Latest news with #HarrySommer
Yahoo
14-05-2025
- Business
- Yahoo
NCLH Q1 Earnings Call: Bookings Choppiness and Cost Discipline Shape Cruise Outlook
Cruise company Norwegian Cruise Line (NYSE:NCLH) fell short of the market's revenue expectations in Q1 CY2025, with sales falling 2.9% year on year to $2.13 billion. Its non-GAAP profit of $0.07 per share was 23.8% below analysts' consensus estimates. Is now the time to buy NCLH? Find out in our full research report (it's free). Revenue: $2.13 billion vs analyst estimates of $2.14 billion (2.9% year-on-year decline, 0.7% miss) Adjusted EPS: $0.07 vs analyst expectations of $0.09 (23.8% miss) Adjusted EBITDA: $453.1 million vs analyst estimates of $439.5 million (21.3% margin, 3.1% beat) Management reiterated its full-year Adjusted EPS guidance of $2.05 at the midpoint EBITDA guidance for the full year is $2.72 billion at the midpoint, in line with analyst expectations Operating Margin: 9.4%, in line with the same quarter last year Free Cash Flow was -$846 million, down from $548.3 million in the same quarter last year Passenger Cruise Days: 5.79 million, down 325,127 year on year Market Capitalization: $8.56 billion Norwegian Cruise Line's first quarter performance reflected a mix of headwinds and operational discipline, as management navigated softer bookings in European itineraries and prioritized pricing over occupancy. CEO Harry Sommer cited 'choppiness' in Q3 Europe bookings, attributing it to greater American hesitancy for long-haul travel and macroeconomic uncertainty, but emphasized continued strong spend from guests once on board and solid demand for close-to-home Caribbean cruises. Looking ahead, management's guidance is anchored in cost efficiency initiatives and a focus on margin protection. The leadership team reiterated full-year adjusted EPS and EBITDA guidance, highlighting the $300 million cost efficiency program and the flexibility to accelerate cost savings if revenue pressures persist. CFO Mark Kempa stated that Norwegian Cruise Line's ability to 'flex if there's pressure on the top line' keeps the company on track for its long-term targets, even as the industry faces variable consumer sentiment. Norwegian Cruise Line's management provided detailed commentary on the primary factors impacting Q1 results and shared updates on strategic initiatives across the business. European Itinerary Weakness: Management identified a period of 'choppiness' in Q3 Europe bookings, especially among American travelers, which led to lower occupancy and pressured yield expectations. This was described as a temporary issue, with improvement observed in more recent booking trends. Pricing Over Occupancy: The company maintained its strategy to protect pricing, even at the expense of filling every available cabin. Leadership stressed that disciplined revenue management, particularly for close-in Caribbean itineraries, helped sustain higher year-over-year pricing despite booking volatility. New Product Delivery: Norwegian Aqua, the first ship in the new Prima Plus class, was delivered on time and on budget. The ship features redesigned spaces and new amenities, such as the Aqua slide coaster, which management believes will enhance guest experience and increase stateroom capacity. Great Stirrup Cay Enhancements: Significant upgrades to the company's private island in the Bahamas are underway, including a new pier, resort-style pool, and expanded family and adult zones. Management expects these investments to drive incremental on-board and destination revenue and improve the product's competitiveness. Cost Efficiency Program: The $300 million-plus cost savings effort, led by the transformation office, is being accelerated. Management said these initiatives have not reduced guest experience, and that cost reductions are being achieved through operational efficiencies, technology investments, and supply chain improvements. Management's outlook for the remainder of the year is shaped by disciplined pricing, capacity shifts, and continued execution on cost initiatives, amid uncertainty in booking trends for certain itineraries. Shift to Close-to-Home Cruises: Deployment is moving toward more Caribbean and short-haul itineraries, which tend to book closer to departure and attract new-to-cruise customers. This mix change is expected to support steady demand and operational efficiency. Margin Protection Focus: The cost efficiency program is expected to offset top-line pressures, with management reiterating guidance for margin expansion in 2025 and confidence in achieving long-term profitability targets. Macroeconomic and Booking Uncertainty: Ongoing macroeconomic uncertainty and consumer hesitancy, particularly for European travel, remain risks. Management highlighted flexibility to accelerate cost actions and adjust deployment in response to demand shifts. Matthew Boss (JP Morgan Chase): Asked about the impact of recent booking 'choppiness' on full-year guidance and whether current trends are sufficient to meet targets. Management said if current pace and pricing continue, guidance is achievable, but they are cautious about extrapolating short-term trends. Steve Wieczynski (Stifel): Inquired whether booking softness was isolated to specific brands or products. CEO Harry Sommer explained all three brands saw similar patterns, with Q3 Europe as the main area of weakness, but no structural issues elsewhere. Robin Farley (UBS): Questioned the year-over-year pricing and booked position given increased capacity and more close-to-home itineraries. CFO Mark Kempa replied that pricing is up and load factors are within historical norms, with only slight volatility in European itineraries. Ben Chaiken (Mizuho): Asked about the return on investment for Great Stirrup Cay enhancements and whether these can drive