NCL Holdings foresees slow return despite ‘pent-up demand’

Norwegian Cruise Line Holdings expects a slow return to business despite “pent-up demand”, with Frank Del Rio insisting the cruise sector’s return “will take some time”.

The Norwegian Cruise Line Holdings president and chief executive said: “We’re working with port operators and partners around the world on how to re-open. We expect sailings to start with a handful of vessels phasing in over five to six months.

Del Rio added: “It will take time to ramp up. It’s very easy to dismantle the whole operation. It takes time to rebuild it.

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“If the booking curve is eight months it will take at least that long, without taking account of the economic situation, to get back.”

Speaking after Norwegian announced a $1.9 billion loss in the first three months of the year, Del Rio insisted: “The number-one priority is regaining the confidence of the consumer.

“Nothing is more essential than providing our guests with peace of mind, providing consumers with absolute confidence in our ability to provide a safe environment.”

He said: “We need a comprehensive series of [safety] protocols. Once those are accepted, we have to market those protocols to give consumers confidence.

“This is not an exercise to get away with the least possible. This will take some time. We want it to be safe to go on a cruise ship. Until we can say that we don’t want to operate.”

He declined to give details of the likely measures, saying: “It’s too early to talk about specifics.”

However, Del Rio said: “Depending on how quickly we can re-open, our plan is to bring back the fleet over a six-month period.

“We believe we could handle the return to service of roughly five vessels a month. We have 28 [ships], so it will take about six months. That assumes the itineraries will be available.

“If itineraries are not open or key ports are not open, a ship may stay laid up.

“I don’t think we’ll be at full occupancy. We don’t know whether government agencies will require us to sail at under 100% [capacity] even if we could.”

Del Rio rejected a suggestion that customers may prefer not to fly and choose cruises close to home, noting “the number-one itineraries” in demand for the first half of next year are Japan and Dubai.

He said: “What we’re seeing defies this notion that people are not going to want to cruise to far away destinations.”

Del Rio insisted: “There seems to be significant demand for cruise. We’re still taking bookings and that gives us a lot of encouragement. We’ve taken a significant amount of new bookings in a period in which we had a horrific news flow and that is with zero marketing. It demonstrates the resilience of this industry.”

He argued: “Consumer demand is based on our ability to market, on travel agencies being open, on the whole industry being back in operation.

“The cash flow that comes from customer bookings is what fuels this industry. As we start operations and we regain momentum, I’m less concerned about revenue [and] more concerned about getting back to sales and marketing and to normal operations that generate the cash flow we need.”

In the meantime, he said: “We have positioned ourselves to withstand an unlikely scenario of an 18-month, zero-revenue environment.

“The industry has been shut down for over four months. There will be pent up demand. People will want to cruise again. Travel agents will be behind us. But nothing takes the place of time.

“People book on average seven to eight months in advance, so it is going to take at least that long.”

Del Rio insisted: “What are the protocols? What ports will be open? These are the key factors, not consumer demand.”

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