NCLH projects lower load factors this year than its publicly listed competitors, but doesn't plan discounts to fill. The company forecasts sequential quarterly increases in occupancies, returning to historical levels in second quarter 2023.
Won't sell cruises for 'crazy' prices
'We could, like others, chase short-term occupancy and sell cruises for crazy prices but we don't want to do that. We never have done that. That is not our strategy,' Del Rio told analysts during the company's earnings call.
He referred to the Great Recession of 2008 and 2009 when some competitors dropped fares to 'ridiculous' levels and it took them 10 years or more to recover or, in some cases, their yields still haven't recovered.
Long-term view
'I'm not willing to mortgage the company for 10-plus years in order to window-dress the next quarter or so. Just won't do it. We're here for the long-term. We're managing the business on a long-term basis. COVID had a major impact ... and the recovery is not instant mashed potatoes. You want instant mashed potatoes, you gotta go elsewhere because we're here for the long run and our pricing strategy, disciplined as it is, is proof of that,' an impassioned Del Rio said.
Shares tumble 12%
However, some investors appear to be focused on the near term, with NCLH shares off 12% early Tuesday afternoon.
Though trends are improving, NCLH today signaled a third quarter loss. This follows Royal Caribbean Group's July 28 forecast for a Q3 profit.
Del Rio called 2022 a 'transition' year and said NCLH remains focused on 2023 for returning to normal margins, yields, profitability and EBITDA. 'It's all 2023 and beyond,' he said.
2023 pricing 20% higher
Illustrating why he's so confident, Del Rio disclosed 2023 pricing is running more than 20% higher than in 2019, a record year, and is up by double digits for all three NCLH brands.
Sales 40% higher counting 20% capacity hike
Plus, sales for 2023 cruises, compared to the same booking time in 2018 for 2019 sailings and taking into account a 20% capacity increase, are a 'whopping 40% higher,' Del Rio told analysts.
He added most of these bookings are expected to stick since a significantly higher percentage — four times compared to 2019 — include air by NCLH and air/sea bookings tend to be 'stickier.'
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