price and on-island spend. Management expressed confidence that these investments will meet ROI thresholds and increase guest throughput. Brandt Montour (Barclays): Sought clarity on why American travelers are particularly hesitant to book Europe and whether this is expected to persist into 2026. Management said hesitancy appears tied to macro uncertainty but noted no booking softness for 2026 European itineraries. Looking forward, the StockStory team will monitor (1) whether booking trends in Europe stabilize or require further promotional activity, (2) progress on cost efficiency measures and their impact on margins, and (3) guest response to the Norwegian Aqua launch and Great Stirrup Cay enhancements. Execution in these areas will be key to tracking Norwegian Cruise Line's ability to offset top-line headwinds and support its earnings targets. Norwegian Cruise Line currently trades at a forward P/E ratio of 9×. At this valuation, is it a buy or sell post earnings? Find out in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today. 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Business Insider
07-05-2025
- Business
- Business Insider
I visited Norwegian's private island and saw how it's expanding to compete with Royal Caribbean
Royal Caribbean and Norwegian's private islands are separated by a mile of the Atlantic Ocean. Norwegian was an early trendsetter, having acquired its 270-acre island in 1977 — decades before its rival launched Perfect Day at CocoCay. Yet, Royal Caribbean's neighboring 130-acre property has quickly become the undisputed winner of the cruise-owned resort race. CocoCay's amenities marry theme park thrills (a waterpark and zipline) and resort relaxation (a luxury lounge and adult-only party) with opportunities for guests to splurge big on upcharges like cabanas. It's an attractive and highly profitable business model, especially as it sees more than 3 million Royal Caribbean guests annually. By comparison, Great Stirrup Cay only accommodated about 400,000 cruisers in 2024, Harry Sommer, president and CEO of Norwegian Cruise Line Holdings, told analysts in April. CocoCay is loud, jam-packed, and exciting — the opposite of its peaceful and less developed neighbor, Great Stirrup Cay. Great Stirrup Cay's buildouts include a zipline course, cabanas, bars, dining shacks, and a resort with waterfront villas. It notably lacks a pier for its ships to dock at, with visitors instead required to take a tender from the cruise vessel to shore. "The charm of these islands back when they were first created in the 70s, 80s, and 90s was that it was your private island escape from civilization," Tom Roesser, product development and strategy manager for Norwegian Cruise Line Holdings, told reporters during a tour of the island's construction sites. "There was really nothing except for a beach and a barbecue. Things are different these days." Norwegian expects to debut a new pier, welcome center, and large pool by the end of the year, giving it the chops to better compete. According to Roesser, the expansion has become a 24-hour, seven-day-a-week affair, with Norwegian purchasing a ferry to accommodate the hundreds of additional crew needed for the project. For guests, some of the new additions will feel much needed. This includes the 1,500-foot-long, $150 million pier, which will simultaneously accommodate two of Norwegian's largest ships — eliminating the need for tendering. The pier will lead to a new welcome center providing shuttle service around the island. Great Stirrup Cay's updated design includes four trams, each accommodating up to 104 riders. Roesser said visitors only have to wait three to five minutes for a ride. A photogenic 42-foot-long bridge is expected to connect the arrivals area with the island's new pièce de résistance: a giant heated pool. Great Stirrup Cay's expansion plan includes a 28,476-square-foot pool accommodating 1,898 guests. CocoCay has several swimming pools, including one that spans more than 33,000 square feet. Great Stirrup Cay's won't be as large, but Roesser says it will have two swim-up bars, a thousand lounge chairs, and 33 rentable cabanas. Half of the pool, specifically the section with the DJ stand, is expected to target a lively adult crowd. The other half should be more kid-friendly, outfitted with walk-in entry points and fountains. The youngest visitors will also have an adjacent 1,500-square-foot splash zone with fountains, slides, and water blasters. Norwegian is also building an adults-only beach club, recreational area, and relaxation cove with hammocks, although it's unclear when they'll be completed. The second expansion phase primarily focuses on bringing recognizable amenities to the island. Horizon Park, an outdoor recreational concept, was introduced on the recently refurbished Norwegian Bliss and Breakaway. The cruise line now plans to bring it to Great Stirrup Cay via a collection of lawn games such as cornhole, giant jenga, and shuffleboard. Similarly, the cruise line also plans to duplicate its popular adult-only Vibe Beach Club, available on several ships, on the private island. However, like its onboard counterpart, guests will have to pay to reserve one of its 200 loungers and 16 oceanfront villas. The cruise line is still evaluating additional amenities, like water slides, as future additions. A little more than 100 crew live on the island full-time, according to Roesser. Expect more as the cruise line expands its property (only about 50 of the 270-acre island has been developed so far). As the resort grows, so too will the number of visitors. Sommer told analysts that he expects Great Stirrup Cay will accommodate more than a million cruisers in 2026 — a substantial chunk of visitors for a company that sees between 2.5 million to 3 million travelers annually.
