Norwegian Cruise Line (NCL) is changing its pricing strategy to adopt more competitive pricing earlier in the booking curve, said Norwegian Cruise Line Holdings (NCLH) CEO John Chidsey.
This departs from a strategy to keep prices high early in the booking curve and discount closer to the date of the sailing, Chidsey said on the company’s Q2 earnings call Thursday. He described the change as one that will better manage the full booking curve.
NCL, the focus of Chidsey’s efforts to turn around NCLH’s financial performance, will also launch new marketing materials in the coming weeks under the leadership of new chief marketing officer Lee Applbaum, Chidsey said. Chidsey has described marketing as a target area for improvement and as having strong potential for improving demand for NCL cruises.
“The goal is straightforward: communicate more clearly why NCL is different,” he said.
The company beat its Q2 profit expectations, with adjusted Ebitda decreasing to $666 million rather than the guided $632 million. Total revenue was $2.6 billion, up 4.9% from the second quarter last year.
NCLH enacted an additional $100 million in savings this quarter, largely through consolidating technology vendors. Last quarter, it shared it had enacted $125 million in savings.
But overall, NCLH is still below its optimal booked position for the next year, executives said. Chidsey primarily attributed that to strategic missteps at NCL, which he has said he inherited when he became CEO in February. The Iran war has played a roll, too, executives said.
They anticipate net yield for the full year to decline by about 5%. The changes the company is implementing to increase revenue, such as the marketing revamp, will take time to impact companywide financial results, said chief financial officer Mark Kempa.
In 2027, he anticipates that yields will still be negative in the first half of the year but will improve every quarter.
