'Not All Cruise Operators Are Created Equal': Norwegian Cruise Line Gears Up For Record 2023

Cruise line operator Norwegian Cruise Line Holdings Ltd NCLH saw its stock fall 43% in 2022 as the cruise industry felt the impact of COVID-19 restrictions and consumer spending impacted by inflation.

Here’s how the company is shaping up for a record-breaking 2023 as it turns the corner on a down year and sets sail for the future.

What Happened: Norwegian Cruise Line Holdings hosted an investor day that highlighted the company’s push forward, which could lead to a record 2023.

One of the company’s key priorities was a focus on shifting to premium itineraries. The company currently covered the premium, contemporary and luxury segments of the cruise line sector.

“Upscale brands drive outsized yields and ship contribution,” the company said.

Norwegian showed it has 9,190 upscale berths, which came in ahead of the totals of 6,500, 3,350 and 2,850 from competitors Viking Cruise, Royal Caribbean Cruises Ltd RCL and Carnival Corp CCL, respectively.

The company was also advancing the number of ships in its fleet, which could increase revenue opportunities. The company currently has 29 ships in its fleet and has eight on order. Three new ships will begin sailing in 2023.

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Why It’s Important: Norwegian Cruise Lines pointed to the sector being a “resilient industry with proven consistent growth profile.”

Passengers for Norwegian Cruise Line have increased at an average annual rate of 5.6% from 2001 to 2019.

The company pointed to positive catalysts of improvement in public health environments, consumer desire for travel and experiences and an attractive new build pipeline.

“Significant tailwinds and catalysts to continue recovery and lay the foundation for a record 2023,” the company said.

Three key items in the company’s strategy moving forward are:

1. Rebuild and improve margins

2. Maximize cash flow generation

3. Optimize the balance sheet

Norwegian reported it saw an uplift in bookings for 2023. The company said bookings for the fiscal year 2023 were equal to the record 2019 levels. The key difference for the company could be higher pricing.

The company reported pricing was “significantly higher and at record levels” for the fiscal year 2023.

Norwegian Cruise was targeting having a record net yield and adjusted EBITDA in the fiscal year 2023.

The company presented a “clear and consistent strategy” to improve the operations and help turn around the business.

“Not all cruise operators are created equal, Norwegian Cruise Line Holdings has unique drivers to unlock value for our stakeholders,” said the company.

NCLH Price Action: Norwegian Cruise Line shares trade at $12.48 at publication Friday afternoon versus a 52-week range of $10.31 to $29.45.