Interview Article - Del Rio's Shake Up Plans for NCL

[Imasima752]

I just saw this and wonder what other NCL fans think:

 

http://www.thestreet.com/story/13054496/1/how-norwegian-cruise-lines-new-ceo-plans-to-shake-up-the-cruise-industry.html

 

I'm a bit concerned about his comment on 7 day cruises, "What I see at Norwegian's product right now is too many milk runs -- it's too easy to do 7-day cruises." While a longer cruise would be wonderful, anything longer than 7 days is pretty much impossible with my career. I hope I'm just reading into it too much.

[aquarianne11]

Thanks for sharing. He made a lot of interesting points.

 

I think 7-day cruises are great and that's all we can fit in our schedule nowadays. NCL has a lot of ships so they can add more interesting itineraries and ports instead of the same ports all the time.

[sparks1093]

"Can I get another $50 out of you and your wife?" Um, maybe, maybe not.

Edited February 25, 2015 by sparks1093

[DMH15]

Aren't 7 day cruises the cruise industries' "milk and butter"> And that is what most people can take off of work.

 

I love longer cruises, but I can't take them all the time. My boss would kill me.

Edited February 25, 2015 by DMH15

[njhorseman]

I would welcome varied itineraries of different lengths. I don't think he's talking about eliminating 7 day cruises, I think he just wants to offer more options.

[clcjdn]

I would welcome varied itineraries of different lengths. I don't think he's talking about eliminating 7 day cruises, I think he just wants to offer more options.

 

That is where my head went when I read it as well.

[Merriem]

That is where my head went when I read it as well.

 

Totally agree!

[WaldosPepper]

I would welcome varied itineraries of different lengths. I don't think he's talking about eliminating 7 day cruises, I think he just wants to offer more options.

 

That's how I read it as well. I'm keeping my fingers crossed that we see some innovative and exciting new itineraries. :)

[eroller]

Del Rio doesn't have experience running a mass market line with mega-ships like NCL. The milk run exists because there are only so many ports that can support the massive ships they are building, not to mention they don't want the ships to travel too far in order to conserve fuel. They also don't want to offer overnight stays in port on the mega-ships because it's too much lost revenue. They want you onboard and spending $$. You can't have it all so to speak. He can't expect NCL to operate like Regent or Oceania which I admit he has done an excellent job leading. Ultra-premium and luxury lines are an entirely different animal though. I credit Sheehan with the revival of NCL and I have to say I was very sorry to see him go. I still don't know what happened but his departure was very abrupt. Unfortunately I don't have tons of confidence in the new President they recruited from Darden restaurants. Darden doesn't have a great reputation and their financials have been poor. The last thing I want is an Olive Garden at sea.

 

As for raising per diems, not as easy as it sounds especially in the mass-market arena where the competition is fierce. If Del Rio can pull it off great, but given the fact that Royal Caribbean has built the most innovative ships in the world and even they have to discount speaks volumes. Even Disney which has the very powerful Disney name behind it has to discount, although not nearly to the extent of other mass-market lines. My question would be what makes NCL worth $50 more than any other line? If Del Rio can answer that and back it up with tangible reasons that make NCL better maybe he can pull it off, but it's not as easy as it sounds. The current yields which all cruise lines consider to be too low are the result of the cruise lines overbuilding. They have no one but themselves to blame. There is simply more capacity than demand so the rampant discounting is necessary. I don't see any slowdown in ship orders so I don't really see this changing. NCL has four 4000+ pax ships on the way, and yes they are likely going to do some sort of "milk-run" in Europe or the Caribbean. They are too big for much else so I'm not certain where Del Rio thinks they can sail to? It seems like he is thinking like he is running Oceania and Regent where the smaller ships and much higher yields enable far more interesting itineraries.

 

I do see NCL expanding more rapidly into emerging markets like China and South America. I expect them to emulate Royal Caribbean in this regard. Anyway it will be interesting to see it all play out. As a person who has recently discovered a new appreciation for NCL after having written off them off some years ago, I hope any changes are for the better. Poor NCL has finally gotten back on its feet and is once again an industry leader after years of mediocre performance and multiple management changes with little direction. I don't want to see that derailed.

[Sotermarler]

Price is definitely an issue for us. If he raises prices we have no issues sailing with Royal.

Also, like previously mentioned 7 days is our max since we leave the littles at home. We also, don't want less than 7 either due to the cost of flying to port.

I hope this guy knows what he is doing.

[4774Papa]

I understand that some cannot take off from work for longer cruises, but we rarely book any cruise less than 12 days.

 

NCL was our first cruise line, but we have cruised seven cruises with Celebrity vs. five for NCL in the past five years since Celebrity has cruises all over the world. They have cruises in Australia/NZ, Asia, South America (NCL does now), the British Isles (NCL does now) and the Black Sea.

