Norwegian Cruise bets on rich Americans to navigate downturn
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FILE PHOTO: U.S. Norwegian Cruise Line Holdings cruise ship Marina arrives at the Havana bay, Cuba March 9, 2017. REUTERS/Alexandre Meneghini
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By Deborah Mary Sophia
(Reuters) -Norwegian Cruise Line Holdings Ltd said its wealthy travelers would help the U.S. liner ride out an economic downturn after better-than-expected quarterly results lifted its shares 7%. The Miami, Florida-based cruise operator said despite mounting concerns over a recession in the United States, it has not seen any pullback from its customer base of wealthy Americans. Inflation has hit lower-income households, but affluent consumers are rushing back to upscale cruising and splurging on food, spas and other experiences onboard, helping lift the cruise industry out of a near 18-month pandemic-induced lull. «We are relatively better positioned in the event of an economic downturn,» Norwegian Chief Financial Officer Mark Kempa told analysts on a call. While rival Carnival (NYSE:CCL) Corp has taken a hit from offering heavy discounts and cheaper fares to attract passengers, Norwegian, which owns Oceania Cruises and Regent Seven Seas Cruises, has raised prices. «While Norwegian has taken a more measured approach to building load factors (occupancy) back to historical norms, pricing looks to be holding up better across its fleet than at peers,» M Science analyst Michael Erstad said. Norwegian, which reaffirmed next year’s bookings at record 2019 levels, said occupancy in the third quarter rose to about 82% from 65% in the previous quarter. For the third quarter, Norwegian’s revenue rose to $1.62 billion from $153.1 million a year earlier when cruise operations were just resuming after the pandemic hit, beating Refinitiv estimates of $1.58 billion. The company posted a smaller quarterly adjusted loss of 64 cents per share compared with estimates of a 70-cent loss. Norwegian also forecast fourth-quarter revenue between $1.4 billion and $1.5 billion, compared to estimates of $1.46 billion, and said its adjusted quarterly EBITDA turned positive for the first time since the start of the pandemic.
