Norwegian Cruise Line Bullish Thanks to Caribbean Demand

28.02.2024 - 01:29 / skift.com / Rashaad Jorden / Harry Sommer / Mark Kempa

Although Norwegian Cruise Line has cut trips to the Middle East this year due to the ongoing Israel-Hamas war, the company is seeing strong demand for trips to other regions — in particular, the Caribbean.

“Our Caribbean capacity for the (Norwegian Cruise Line) brand is expected to increase by approximately 300 basis points in 2024 versus the (previous) year,” said Norwegian Cruise Line CEO Harry Sommer during the company’s fourth quarters earnings call on Tuesday.

Norwegian’s optimism for 2024 follows a strong 2023. Occupancy hit 102.9% in the past year and its total revenue per passenger rose roughly 17% from 2019. The company projects occupancy levels for the full year to be 105.1%.

If Norwegian beats its performance in 2023, it will have to do so without the Middle East. The company announced last November it would cancel all trips to Israel for 2024. Norwegian also recently said it would reroute all cruises sailing through the Red Sea for the rest of the year.

Sommer added that just 4% of the company’s capacity in the full year was expected to visit the Middle East.

Sommer also touched on where Norwegian was looking to deploy ships. Roughly 58% of the company’s ships are scheduled to be deployed in the Caribbean during the first quarter, a figure that drops 40 percentage points the following quarter and to 8% in the third quarter.

About 17% and 34% of Norwegian’s ships are scheduled to deployed in Alaska and Europe, respectively during the second quarter.

“We believe we have the right mix of Caribbean products for our guest set over the summer,” Sommer said.

“We do have ships in the Caribbean. We don’t go to a zero percent capacity. But we have seen higher returns out of Europe and Alaska and Bermuda than we do out of the Caribbean, which is why we position our ships there.”

Chief Financial Officer Mark Kempa said he doesn’t see any difference in pricing growth between Europe and the Caribbean.

“I don’t think there’s any meaningful differences between the markets. We’re seeing strong pricing for all of those markets and other markets,” Kempa said. “In terms of growth, we’re not seeing any sort of significant differences between markets.”

The company generated $8.5 billion worth of total revenue last year, a 32% increase from 2019, while producing a net income of $166.2 million. 2023 was the company’s first profitable year since 2019. Norwegian did however post a $106.5 million net loss during the fourth quarter.