What will it take for China to get a second NCLH ship?

(Photo: Meyer Werft) Norwegian Joy - likely to remain NCLH's sole China ship for awhile

Now that its 2019 newbuild, Norwegian Encore, is committed to the Caribbean, when could Norwegian Cruise Line Holdings send a second ship to China?

NCLH president and CEO Frank Del Rio indicated it could be a couple of years, given how well the rest of the world is performing. There are plenty of other places where the company would like to have ships.

Del Rio cited unserved or underserved markets such as a lack of presence in the mid-Atlantic states. ‘We’re not in Baltimore. We’re not in Charleston,’ he said. Nor does the company have any capacity in Fort Lauderdale’s Port Everglades, which Del Rio called the world’s second busiest cruise port. (Actually, it’s currently third, after Port Canaveral.)

There’s no NCLH presence in the Gulf states of Texas or Alabama. And the company lacks year-round tonnage in Tampa, New Orleans and Los Angeles.

‘We only have three ships in Alaska, a very high-yielding market. Some of our competitors have up to eight vessels,’ Del Rio said.

‘So, given our fleet size today and the fact that we will only be [introducing] one ship per year, it could be a couple of years before we consider adding more tonnage to China, if the conditions in the rest of the world remain as robust as they are today.’

China was profitable for NCLH in 2017 when Norwegian Joy was introduced there, however the market still faces challenges, Del Rio said during the company’s fourth quarter earnings call. He doesn’t think China is ‘hitting on all cylinders like it can’ but said NCLH remains committed.

With South Korea still off the charts, it’s difficult to optimize itineraries, at least on the kind of short duration sailings the market now seeks. Del Rio also indicated the maturing and expansion of the distribution system is going slower than hoped.

That said, Norwegian Joy is fully chartered for the first half of 2018 and the company is encouraged that the second half of the year is better chartered than at this time last year, at slightly higher prices.

A further cause for optimism is that China isn’t in line for double- or even triple-digit year-over-year capacity growth. According to Del Rio, capacity is ‘flattish or slightly down,’ which should benefit companies like NCLH that are staying in the market.

Posted 22 February 2018

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Anne Kalosh

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Editor, Seatrade Cruise News & Senior Associate Editor, Seatrade Cruise Review Anne Kalosh covers global stories, reporting both breaking and in-depth news on cruising's significant people, places, ships and trends. A sought-after expert on cruising, she has moderated conferences around the world, including the high-profile State of the Industry panel at Seatrade Cruise Global. She created and led the acclaimed itinerary-planning case study for Seatrade's cruise master classes held at Cambridge and Oxford universities. She is the cruise columnist for AFAR.com, and her freelance stories have appeared in a wide range of publications, from The New York Times to The Miami Herald.

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