Yahoo
04-05-2025
- Business
- Yahoo
The Trade War Is Already Hurting Oil Demand
Signs have emerged that the U.S.-China trade war is already hitting oil demand in the shipping and aviation sectors, and this weakness could soon move into the U.S. trucking business and reduce diesel demand. Container traffic from China to the United States is plummeting, while U.S. airlines warn of a hit to consumer spending amid weakened consumer sentiment with the tariffs and expectations of higher inflation. Shipping and aviation account for a combined 10% of global oil consumption, and the decline in container shipping traffic is set to hurt demand, a decline that could become worse if the U.S. trucking business suffers—which analysts expect it will. Hapag-Lloyd, one of the world's biggest container shipping firms, told Reuters last week that customers had already canceled 30% of shipments from China to the United States due to the trade war and the escalation of the U.S. tariffs on imports of Chinese goods. But demand for shipments from Southeast Asian nations such as Thailand, Vietnam, and Cambodia has spiked, according to a spokesperson for Hapag-Lloyd. Mitsui O.S.K. Lines Ltd, the Japanese shipping giant, expects a decline in profits this year, also due to expected slow cargo movement amid 'concerns over inflation and global economy stagnation due to the U.S. tariff policies.' Leisure is also being hit with weakened consumer sentiment—Norwegian Cruise Line Holdings says it has seen softening in its 12-month forward booked position. 'While we recognize there may be potential pressures on the top line, we believe these can be effectively offset by the continued execution of our cost savings initiatives,' president and CEO Harry Sommer said this week. London-based shipbroker Clarksons issued a profit warning, noting that 'uncertainty arising from the potential of a global trade war has escalated.' Gene Seroka, executive director of the Port of Los Angeles, told CNBC this week he expects cargo volume from China to plunge by 35% next week compared with the same period in 2024, as U.S. retailers halt shipping from China due to the tariffs. 'Realistically speaking, until some accord or framework can be reached with China, the volume coming out of there — save a couple of different commodities — will be very light at best,' Seroka told CNBC. The plunge in shipping routes from China to the U.S. will hit American trucking, Apollo Global Management said in a presentation to clients at the end of April. By mid-May, containerships to U.S. ports will grind to a halt, by late May, trucking demand will come to a halt, early June will see layoffs in the trucking and retail industry, and recession is coming in the summer of 2025, Apollo Global Management predicts. Apart from business confidence, consumer confidence in the U.S. is also plummeting, and a record-high share of consumers think business conditions are worsening, according to Apollo's dire forecasts, which say there will be empty shelves and Covid-like shortages soon. Airlines are also noting a decline in leisure demand as consumers spend less, anticipating higher inflation and a worsening economy. 'The year started out very strong. However, that changed and we saw demand weaken as the quarter progressed, especially in leisure demand,' Southwest Airlines' President and CEO Bob Jordan said on the earnings call last week. Southwest Airlines did not reiterate its profit guidance for 2025, as 'Amid the current macroeconomic uncertainty, it is very difficult to confidently forecast given recent and short lived trends,' Jordan added. With the current U.S. Administration, there is always a chance of a flip and reversal in the tariff and trade wars, but business and consumer sentiment has been eroded in the near term. Major investment banks already forecast recession as a base-case scenario, while oil demand forecasters, including the International Energy Agency (IEA), OPEC, and the U.S. Energy Information Administration (EIA), have downgraded their demand growth outlooks. The IEA cut its 2025 oil demand growth estimate by 300,000 barrels per day (bpd), OPEC revised down its demand growth forecast by 150,000 bpd, and the EIA slashed its growth projection by 400,000 bpd. By Tsvetana Paraskova for More Top Reads From this article on
Forbes
02-05-2025
- Business
- Forbes
Norwegian Is Turning Two Regent And Oceania Cruise Ships Into Residences
The Norwegian Sky is one of several ships that Norwegian is repurposing. Cruise lines are finding a new way to attract new customers, optimize their fleets and, they hope, boost profits by transforming ships into permanent residential vessels. Norwegian Cruise Line Holdings has recently executed a significant shift in its fleet management strategy in all three of its cruise brands: Norwegian, Regent Seven Seas, and Oceania, according to Cruise Industry News. After previously indicating to Wall Street in February that there weren't imminent plans for ship sales and suggesting a 35-year service life for its vessels, the company abruptly changed course in March and April. The rapid transformation began on March 21 when Regent Seven Seas Navigator was sold to Crescent Seas. Just two weeks later, on April 3, the same startup acquired Oceania