Del Rio's EXACT comments on the recent Fees and Price Increases

[runner2013]

He hasn't seen much change because a large majority of the people on these ships the past month or so were past final payment, had already purchased drink packages, etc and didn't want to cancel and lose all their money.

Ask him again in say, 5-6 months when people who are not at final payment begin to cancel(I know I just cancelled an Alaskan trip for next year), or choose not to book at all and see what he has to say...

[SteveH2508]

I don't understand all of the "upscale" talk. NCL is nowhere near being upscale. The suites are the cheapest of any of the mainstream lines ... so I don't get that theory at all. I think FDR is trying to keep the initial costs down, while milking passengers once they get on board.

 

This is the usual business model for mainstream lines. What I cannot get my head around is the shedloads of UBPs and UDPs etc. they have given away recently. Surely this will hit the revenue generation and profit when these pax sail later on?

 

Maybe they are banking on people spending more on other things which they would not otherwise have done (photos, spa etc.)?

[eroller]

There are far, far better investment choices out there now to choose from.

 

 

Definitely agree!

[eroller]

No, they don't. I think it was mentioned on the call that it is being considered.

 

 

Thanks.

[SissasMomE]

This is the usual business model for mainstream lines. What I cannot get my head around is the shedloads of UBPs and UDPs etc. they have given away recently. Surely this will hit the revenue generation and profit when these pax sail later on?

 

Maybe they are banking on people spending more on other things which they would not otherwise have done (photos, spa etc.)?

 

What counts a sale / profit? He is stating the quarterly profits show an increase. Are the profits new bookings? Or are profits once the fare is paid in full? If a booking counts as a profit, then it seems FDR allowed the free UBP and UDP to continue to drive up the numbers. It may not be coincidence that the promotion ended at the same time the quarter ended ... you know?

[sparks1093]

Every cruise lines changes. On Celebrity some of the old times lament about how it was in the old days. Sure the waiters wore white gloves to serve your dinner on fine china, but did it really have that much of an impact on a cruise. It didn't for me and now that it is gone my food taste just the same.

 

I really don't think that there would be much success raising NCL up the cruise food chain. They have found their niche and I believe they do a great job at doing it. I'm not entirely sure that when Mr. Del Rio said he want more affluent passengers, that he was talking about wanting customers who were richer, I think he might have meant passengers that spend more onboard the ships. I've seen on here people bragging about how less they spend on their cruises and I have to say that some really don't spend at all. One could actually have a great cruise without spending anything other than their fare and DSC. Cruise lines make a substantial amount of their revenue on onboard spending and when people are bringing on things like water, soda, wine (even though there is a corkage fee), they can go through a cruise not spending anything else. I'm sure Mr. Del Rio and Mr. Stuart are both being challenged to increase revenue (I don't know of any company who is satisfied with what they are making) and they can do that one of two ways. They can raise the fares, which could put them at a competitive disadvantage or they can raise the fees of some of the, what I call, choice items on the ships. By raising the choice items, they are not forcing anyone to pay for them, but they are hoping that enough people do and they will have met their goal. Some may not like the changes, some may feel they are inconvenienced by them, but in the end if the changes stay, people have to make their own decisions if they will continue to be a customer or not.

 

I have a feeling, even if the changes stay in place, in a year the majority will still be on here posting and the few that leave will be enjoying their cruises on another line and those that said they won't cruise with NCL, even though they never had, will still not be cruising with NCL.

 

They found their niche under Sheehan. Del Rio has a different vision and wants to attain a different niche. I have cruised with NCL and I liked NCL the way that it was. It saddens me that Del Rio took over, but yes, change does happen. I will enjoy the cruises that I take with whatever cruise line I take them, even if it does turn out to be NCL as doubtful as that looks right now.

[swedish weave]

Every cruise lines changes. On Celebrity some of the old times lament about how it was in the old days. Sure the waiters wore white gloves to serve your dinner on fine china, but did it really have that much of an impact on a cruise. It didn't for me and now that it is gone my food taste just the same.

 

I really don't think that there would be much success raising NCL up the cruise food chain. They have found their niche and I believe they do a great job at doing it. I'm not entirely sure that when Mr. Del Rio said he want more affluent passengers, that he was talking about wanting customers who were richer, I think he might have meant passengers that spend more onboard the ships. I've seen on here people bragging about how less they spend on their cruises and I have to say that some really don't spend at all. One could actually have a great cruise without spending anything other than their fare and DSC. Cruise lines make a substantial amount of their revenue on onboard spending and when people are bringing on things like water, soda, wine (even though there is a corkage fee), they can go through a cruise not spending anything else. I'm sure Mr. Del Rio and Mr. Stuart are both being challenged to increase revenue (I don't know of any company who is satisfied with what they are making) and they can do that one of two ways. They can raise the fares, which could put them at a competitive disadvantage or they can raise the fees of some of the, what I call, choice items on the ships. By raising the choice items, they are not forcing anyone to pay for them, but they are hoping that enough people do and they will have met their goal. Some may not like the changes, some may feel they are inconvenienced by them, but in the end if the changes stay, people have to make their own decisions if they will continue to be a customer or not.