 

NCL does need to expand to longer cruises. Also, they need to consider more itineraries.

[Travelcat2]

Mr. Del Rio (or FDR as he is known by Oceania and Regent passengers) would never do away with 7 night itineraries. Regent and Oceania have itineraries from 7 nights to 180 nights (180 nights on Oceania's around the world itineraries.)

 

Regent has stiff competition in the luxury cruise market (Crystal, Silversea and Seabourn in particular) yet, their ships run full. The fares on Regent are higher than its competition but they include more (everything from airfare to excursions).

 

In terms of not running a mainstream cruise line before, when he started Oceania, he was new at that. When Oceania's parent company purchased Regent, he had never stepped foot on a luxury ship. He has been extremely successful with both cruise lines.

 

I'm just suggesting that everyone take a wait and see attitude and try not to judge FDR just yet. He has done amazing things for Oceania and Regent.

[LrgPizza]

What an interesting read. I'm as excited as he is about going to Cuba. I can't wait, and I'll likely book as soon as it's available.

 

I am curious what is going to happen to the 2 other Breakaway Plus ships that are planned after Escape and Bliss. He doesn't seem excited at all about the idea of adding new ships.

[sparks1093]

Mr. Del Rio (or FDR as he is known by Oceania and Regent passengers) would never do away with 7 night itineraries. Regent and Oceania have itineraries from 7 nights to 180 nights (180 nights on Oceania's around the world itineraries.)

 

Regent has stiff competition in the luxury cruise market (Crystal, Silversea and Seabourn in particular) yet, their ships run full. The fares on Regent are higher than its competition but they include more (everything from airfare to excursions).

 

In terms of not running a mainstream cruise line before, when he started Oceania, he was new at that. When Oceania's parent company purchased Regent, he had never stepped foot on a luxury ship. He has been extremely successful with both cruise lines.

 

I'm just suggesting that everyone take a wait and see attitude and try not to judge FDR just yet. He has done amazing things for Oceania and Regent.

 

I am willing to wait and see, but have no interest in sailing on Oceania lite;).

[Merriem]

Having just come off of Oceania in November, I was not impressed except with the MDR food. We normally do not go on big ships, but our TA said we would be very pleased with the Haven on the Breakaway. NCL was our first cruise over 30 years ago, and are looking forward to trying it again. I would like to see longer cruises.

[eroller]

 

I'm just suggesting that everyone take a wait and see attitude and try not to judge FDR just yet. He has done amazing things for Oceania and Regent.

 

 

What I remember most is his tenure at Renaissance Cruises, which built the 8 R-class ships. They tried to bypass travel agents completely to help eliminate their distribution costs. It was a disaster and pretty much spelled the end for Renaissance. Travel agents would not even mention Renaissance Cruises let alone book them. What I don't remember is if Del Rio joined Renaissance before, during, or after that debacle?

 

It's no surprise that he is very keen on Cuba, since that is his origin.

[Jancruz]

Dont under estimate Mr. Delrio..he is a brilliant man and an innovator at everything he tries..I am so excited to see the next step at NCL!!

Jancruz1

[Cruzface]

Sounds like he wants to squeeze more money from customers and offer nothing extra in return....

[LrgPizza]

Sounds like he wants to squeeze more money from customers and offer nothing extra in return....

Which would be really, really good for business. That's his job.

[jmele999]

I personally do not see NCL getting rid off of the 7 day intineraries because they generate a lot of revenue. When you think about it, NCL can generare more revenue from three 7-day cruises than from two 11-day cruises. Also, as it has been mentioned before, NCL will have a hard time filling up some of their megaships on 12 night cruises.

 

A possible solution could be to add 8 and 9 day cruises to those ships also doing the 7 day cruises. It can easily be done by having some cruises start on Saturday and end on either a Sunday or Monday. By doing so, you can make it more suitable for those of us who still have to work and can only take a limited amount of time off.

Edited February 25, 2015 by jmele999

[SAILPRO]

Del Rio doesn't have experience running a mass market line with mega-ships like NCL. The milk run exists because there are only so many ports that can support the massive ships they are building, not to mention they don't want the ships to travel too far in order to conserve fuel. They also don't want to offer overnight stays in port on the mega-ships because it's too much lost revenue. They want you onboard and spending $$. You can't have it all so to speak. He can't expect NCL to operate like Regent or Oceania which I admit he has done an excellent job leading. Ultra-premium and luxury lines are an entirely different animal though. I credit Sheehan with the revival of NCL and I have to say I was very sorry to see him go. I still don't know what happened but his departure was very abrupt. Unfortunately I don't have tons of confidence in the new President they recruited from Darden restaurants. Darden doesn't have a great reputation and their financials have been poor. The last thing I want is an Olive Garden at sea.

