Norwegian Cruise bets on rich Americans to navigate downturn
Norwegian Cruise Line Holdings Ltd (NCLH.N) 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 Corp (CCL.N) 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.