 

I have a feeling, even if the changes stay in place, in a year the majority will still be on here posting and the few that leave will be enjoying their cruises on another line and those that said they won't cruise with NCL, even though they never had, will still not be cruising with NCL.

 

If onboard spending is so important to NCL, how do you explain their promotions in which they gave as booking bonuses -- drinks, specialty restaurant meals, DSC, tours, OBC, etc??

[sparks1093]

I don't understand all of the "upscale" talk. NCL is nowhere near being upscale. The suites are the cheapest of any of the mainstream lines ... so I don't get that theory at all. I think FDR is trying to keep the initial costs down, while milking passengers once they get on board.

 

NCL is nowhere being upscale, yet, but Del Rio's vision wants to make it so. At least that is my take away (I can not remember if he said as much in the interview that I read or if it was reading between the lines).

[fshagan]

not always the case. I had a problem with RCI which they refused to deal with. I posted on RCI's facebook page and got enough replies not in RCI's favor that they called me and finally rectified the situation to my satisfaction.

 

So in my case complaining on the internet wasn't worthless.

 

I think there's a difference between a customer with a specific grievance based on a recent experience and a forum full of people complaining about changes they haven't experienced yet.

[eroller]

 

Del Rio wants to move NCL from a mainstream line in competition with RCI and CCL into an upscale line competing with Celebrity (an Oceania-lite type of cruise line).

 

 

I don't think this is the case. NCL will always be a mass-market line (contemporary market in cruise-line speak). The NCL ships are large and high density and that is not changing. Upscale and premium mean more space per passenger, a higher crew to pax ratio, and lower density. That won't be happening at NCL. Royal Caribbean, MSC, and Carnival will remain NCL's primary competitors.

 

I do see Del Rio attempting to generate more revenue by making the product appear more inclusive. He accomplishes this by raising ticket prices, but including value-adds like Ultimate Dining or a shore excursion credit. This is nothing ground breaking as all the cruise lines are doing the same in a major attempt to increase yields. He is even going as far as making NORWEGIAN SKY almost all-inclusive. Personally I think this will backfire as I can't imagine the small increase in ticket prices will compensate for the lost onboard revenue. These are booze cruises after all and liquor sales probably account for more revenue than the ticket price. Also the short cruise market is highly competitive so the prices can't be raised much higher than the competition or people will simply book Carnival & Royal Caribbean (even though they don't have alcohol included).

 

So far most the changes I've seen since FDR took over NCL would appear to have minimal financial gain for the company, but a large negative impact for customer perception. Chipping away at the product experience for minimal financial gain. Not a good strategy so far.

Edited May 9, 2015 by eroller

[NLH Arizona]

They found their niche under Sheehan. Del Rio has a different vision and wants to attain a different niche. I have cruised with NCL and I liked NCL the way that it was. It saddens me that Del Rio took over, but yes, change does happen. I will enjoy the cruises that I take with whatever cruise line I take them, even if it does turn out to be NCL as doubtful as that looks right now.

 

Like I said, I don't think a change from their niche would work. NCL is know as being a lower priced cruise line (on Celebrity's threads, they have even called it a highly budgeted cruise line) and it would take an awful lot of changes to change the perception of the public, not to mention what they would have to do on the ships to change the onboard experience to equal that of a higher status type line. I also just love cruising, be it on NCL, Celebrity or Crystal. IMHO, there are no bad cruises.

[SteveH2508]

What counts a sale / profit? He is stating the quarterly profits show an increase. Are the profits new bookings? Or are profits once the fare is paid in full? If a booking counts as a profit, then it seems FDR allowed the free UBP and UDP to continue to drive up the numbers. It may not be coincidence that the promotion ended at the same time the quarter ended ... you know?

 

If he is counting those new bookings as profits then that is a serious accounting no-no.

 

The prudence concept does not allow you to realise profits until they are crystallised i.e. there is a payment or legally enforceable demand for payment (e.g. an invoice). Until final payment is made there is no guarantee that the booking will crystallise into a confirmed payment. Anticipating profits like this could lead to serious problems (Google Tesco in the UK for an example).

