Norwegian Cruise Line Holdings reports positive momentum In Q1 call: Travel Weekly
Encouraged by strong close-in bookings, executives at Norwegian Cruise Line Holdings (NCLH) said Tuesday they expect positive cash flow in Q2 and an “extremely strong” 2023 but warned that 2022 is a transitional year of pandemic recovery for the cruise company.
In a Q1 earnings call with investors, CEO Frank Del Rio said NCLH is “not 100% back to where we need to be” but is approaching the levels it needs to sail full and generate what he predicted would be the highest net yield in the company’s history in future quarters.
“We’re waking up the bear,” Del Rio said on a Q1 earnings call Tuesday. “It took us 26 months to get our fleet back operating at full strength, and so it’s going to take some time to get all the pieces right, to get consumers thinking in the right direction, getting the ports open around the world.”
Related Insight: Signs point to a stronger return of first-time cruisers
After a bumpy January due to the omicron variant and then the start of the war in Ukraine weeks later, bookings have rebounded and recently surpassed pre-omicron levels, the company reported. Booking volumes are now approaching the pace needed to sail consistently at historical load factor levels, according to executives.
This quarter, NCLH averaged 48% occupancy for the entire quarter, reflecting a dip from the omicron variant and falling below expectations. NCLH executives expect load factors for Q2 to come in around 65%.
While the cumulative booked position for the second half of 2022 is below comparable 2019 levels, NCLH executives said Q4 is in line with 2019 and that prices are meaningfully higher in all periods. About 60% of the booked position for the second half of the year are loyal, repeat customers of NCLH brands.
Booked position and pricing for 2023 are significantly higher and at record levels compared with 2019, according to the company.
Lines, guests learning to live with Covid
Baring future “black swan events,” like new variants and geopolitical conflicts, Del Rio said the key to the transition is a “moderation” of Covid. “Society is learning to live with Covid, and we have to do that. It’s not going away. No vaccine is going to make it disappear. It is now one of the many novel coronaviruses that affect our lives every day, and I’m glad to see that we’re all learning to live with it.”
Executives pointed to the cruise company’s trend of close-in bookings as proof. Bookings made within 60 days of sailings are running “significantly higher than history” and expectations, said Del Rio. One reason for that, he said, is there is more inventory to sell now than had been the case before the pandemic, but another is consumer confidence to sail close-in.
Oceania experienced one of its top three booking days after introducing its late-2023 and 2024 departures in March, Del Rio said. “We’re seeing people booking way into the future, and now we’re seeing very, very strong bookings very close-in. In time, if there’s a gap between the long and the relatively short, it’s going to start to fill in.
“We’ve got to take momentum back, and I’ll take momentum anyway I can get it,” Del Rio said.
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