CEO Explains Why NCLH Stopped Issuing FCCs & Why “Boom Time” is Coming

Norwegian Cruise Line Holdings signalled robust demand for cruising to return and an overall positive outlook for the industry, despite turning in a wider than expected fourth quarter loss of US$683 million last week.

For the full year, adjusted net loss was $2.2 billion, down from the $1.1 billion profit in 2019.

Frank del Rio, President and CEO, NCLH.
Frank del Rio, President and CEO, NCLH.

Looking ahead, NCLH president and CEO Frank del Rio said the worldwide COVID-19 vaccination rollout is driving strong future cruise bookings and could cause an eventual “boom time for the industry”, according to Cruise Critic, adding that it’s true across all of its brands, Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.

A combination of pent-up demand and higher numbers of people who have received inoculations has led to future bookings being “significantly ahead” of the record year of 2019, Del Rio highlighted. Forward bookings are especially strong among the 55+ crowd, the age group that is among the first in line to receive vaccinations.

“Early in the pandemic, people were writing off the mature market,” Del Rio said. “It’s been anything but.”

However, that’s not the case in the immediate short-term, he cautioned, as the company’s overall cumulative booked position for the second half of 2021 is below historical records. Del Rio attributed it to the uncertainty the lines still have about when they can actually resume sailing.

These comments echo those of Royal Caribbean Group executives during its earnings call earlier last week.

NCLH Stopped Offering FCCs in the Fall

Del Rio noted that NCLH stopped offering future cruise credits (FCCs) in the fall, so as to not negatively impact future business, Seatrade Cruise News reported.

“When we do cancel a set of sailings, everyone gets a cash refund,” said Del Rio. “We’re no longer offering the option of an FCC. We don’t want to negatively impact future business any more than the effect of the existing FCCs. So today there is no choice: You get your money back.”

Del Rio said NCLH has the liquidity to offer the cash, and FCCs are dilutive to future business because they generally have a 25 per cent rebooking bonus added to them. The move keeps space on the ships open for new customers, who are more likely to pay the full price and generate higher yields.

Eyeing a Restart: 90-Day Window, 50% Occupancy

Having recently suspended service through 31MAY, Norwegian Cruise Line Holdings is looking at a 90-day window to launch cruise service in the United States once it receives the green light to resume sailings from the CDC, Cruise Industry News reported.

Del Rio said the company would be able to reintroduce one ship a week. That means in order to be fully operational by the start of 2022, the phased resumption would need to begin by JUN or JUL of this year.

As for occupancy levels during the start-up phase, Del Rio noted the CDC has not yet given the industry their target occupancy levels, but NCLH is looking at an initial 50 per cent level.

Anna Kroupina

Journalist

Anna's day starts at 5:30 a.m. each morning to scour daily travel news headlines to find the most relevant stories for Canadian travel advisors. She contributes to writing the daily news and covers events. The Alberta Rockies, Hawaii and France's Provence region are among her favourite destinations. She's a proud cat mom and a terrible snowboarder.

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