Insignia. The fleet reduction continued when Norwegian Sky and Sun were chartered to Cordelia Cruises, a cruise line based in Mumbai, four days later. These will remain conventional cruise ships. "These agreements are a clear reflection of our disciplined long term approach to fleet optimization," explained Harry Sommer, president and CEO of Norwegian Cruise Line Holdings, during the company's first quarter earnings call on April 30. "By transitioning these ships into markets outside our core business with established operators in their respective areas, we're able to unlock value from these assets while remaining focused on delivering a consistent, high quality experience across the remainder of each fleet in our three brands." But what's really happening behind this corporate speak? The cruise industry has been exploring new business models, and permanent residences at sea represent an intriguing growth opportunity. The moves create a younger overall fleet profile. Before these transactions, Norwegian Cruise Line would have had an average fleet age of 15 years by 2030, with both Oceania and Regent averaging 14 years. The redeployed ships are among the oldest ships for the three brands. Newer ships are more in demand and generally command higher cruise prices due to their more modern amenities and attractions. In the post-pandemic years, cruise demand boomed. Lines raised prices as ships became fully booked for months into the future. But NCL recently missed its projected earnings, noting 'choppiness' in U.S. bookings on European cruises in the last couple of months. Sommer still made the point that times of economic turmoil can actually shift vacationers to cruising because of its value proposition compared to other types of vacation. If demand for cruising continues to soften, reducing the fleet size will help maintain occupancy levels. The concept of living aboard a cruise ship permanently isn't new, but it's gaining momentum. For cruise companies, selling older ships to residential operators makes financial sense. This reduces maintenance costs on aging vessels and free up capital for newer ships that can command higher cruise prices. For consumers with the means and desire for a nomadic lifestyle, these floating residences can offer an appealing alternative to traditional retirement or second-home ownership. Residents get to travel the world without constantly packing and unpacking, maintain social connections with fellow seafarers, and enjoy the amenities and services of luxury cruise living. To date, residential cruise ships haven't always provided smooth sailing for purchasers. Delays have stranded residents in departure ports. One line, Storylines, in 2022 announced its MS Narrative would sail in 2024. It's now scheduled for 2027. Despite many announcements, there are only two residential cruise ships actually sailing today. With the cost of a residence easily hitting a million dollars or more, a potential purchaser might approach investing in a future launch with some trepidation. Russell W. Galbut is Founder and Chairman of Crescent Seas and also Co-Founder & Managing Principal of Crescent Heights, a Miami-based urban development firm with a thirty-year track record. The ships will be managed and staffed by NCL and The Apollo Group, a firm with decades of experience in luxury cruising. The credibility and experience of the players in this new venture will likely give potential residents confidence in the security of their investment. The Crescent Seas Navigator is scheduled to begin cruising December, 2026, with residences costing from $750,000 to $8 million. A total of five ships are planned. A few months ago, NCL said it would keep its oldest ships sailing years into the future. Then, as the cruise market showed signs of possible weakness, it changed course. Two of the ships, the Norwegian Sky and Norwegian Sun, will be chartered to a company that isn't directly competitive with NCL's brands. The Regent Navigator and Oceania Insignia will become part of a potentially high growth company in the nascent residential cruising space. The terms of the deal weren't disclosed, but it appears NCL will have some type of ongoing participation in the venture. This is bold deal-making. If cruise interest sinks, NCL won't miss these older vessels. If the market resumes its growth, newer ships are coming online in the next couple of years for all three NCL brands. The end result will be younger, more attractive fleet. This is a great example of finding new markets for existing products – something every CMO should appreciate. This shift suggests we may be seeing the emergence of two distinct cruise segments: traditional vacation cruises on newer vessels, and residential cruises on repurposed older ships. Both models serve different customer needs and allow cruise companies to optimize their fleets for profitability. I find the high-powered backing for the new Crescent Seas fleet and its five-ship plan particularly interesting. The serious players in that venture could well de-risk and legitimize the still-nascent residential cruise concept. If their first two ships sail on schedule and sell most of their condos, look for other major cruise players to repurpose their older vessels for that market.
