In his first quarterly earnings conference call with financial analysts, Norwegian Cruise Line Holdings Ltd. CEO Frank Del Rio said he relishes the "once-in-a-lifetime opportunity" while emphasizing that the corporation's three cruise brands will remain separate and distinct.
"I am more eager and passionate about this opportunity than perhaps any other in my career," Del Rio said.
NCLH, the parent company of Norwegian Cruise Line and Prestige Cruise Holdings' Oceania Cruises and Regent Seven Seas Cruises, has a combination of three "highly complementary brands" that "we believe is unmatched in the industry," Del Rio said.
Del Rio was named president and CEO of NCLH in January, less than two months after Norwegian purchased Prestige, which Del Rio ran as chairman and CEO. After several management shake-ups, Del Rio is settling in at the helm with a team that includes several executives who have been at his side since he co-founded Oceania in 2002.
Since the acquisition, some travel agents and past guests worried that the highly rated experience offered by Oceania and Regent would get watered down by Norwegian. Executives have worked to alleviate those fears.
"Each brand will continue to deliver the guest experiences they are known for," Del Rio said. "Any changes that likely will be adopted as best practices will be invisible to our guests. … Three distinct brands and one exceptional organization is my mantra."
Synergies and sharing best practices will result in savings of $25 million in 2015, through consolidating office operations, insurance costs, port fees and shore excursion concessioner contracts, the company said.
"Revenue synergies of $15 million will lead to a first-year synergy of at least $40 million in 2015, which will equate to $50 million in 2016," Del Rio said.
Business is booming now. "Until recently, our booked revenue had been on par with prior year; however, the last three weeks of this Wave Season have seen a significant acceleration in booking volume," Del Rio said in a statement. "Norwegian Escape is in a better booked position than her last two predecessor sister ships, Norwegian Breakaway and Getaway, and Seven Seas Explorer has set both single-day and single-week booking records at the Regent brand. At year end, and as of today, the company has more booked revenue and the highest net yields on future sailings than ever before, including full year 2015 and 2016."
Still, Del Rio said more newbuild orders aren't likely to be forthcoming. "The Prestige brands have historically grown organically," he said during the conference call. "The last new ship that Regent introduced was in 2003 when Voyager came on line. Thirteen years may be too long, but with the new vessel coming in 2016, we have no plans on the horizon to add another Regent vessel."
Oceania is adding a fourth 684-passenger sister ship to the Regatta, Nautica and Insignia. Currently operating as the Ocean Princess, NCLH will take possession of the ship in March 2016, when it will undergo a $40 million dry-dock renovation and join the fleet in April 2016. Bookings for the Sirena will open next month. Oceania also operates the newer, purpose-built, 1,250-guest Riviera and Marina.
Del Rio said the biggest opportunity at Norwegian Cruise Line is to "expand its footprint internationally," by sourcing more passengers from Canada, the U.K. and other markets.
Also, Norwegian has a database of past passengers with about 210,000 households that also fit Oceania's passenger psychographics and demographics. And, in fact, Norwegian's Pride of America, which operates Hawaii itineraries, commands per diems that are sometimes the same or even exceeding that of Oceania. "We love the opportunity of cross-selling," Del Rio said.
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