NCL Remains Profitable in 2009

[Seanote]

From USA Today:

 

This item was written by veteran cruise writer Fran Golden, co-author of Frommer's Alaska Cruises & Ports of Call. Golden is serving as Guest Editor of The Cruise Log this week while USA TODAY Cruise Editor Gene Sloan is out.

 

Is Norwegian Cruise Line on the upswing? NCL is reporting a second quarter profit of $15.4 million, despite cheaper fares. This compares to a second quarter loss of $27 million last year......

 

http://www.usatoday.com/travel/cruises/item.aspx?type=blog&ak=68496642.blog

[lambs2]

Good to hear! I will bet you dollars to doughnuts this has something to do with their very successful Future Cruise Rewards Program!

[njhorseman]

Good to hear! I will bet you dollars to doughnuts this has something to do with their very successful Future Cruise Rewards Program!

 

 

Here's exactly what the article says:

 

The line says the rise can be attributed to "onboard spending and other revenue" including lower fuel costs.

 

Remember, future cruise rewards will ultimately be utilized as deposits for cruises, and at that time the cruise line will realize only half the revenue they would have through a standard cabin deposit.

[CTCruisers]

Thanks for the article.

 

It is nice to know that their strategies have started to pay off. The name of the game is to get the cabins filled and then make money off all of the incidentals (excursions, drinks, specialty restaurants).

 

I know it is a lot of nickle and diming, but their low cruise prices do get the bookings.

 

I think that if they keep their ships ship shape and focus on service, they will only be stronger in the future.

[FLAHAM]

Here's exactly what the article says:

 

The line says the rise can be attributed to "onboard spending and other revenue" including lower fuel costs.

 

Remember, future cruise rewards will ultimately be utilized as deposits for cruises, and at that time the cruise line will realize only half the revenue they would have through a standard cabin deposit.

 

Retired investor,

 

As best I remember Accounting 101, when you receive a deposit you don't recognize revenue until the service (i.e., the cruise) is rendered.

[njhorseman]

Retired investor,

 

As best I remember Accounting 101, when you receive a deposit you don't recognize revenue until the service (i.e., the cruise) is rendered.

 

 

Which is why I cited the article's statement attributing the quarter's profits to onboard spending, other revenue and lower fuel costs. It was "lambs2" that talked about the future cruise credit being the source of the profits. I chose not to specifically mention accounting considerations because I thought it might be too technical.

[InTheCruisingYearsOfLife]

Good to hear! I will bet you dollars to doughnuts this has something to do with their very successful Future Cruise Rewards Program!

 

Hey Lamb-squared, I'll bet you rupees to bagels that it might also have something to do with people utilizing their last Compass Rewards perqs before they become worthless. Long term, BofA's decision to axe that program won't be good for NCL. In my opinion, NCL should have protested this move and/or should have searched out another credit card dealer to carry on with the 3% reward program. (Or perhaps they did, unsuccessfully.) Without it, cruises are going to be a lot less affordable and a lot farther in between, at least for YearsO'Life and his DW. <sigh>

 

I suppose there's always the prospects of switching to inside cabins. But thirty one years o' wedded bliss has taught me one thing fersure: the lady needs her natural light. (And I'm right there with her.) Moving to an inside cabin would be too much like verse ten of the same Psalm you cite.;) No offense intended to those who can swing the gig, but there's a bonafide reason why our current house has 37 windows, and it all has to do with mood management.

 

C. Y. O'Life

[lambs2]

Hey Lamb-squared, I'll bet you rupees to bagels that it might also have something to do with people utilizing their last Compass Rewards perqs before they become worthless. Long term, BofA's decision to axe that program won't be good for NCL. In my opinion, NCL should have protested this move and/or should have searched out another credit card dealer to carry on with the 3% reward program. (Or perhaps they did, unsuccessfully.) Without it, cruises are going to be a lot less affordable and a lot farther in between, at least for YearsO'Life and his DW. <sigh>

 

I suppose there's always the prospects of switching to inside cabins. But thirty one years o' wedded bliss has taught me one thing fersure: the lady needs her natural light. (And I'm right there with her.) Moving to an inside cabin would be too much like verse ten of the same Psalm you cite.;) No offense intended to those who can swing the gig, but there's a bonafide reason why our current house has 37 windows, and it all has to do with mood management.

 

C. Y. O'Life

 

I definitely agree with you about those spending their last Compass Rewards. We never got in on that program but we have met many cruise buddies over the years who loved and utilized it.

 

I still hold that the Cruise Rewards Program is filling cabins for NCL in 2009 that might otherwise not have been filled without the program. I know that was one of the main reasons we booked our upcoming PC Cruise with NCL instead of another line.

[CanadianTwosome]

I definitely agree with you about those spending their last Compass Rewards. We never got in on that program but we have met many cruise buddies over the years who loved and utilized it.

 

I still hold that the Cruise Rewards Program is filling cabins for NCL in 2009 that might otherwise not have been filled without the program. I know that was one of the main reasons we booked our upcoming PC Cruise with NCL instead of another line.

 

I think you're right. It's $100 off, and there are very few people who don't appreciate $100 in their pocket. Add to that the low fares, and I think it leads to more cruisers. I actually think it's a bit ironic that the article states NCL is making a profit despite lower fares, since in my opinion, those lower fares are probably playing a big role. More people can afford to cruise more often, and the result is that the onboard spending, etc. increases. People can call it nickel and diming all they want, but the truth is that for every person who eats at specialty restaurants every night, there is at least one who doesn't pay a cent more than their DSC; for every person who books their excursions exclusively through NCL there is at least one who books theirs exclusively with private suppliers - and the rest of the passengers pick and choose according to what they can afford.

 

YAY NCL!! (wow, I think that's the first time I actually felt like an NCL cheerleader! ha ha ha :p)

[Lizcourt]

Thanks for the article.

 

It is nice to know that their strategies have started to pay off. The name of the game is to get the cabins filled and then make money off all of the incidentals (excursions, drinks, specialty restaurants).

 

I know it is a lot of nickle and diming, but their low cruise prices do get the bookings.

 

I think that if they keep their ships ship shape and focus on service, they will only be stronger in the future.

 

 

There's something to be said for that. Within reason (like, I don't think cruise passengers would tolerate it if all or most restaurant venues or entertainment wasn't included in the cruise fare), if the "nickle and diming" lets them keep the fares lower, that's a good thing. It lets me get on the cruise, where I have the option whether or not to be part of their on-board revenue generation.

[euro cruiser]

There's something to be said for that. Within reason (like, I don't think cruise passengers would tolerate it if all or most restaurant venues or entertainment wasn't included in the cruise fare), if the "nickle and diming" lets them keep the fares lower, that's a good thing. It lets me get on the cruise, where I have the option whether or not to be part of their on-board revenue generation.

For the most part I agree, but I found the revenue generating tactics on the Gem a few weeks ago a tad stressful. In addition to the several times a day interruptions by the folks "selling" the specialty restaurants, I had one bartender pour top shelf booze without asking and another bring me a drink in a souvenir glass I didn't ask for. When I told him that wasn't what I ordered, he sneered at me, sighed and grabbed the drink back. I was a little hesitant to drink the replacement he brought, having been a bartender for years myself, I know what can happen to the drink when a customer isn't looking ...:eek:

 

Don't discount the importance of "lower fuel costs". That line item alone can make or break profits in this industry, much like the airlines.

[lambs2]

It remains to be seen if the fuel cost surcharge will soon be reimplemented, I would think.