When we planned our latest trip to Scotland, my partner and I decided to spend one of our nights somewhere special.
01.11.2024 - 00:31 / skift.com / Sean Oneill / Harry Sommer
Norwegian Cruise Line is witnessing resilient demand from vacationers across all markets and among both mass-market and luxury travelers — defying concerns about potential softness in leisure travel spending.
“We are on track to end 2024 on an exceptionally strong note, marking our best year as a company since we returned to operations [after the pandemic],” said CEO Harry Sommer during an earnings call on Thursday.
“It’s hard to see any cracks,” Sommer said.
The company’s key metrics are essentially (1) how much it can charge for the rooms, (2) how full the ships are, and (3) how much extra stuff people buy onboard. Norwegian Cruise Line is doing well on all three.
The cruise operator reports strength worldwide for advance bookings extending into 2025 across all its brands: Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas.
In the third quarter, pricing was up 7% year-over-year – a big change from the start of the year when executives forecast that pricing would be flat.
For the fourth quarter, executives implied pricing would be up about 5% despite tough year-over-year comparisons. (Last year, the pricing gain was 14%.)
While overall ship occupancy remains slightly below historical peaks, executives said this primarily reflects a strategic choice rather than demand weakness. They plan to push more on pricing than filling up cabins.
The current occupancy levels are driven mainly by the mix of cabin configurations and the number of third and fourth passengers — typically children on its Norwegian brand.
“I don’t see occupancy being a tailwind or headwind,” Sommer said, noting that he expects occupancy to remain relatively stable through 2025.
Travelers have generally been booking further ahead than they did pre-pandemic. However, in recent quarters, Norwegian has seen stronger “close-in” demand from some customers, giving the company more pricing power for near-term sailings.
This dual trend of strong advance bookings alongside healthy last-minute demand has allowed the company to maintain higher pricing.
However, executives emphasized they’re focused on sustainable growth rather than pushing booking curves to record levels.
Nearly all passengers are now pre-booking some form of onboard purchases before their cruises, including drinks packages, dining experiences, spa treatments, and shore excursions.
Executives said the advance upselling should continue to increase at a moderate pace. The company has begun applying more sophisticated revenue management techniques, using software similar to what it’s already been using to help set ticket prices.
“We are in the opening phases of doing better revenue management on our onboard product as well,” Sommer noted, adding that improved
When we planned our latest trip to Scotland, my partner and I decided to spend one of our nights somewhere special.
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