I have to admit that I felt a little concerned when Kevin Sheehan left NCL. He represented Norwegian remarkably, and was well liked by many of us. He was replaced by Frank Del Rio, who also has a history in the cruise industry. As co-founder of Oceania cruises, and later on becoming the CEO of the company.
During a recent interview Del Rio made some points that I was not keen off. He stated that he intends to fix the financial woes of the company without increasing the size of the fleet (although NCL will continue to grow with the new scheduled deliveries). He claims that for an $4 a day per person, this comes to a total of $56 for two people for a week long cruise, he will be able to do just that. With this extra income the company will meet its expectation, doubling per-share in the next 3 years.
In his words, “My Starbucks coffee this morning cost me more than that,”. I guess I can’t really relate to that since I brew my own coffee. My real issue with this new pricing is that I already thought that NCL was a bit overpriced. While their older ships offer good deals, their new vessels can get quite pricy. I would hope that the increase would only be implemented in the older vessels, while maintaining the current price on the new ones. However, that is not the case.
The increase will happen in ways that will be hard to notice. For example, with drinks, a beer could be raised by $0.25 and sodas by $0.15, while we are not likely to see this increase. I can see how at the end of the cruise that OB account would have increased by $50+. These price increases are not gratuity related, they are there to increase the profit margin of NCL, and thus helps the company meet its increasing financial goals.
While Del Rio is a proven CEO of a luxury line, I still have my doubts that his strategy will be an effective one in a contemporary cruise line. I guess we will have to wait and see. Hopefully the company can meet the projected goal, and is able to have some financial growth. While still maintaining the best interests of your average cruiser in mind.
Del Rio also added that he sees Norwegian as having a better ability of growth than its rival brands. His reasoning stands behind the newly acquired Regent and Oceania. He stated that the luxury cruise market is one that has a lot of room for growth, and that NCL now has a chance at growth across a wide spectrum.
