said President David Herrera during Norwegian Cruise Line Holdings' Investor Day.

NCL's newbuilds have a richer cabin mix. On average, people pay double for a balcony room over an inside cabin, Herrera said. By 2026, two-thirds of NCL's accommodations will be balcony category or higher.

More 'fun and sun' deployment

In recent years NCL focused on more premium itineraries and bucket-list destinations. Now, with newer, bigger ships coming, the line is also emphazing 'fun and sun' deployment — Caribbean/Bahamas, Bermuda (news to come there) and Hawaii.

The average itinerary length will go from nine days in 2023 to eight in 2026. During the same period, NCL's top 10 embarkation ports will go from a 65% share to 80%. This more consistent deployment benefits operating efficiency, provisioning and guest satisfaction.

More Caribbean

Herrera said people want bucket-list experiences but they're also asking for more Caribbean itineraries. Newbuilds will be going into three-, four- and seven-night Caribbean/Bahamas cruises.

An improved Great Stirrup Cay plays into that. With the ability for ships to dock, by 2026 the passenger count will go up 75%. Additional amenities, to be announced, will entail more active experiences.

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'We're not trying to build the world's largest theme park on our Bahamian paradise'

But Herrera said: 'We're not trying to build the world's largest theme park on our Bahamian paradise.' It will remain more upscale, he indicated, with the Silver Cove VIP experience mirroring NCL's elevated brand positioning.

NCLH CEO Harry Sommer pushed back on an analyst questioning lower yielding Caribbean itineraries. The NCLH chief noted the company doesn't have a summer ship at Port Canaveral, for example, and the Florida homeports are lower cost than operating in Europe and Alaska. 

Upgrade strategy

Investments to enhance revenue management are maximizing yield and enabling targeted offers to attract the 'right' guests for specific products.

And when a balcony cabin is unsold, NCL can offer upgrades for a premium, so customers in an ocean-view room are enticed to move up while those in an inside room get the chance to move up to ocean-view. In the end, an inside room may be empty but extra revenue is generated without the additional cost of sourcing new customers to fill a balcony cabin.

Data-driven marketing and personalized campaigns are paying dividends. Herrera said NCL had increased its marketable database 77% from 2019 to 2023, and website visits rose 39% in the same period.

Loyalty programs like CruiseNext certificate sales on board — essentially, a nonrefundable deposit for a future cruise cruise — are up 60% since 2015. When an analyst asked if NCLH may be considering a loyalty program that encompasses all three of its brands, CEO Sommer indicated that's possible and there may be news in the back half of the year.

New Free at Sea approach?

Ninety percent of customers participate in one or more 'Free at Sea' amenity, and Herrera said: 'We see more opportunity here,' signaling a new approach in the coming months.

'Free at Sea' helps with cash flow and has driven onboard revenue 24% higher since 2019.