[sparks1093]

I don't think this is the case. NCL will always be a mass-market line (contemporary market in cruise-line speak). The NCL ships are large and high density and that is not changing. Upscale and premium mean more space per passenger, a higher crew to pax ratio, and lower density. That won't be happening at NCL. Royal Caribbean, MSC, and Carnival will remain NCL's primary competitors.

 

I do see Del Rio attempting to generate more revenue by making the product appear more inclusive. He accomplishes this by raising ticket prices, but including value-adds like Ultimate Dining or a shore excursion credit. This is nothing ground breaking as all the cruise lines are doing the same in a major attempt to increase yields. He is even going as far as making NORWEGIAN SKY almost all-inclusive. Personally I think this will backfire as I can't imagine the small increase in ticket prices will compensate for the lost onboard revenue. These are booze cruises after all and liquor sales probably account for more revenue than the ticket price. Also the short cruise market is highly competitive so the prices can't be raised much higher than the competition or people will simply book Carnival & Royal Caribbean (even though they don't have alcohol included).

 

So far most the changes I've seen since FDR took over NCL would appear to have minimal financial gain for the company, but a large negative impact for customer perception. Chipping away at the product experience for minimal financial gain. Not a good strategy so far.

 

Like I said, I don't think a change from their niche would work. NCL is know as being a lower priced cruise line (on Celebrity's threads, they have even called it a highly budgeted cruise line) and it would take an awful lot of changes to change the perception of the public, not to mention what they would have to do on the ships to change the onboard experience to equal that of a higher status type line. I also just love cruising, be it on NCL, Celebrity or Crystal. IMHO, there are no bad cruises.

 

It may or may not work, I personally don't know if it will. But that doesn't mean that isn't the vision that Del Rio has or that is what his goal for NCL ultimately is, regardless of how NCL is now perceived. All I know is that in the process of changing I am unlikely to sail with NCL (as I have said on other threads I look at the cost of the fare in deciding whether or not to sail, you can "include" all the "freebies" that you want to and if it increases the cost I'll not be falling for it, and I've also said that I've no interest in cruising on Oceania-lite).

[NLH Arizona]

It may or may not work, I personally don't know if it will. But that doesn't mean that isn't the vision that Del Rio has or that is what his goal for NCL ultimately is, regardless of how NCL is now perceived. All I know is that in the process of changing I am unlikely to sail with NCL (as I have said on other threads I look at the cost of the fare in deciding whether or not to sail, you can "include" all the "freebies" that you want to and if it increases the cost I'll not be falling for it, and I've also said that I've no interest in cruising on Oceania-lite).

A lot of business have a goal that they never achieve and I would say NCL is in that boat (pun intended). Everyone has to make their own decisions, yours is to not sail with them; I always admire someone who stands by their convictions. Hope you have many more wonderful cruises, no matter which cruise line you choose to sail on. I'll also miss your posts on here, since I've enjoyed them and have garnered a lot of good information from them.

[DaytonCruiser]

If I was going to implement some non customer friendly policies,it might be smart/shrew/sneaky to offer several customer friendly booking options such as "free" UDP,UBP,DSC,OBC to both boost booking numbers and soften the blow.

 

I'm just wondering what's next.

Edited May 9, 2015 by DaytonCruiser

[Casino Comp Chick]

If onboard spending is so important to NCL, how do you explain their promotions in which they gave as booking bonuses -- drinks, specialty restaurant meals, DSC, tours, OBC, etc??

 

Easy, He wanted his first quarter earnings report to show a jump in bookings so he would look good to the Board of Directors and the investors.

Edited May 9, 2015 by iimmie

[LrgPizza]

I think there's a difference between a customer with a specific grievance based on a recent experience and a forum full of people complaining about changes they haven't experienced yet.

This. There are so many posts here with people going off about the negative changes, and there are still plenty of posts showing up from people who just got off a ship and had a great trip. In the long run, that's the bottom line.

[Cindy]

Like I said, I don't think a change from their niche would work. NCL is know as being a lower priced cruise line (on Celebrity's threads, they have even called it a highly budgeted cruise line) and it would take an awful lot of changes to change the perception of the public, not to mention what they would have to do on the ships to change the onboard experience to equal that of a higher status type line.

 

Premium/upscale cruise lines don't have things like slides, rock-climbing walls, cutesy artwork on the hull, ropes courses, bungee jumping, and huge ships carrying thousands of people in tight quarters. What many of them do have, and what FDR seems to be trying to emulate, is an all-inclusive product.

 

Changing one or two aspects of the NCL product won't make it a premium cruise line. IMO, Norwegian is firmly entrenched in the mass market segment of the cruise industry, and to change the product they'd almost have to scrap everything -- including their ships -- and start from scratch.

[coldflame]

If he is counting those new bookings as profits then that is a serious accounting no-no.

