After Royal Caribbean executives gave some commentary on the state of the cruise industry during the company’s Q4 earnings call earlier this week, another cruise giant did the same on Thursday.
Speaking to analysts after reporting Q4 earnings on Thursday, Norwegian Cruise Line Holdings’ Frank Del Rio gave his perspective on the state of the industry ahead of its expected restart later this year.
Speaking on when the restart will get underway, Del Rio said that it is difficult to know. It still largely depends on decisions from the Centers for Disease Control and Prevention (CDC).
“I simply don’t know,” he said on the call. “It could be a few days, could be a few weeks, we simply don’t know.”
Del Rio said that once NCLH gets permission to proceed from the CDC, it could ramp up operations quickly. The talk right now is a 60-day window, but, Del Rio said, “it could be less” although he expects it could be more.
“For planning purposes, we’d like to give ourselves that 90-day window more or less,” he said.
For NCLH to be at 100% sailing by the year-end or early 2022, it would have to start “standing up vessels in June, July” of this year, Del Rio added.
Advisors and consumers should expect the restart to happen incrementally, too, with somewhere around a 50% capacity on select ships to start. After it does restart, NCLH expects to add “maybe” one ship a week, which will cut capacity and displace some consumers.
Del Rio said that they view vaccines as “a powerful tool” in NCLH’s restart. However, he did not commit to making vaccines a mandatory requirement for guests.
“We would expect that by the time cruising resumes, vaccinations will most certainly be widely available in a developed world. And we believe that by then, we will be able to secure vaccines for our crew,” he said.
“A mix of vaccinated guests and crew along with the other established protocols will provide a powerful combination to mitigate the risk of COVID-19 onboard our ships in the communities we visit.”
‘Boom time for cruise industry’
With the cut in supply from NCLH and growing pent-up demand, the cruise industry could be looking at a renaissance when it resumes.
“You got less supply, you’ve got pent-up demand. You’ve got people with money in their pocket. I think this is just the making of a boom time for the cruise industry,” Del Rio said.
That could have a big impact on pricing, too.
“It’s astonishing to me in the 25-plus years I’ve been in this business, that given the fact travel agents are not at full strength, that we’re spending a fraction of what we normally spend, the bad news cycle of lockdowns and pandemics and travel restrictions and quarantine, that business is as robust as it is. Not only in volume, but we’re able to tick up prices,” he added.
Del Rio noted that it is still “difficult to predict” what the outcome will be for Alaska. However, he is encouraged that Transport Canada’s decision to close waters until spring of 2022 “has been noted by various government officials.”
“As you know, tourism is the third-largest industry in Alaska and for certain Alaskan coastal communities, cruising is over 90% of their tourism business,” he said.
“We’re hopeful, cautiously optimistic. It’s a lot of hoops to jump through both from the Canadian side and also, let’s face it, we cannot operate as of today in U.S. waters and Alaska waters,” he continued.
While NCLH has suspended taking new bookings on Alaska, Del Rio said the company still holds out “some hope that these initiatives led by the Alaskan delegation can open up Alaska for 2021.”
Both Oceania and Regent are nearly 40% booked for 2022, which is an encouraging sign for the luxury brands. “That’s much better than they’ve ever been at this stage of the booking cycle,” Del Rio said.
Overall, NCLH said that “the booking curve is now double what it normally is,” as no bookings are on the books for the next few months because of the shutdown and people start booking farther out.
“People know that this pandemic will end someday,” Del Rio said, adding that filling ships will not be an issue once the CDC grants NCLH permission to sail.
“I have a lot of things to worry about these days…fundamental consumer demand and our ability to fill our ships at strong pricing is not one of them,” he said. “New bookings [and] new cash booking with the minimal amount of marketing we’re doing with the travel agency system…is truly remarkable.”
“People are eager to get back to the high seas. There’s no question about that.”