 

As for raising per diems, not as easy as it sounds especially in the mass-market arena where the competition is fierce. If Del Rio can pull it off great, but given the fact that Royal Caribbean has built the most innovative ships in the world and even they have to discount speaks volumes. Even Disney which has the very powerful Disney name behind it has to discount, although not nearly to the extent of other mass-market lines. My question would be what makes NCL worth $50 more than any other line? If Del Rio can answer that and back it up with tangible reasons that make NCL better maybe he can pull it off, but it's not as easy as it sounds. The current yields which all cruise lines consider to be too low are the result of the cruise lines overbuilding. They have no one but themselves to blame. There is simply more capacity than demand so the rampant discounting is necessary. I don't see any slowdown in ship orders so I don't really see this changing. NCL has four 4000+ pax ships on the way, and yes they are likely going to do some sort of "milk-run" in Europe or the Caribbean. They are too big for much else so I'm not certain where Del Rio thinks they can sail to? It seems like he is thinking like he is running Oceania and Regent where the smaller ships and much higher yields enable far more interesting itineraries.

 

I do see NCL expanding more rapidly into emerging markets like China and South America. I expect them to emulate Royal Caribbean in this regard. Anyway it will be interesting to see it all play out. As a person who has recently discovered a new appreciation for NCL after having written off them off some years ago, I hope any changes are for the better. Poor NCL has finally gotten back on its feet and is once again an industry leader after years of mediocre performance and multiple management changes with little direction. I don't want to see that derailed.

 

Well said, eroller!

Most of us love Sheehan and was very surprised to see him go! :(

He seems to love his job and appreciate his employees.

Don't know much about Del Rio, time will tell.

[tntornadox]

What a great article! I took several things away from it on first reading:

 

1) Del Rio knows his stuff. Seriously, the man has been in the industry for a long time running several successful lines. He has been here long enough to know what works and what doesn't and that will serve NCL well. Nothing against Sheehan, as he was the man who brought NCL back from the dead, but the company has a legit cruise business executive at the helm for the first time in a long time and that can only mean good things.

 

2) As for the 7-night comment, what I got was those are fine, but you need to offer options. If you price out a 4 or 5 night cruise on other lines, you'll find comparable pricing at times to 7 nighters! Why? There is a huge demand for shorter cruises and NCL doesn't currently offer ANY 5 night Caribbean cruises at all, for example. This is an untapped market for them and honestly, you could offer a 7 night one week then a 4 night and 3 night or some odd combination even on the same ship the next week! This would be a solution for the argument that NCL doesn't have enough ships to sail shorter itens... just simply slip a few short cruises into the current ships' schedule on occasion!

 

3) Finally, on the point of getting more money out of passengers, that's his job. But I didn't read it that way, from what I read, I think we will continue to see amazing promotions (such as the current one) but the base rate may increase slightly. But because you are getting a beverage or dining package for free, you get better value for your money on Norwegian than other lines due to the level of choices on the bigger ships. If you think about it, this is probably already paying off because how many people booked an OV or above who may have booked an interior otherwise? They've already made more money off this booking than they would had originally.

 

If you read closely, you'll note that he mentioned current promotions and how bookings are up big time in February, expect to see this continue. If you read between the lines, it sounds like this promotion may have been the new management team's idea in the first place.

Edited February 25, 2015 by tntornadox

[xriva]

I would welcome varied itineraries of different lengths. I don't think he's talking about eliminating 7 day cruises, I think he just wants to offer more options.

 

 

That's how I read it, as well. I would like the ships to alternate itineraries, instead of just doing the same route every week. Some of the ports are starting to get old.

[backsbanny]

I truely love ncl and consider myself a very loyal fan of ncl.this article worried me a lot.mr del rio must understand that ncl is a cruiseline that has a lot of fans people who love ncl for what it is...for freestyle cruising for its entertainment for the good rates for everything.i would be bored to death if i embarked on an oceania cruise.i love the ambience of ncl.i am worried that this is going to change.if you already check prices on ncl for 2016 and 2017 the prices have skyrocketed!low season oceanview staterooms for 900usd for example on ncl jem from san juan for example.even celebrity is cheaper on some of the cruises.mr del rio might want to increase a lot the fares to get ncl to be a more upper class cruiseline.he hasnt understood that ncl is a mass market cruiseline and now the prices are sometimes more than rcl celebrity hal etc..a lot of competition for mr del rio

 

 

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[Kingmaker_inc]

I find this quote the most concerning of anything he said:

 

"I reject the notion that the only way to grow in this business is by adding new ships. Ships are a necessary condition if you want to be in the cruise business, but there ought to be a balance between new ships and organic growth via pricing. Occupancy is already full, but you could move the pricing needle."