 

The prudence concept does not allow you to realise profits until they are crystallised i.e. there is a payment or legally enforceable demand for payment (e.g. an invoice). Until final payment is made there is no guarantee that the booking will crystallise into a confirmed payment. Anticipating profits like this could lead to serious problems (Google Tesco in the UK for an example).

 

They might not count those as profit insofar as financial statements is concerned; but they sure have a lot of historical data and based on current bookings they can make sound statistical projections in terms of revenue for the next 6-12 months. Lot of companies do this since it helps them figure out where they are at and what if anything needs changing. It's common practice.

 

The way the system breaks is mass exodus/cancellations. But I can almost guarantee you, it won't happen, not even if they make people draw blood upon entering the ship.

[coldflame]

not always the case. I had a problem with RCI which they refused to deal with. I posted on RCI's facebook page and got enough replies not in RCI's favor that they called me and finally rectified the situation to my satisfaction.

 

So in my case complaining on the internet wasn't worthless.

 

Bill

 

They solved a customer service issue, which what good social media teams do. I think I have said this at least three times in this thread: there's a subtle but supremely important difference better customer help/service and policy changes. Huge difference how it's treated internally at HQs and the escalation therein.

 

Same as complaining on the Internet your congress person or President is not voting the way you want or supporting favorable legislation. Worthless unless you call, fax or send physical mail.

 

With companies, phone call + email, for policy questions will get answered and dealt with so much faster than complaining in these forums (or any other forums).

[coldflame]

I think you're dreaming. Most times when an irate person calls, they say the supervisor/manager or whatever is out of the office and take your number. You're lucky if you hear back the next day. Social Media is such a huge deal because complaints reach thousands or sometimes millions of people.

 

The person on the phone is just one, and add in the 5 people they told because they were mad = very limited impact.

 

If one person calls, yes, this is what happens. I think you forgot to read the part when I said "your phone switchboard lit up" that means the same hundreds of people crying rivers here, do the same on the phone, trust me, you're taking very valuable time from them, it will (and it does) go up the chain very, very, very fast.

[sparks1093]

A lot of business have a goal that they never achieve and I would say NCL is in that boat (pun intended). Everyone has to make their own decisions, yours is to not sail with them; I always admire someone who stands by their convictions. Hope you have many more wonderful cruises, no matter which cruise line you choose to sail on. I'll also miss your posts on here, since I've enjoyed them and have garnered a lot of good information from them.

 

Thank you and I know that you will enjoy your cruises just as much as I will. I am hoping that the changes are not so drastic as to change the feel of NCL and that I will be able to book with them to see for myself but if there continues to be an $800 difference between NCL and the competition it's unlikely that I'll book.

[jjikids]

We also just emailed NCL. We usually stay in suites so some of the changes don't pertain to us but we still are appalled at those changes. We asked why Norwegian was biting the hands of those who feed them. As to why, Mr Del Rio felt there were no complaints we stated we only found out by Cruise Critic. Norwegians website does not mention all the changes and those that they do are in the fine print. We stated that Celebrity wants us back. We do have a cruise booked but are waiting to see what will happen in the future.

[DGP1111]

. . . So far most the changes I've seen since FDR took over NCL would appear to have minimal financial gain for the company, but a large negative impact for customer perception. Chipping away at the product experience for minimal financial gain. Not a good strategy so far.

 

I think that's an excellent synopsis.

 

.

[russianmom]

http://www.miamiherald.com/news/business/tourism-cruises/article20412618.html

 

Del Rio said Norwegian will reinvest $20 million of that money in sales and marketing efforts to drive demand and in improvements to the product on Norwegian Cruise Line ships.

 

“We do think that the Norwegian brand could improve from where it is today,” he said.

 

Even without those improvements, he said advance reservations for Norwegian ships are robust, with the booked load factor for 2016 roughly double what it was for 2015 at the same time last year.

 

“The necessary condition in my view of being able to raise prices and per diems, and therefore yields, is load factor,” Del Rio said. “When you’re as well booked into the future as we are at this point, that bodes very well for constant increases in pricing.”

 

In a note to investors, Morningstar analyst Jaime Katz noted the strong advance bookings, both for existing Norwegian capacity and for new ships coming to the Norwegian, Oceania and Regent brands.

 

“All this commentary indicates that close-in inventory should be better positioned this year versus the prior year, alleviating the need to add additional value to the cruising proposition closer in,” she wrote. “Since the Prestige acquisition, we think Norwegian is uniquely positioned to capitalize on the premium market segment, which tends to be more receptive to price increases that are tied to better product, and an improved value proposition.”

 

Read more here: http://www.miamiherald.com/news/business/tourism-cruises/article20412618.html#storylink=cpy