Yahoo
02-05-2025
- Business
- Yahoo
Norwegian Cruise Line faces troubling trend
While Royal Caribbean Group just reported that its cruise bookings haven't slowed down and are even outpacing last year's, despite economic uncertainty, Norwegian Cruise Line Holdings is navigating some 'choppiness.' Although the company's CEO Harry Sommer remains optimistic about long-term growth, current economic turbulence is presenting some booking challenges for all three of Norwegian's cruise brands — Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas the company's Q1 earnings call on April 30, Sommer pointed to one concerning trend in cruise traveler behavior as the reason for a softening in bookings that the company experienced in the first part of April. Economic uncertainty, and maybe some anxiety about the current political environment, seem to be leading more Americans to hold off on booking international travel to one key region where Norwegian, Oceania, and Regent cruise ships have a significant presence during the summer season. As Sommer answered questions about recent booking inconsistencies the company has experienced, he revealed that the challenge lies mainly with Europe itineraries sailing in July, August, and September 2025.'In terms of customer behavior, listen, clearly we saw a little bit of choppiness, that's what we've referred to it as, in the first part of April, mostly related to our Q3 itineraries, mostly related to our European Q3 itineraries, to be as clear as possible, with perhaps some hesitancy for Americans to do long-haul trips during this environment,' Sommer explained. The booking slowdown was specifically linked to North American customers and thought to be related to economic uncertainty. But it's possible that a perceived increase in anti-American sentiment could also factor into U.S. cruisers' decisions not to book European cruises this clarified that the cruise line is already seeing overall bookings pick up after the early April choppiness, but he noted that the challenge with Q3 Europe itineraries may continue. At this point in time, Norwegian is not seeing booking challenges for 2026 Europe cruise itineraries. Sommer also pointed out that the company shifted its deployment strategy for 2026 to be 'a little bit less reliant on Europe in '26 versus '25' and to offer more shorter Europe itineraries, which lowers the Europe cruise price point for passengers. Sommer noted, however, that even at higher cruise price points, the company's luxury brands aren't really experiencing challenges any greater than Norwegian Cruise Line's when it comes to Q3 Europe itineraries.'I think all three brands are seeing pretty much the same booking patterns, some pressure on Q3 Europe, which perhaps is a slightly larger percentage of Oceania and Regent itineraries than it is for NCL, but really just limited to that,' he explained. The company continues to see strong bookings for close-to-home cruises, winter itineraries, and even exotic winter itineraries, but Europe has become an 'Achilles heel.' 'We're very happy with the winter itineraries, even the winter exotic itineraries are doing very good for places like Asia, Africa, South America, Australia, etc., and the world cruise on the luxury brand, and '26 is looking very well from a booking perspective as well, so no weakness luxury versus NCL. They all seem to be doing well, and all just seem to have this one Achilles heel,' Sommer isn't worried enough about that Achilles heel to make significant price cuts, however. The company did a small amount of close-in discounting for Q3 around problem areas of Europe, but is focused on maintaining price integrity. 'I can make bookings happen by lowering prices. When you look at our booking trends versus perhaps others, I think that's just something to think about, not that I'm suggesting anything else is happening. I'm just saying that we are super focused on price, and if there's two or three slower weeks in bookings that we can maintain price, we're going to do it and we're going to continue doing that in order to set us up for a foundation for a strong future,' Sommer emphasized. (The Arena Group will earn a commission if you book a cruise.) , or email Amy Post at or call or text her at 386-383-2472.
