NCLH chief outlines pricing and marketing overhaul to ‘rebuild demand’

Norwegian Cruise Line Holdings (NCLH) chief executive John W Chidsey has outlined changes to pricing and marketing as part of the group’s “pathway to revenue recovery” on its latest earnings call.

 

The parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises reported it “continues to experience pressure” from softer demand for Norwegian Cruise Line, company-specific challenges and the ongoing conflict in the Middle East in its second-quarter results.

 

Speaking on the earnings call, Chidsey said he was “confident” the cruise group was on “the pathway to revenue recovery” but added “successful turnarounds are never linear and take time to demonstrate tangible performance improvements”.

 

More: NCLH reports softer demand and booking lag despite rise in revenues

 

He said the main priorities looking forward were to build a team, sharpen brand positioning, rebuild demand and optimise pricing, but benefits from changes made would most likely not materialise until the end of 2027.

 

Chidsey said during the last quarter the team had “begun to make changes” to how Norwegian Cruise Line (NCL) products are sold, and how all three brands are marketed.

 

On pricing, he said: “It became clear that in certain areas we were holding price too high, too far out, which limited early demand generation and left us more exposed to close-in discounting.”

 

Chidsey said work had already started to change pricing “market by market, sailing by sailing” as the brand moved towards “a base-loading methodology” which establishes “more competitive pricing earlier in the booking curve”.

 

“This is not about discounting the product,” he stressed. “It is about managing the full booking curve more effectively, building a healthier booked position earlier and maintaining better price integrity as we move closer to sailing.”

 

He said all new NCL inventory for 2028 and beyond would be managed using this method, while other pricing initiatives are being implemented on selected sailings already on sale for 2027 and 2028.

 

Chidsey added being “more strategic about our promotional activity” was another area the company was looking at, which also meant “sharpening brand positioning” for Oceania Cruises and Regent Seven Seas Cruises.

 

He said he saw “a gap” between previous marketing and connecting to customers with “the strength of our offering”.

 

“We are now focused on effectively reaching that audience through the most impactful channels,” he said, adding a new campaign for the opening of Great Stirrup Cay would be launching in the next two weeks.

 

The new campaigns will include a broader mix of media and “communicate more clearly” competitive differences with calls to action.

 

“Our issues are how we have marketed or not marketed,” he said. “We clearly spent way too much money at the lower end of the funnel, not at the top of the funnel.”

 

Chidsey was confident NCL had “the right product and the right target customer”, namely premium families and seasoned travellers which represented 35 million potential consumers.

 

“Improving our brand positioning and rebuilding demand are critical to returning to our optimal booked position,” he added.

 

Chidsey added he saw “meaningful opportunities” to save more costs in the business, on top of the $225m previously announced in the last two quarters.

 

Chief financial officer Mark Kempa said he “expected to build on these efforts going forward”, but these efficiencies would not affect product or “come at the expense of the guest experience”.

 

Kempa added while there was a “strong order book” of 16 ships for delivery across the three brands, NCLH expects five ships to leave the fleet over the next three years.

 

The ships leaving their respective fleets by 2028 are: Norwegian Sky, Norwegian Sun, Oceania Regatta, Oceania Sirena and Seven Seas Navigator.

 

“This is important because we are not simply adding capacity for the sake of growth,” Kempa said.