NCL income up 217%, Food & Service budget increase?

[wilmingtech]

NCL has gone from a net income of (-482.48M) in Dec 22 to a +345.87M in the 3rd quarter of this year (2023).

 

How long will it take for that to trickle down to increased service and food quality on the ships? 

I understand the reason for the cutbacks but now with the cruise industry booming, will more of that addl profit go to new ships and expansion of the company with the current cutbacks being the "new normal" or will they focus on improving quality of food and service on the ships to retain the clientele?

[tgloersen]

Good Question, wish i had an answer worth posting.

[shof515]

they will be more cutbacks, increase in pricing and overall quality decline. all of the extra money will go towards shareholders and other higher corporation people. this always happens to every company. 

[laudergayle]

1 minute ago, shof515 said:

they will be more cutbacks, increase in pricing and overall quality decline. all of the extra money will go towards shareholders and other higher corporation people. this always happens to every company. 

Until you start losing market share because your price:value relationship is rejected by potential cruisers. At which point, they will begin to make trade-offs between shareholders/corporate and guest experience.  But, then again, NCL could take the leadership position and start adding value back sooner to grow market share first.  

[graphicguy]

I know they’re getting ready to launch the Aqua, and have already launched the Prima and Viva since the restart.  

 

From what I can tell, they’re moving away from the typical Buffet and MDR types of offerings on their new ships and working towards having smaller, more focused food offerings in a cafe type of environment.  I don’t know if that costs more or less, though.

 

Not sure, but I think I’ll like those changes.

 

They’re letting entertainment contracts expire on their big shows and getting ready to roll out more internally developed shows…..some smaller (e.g. Rumours in Syd Norman’s), some bigger (rumblings about Cirque “type” shows in the main theaters).  Will that cost more or less?  I would have to think not paying the royalty fees for broadway and east end type productions would be less expensive.  Remains to be seen if their internally developed shows are as good.

 

To me, service has always been really good.  So, haven’t seen a drop off there.  I know some got their panties in a bunch over not having 2X/day cabin service.  But to me, that’s a nothing burger.

 

I feel the food is still quite good at ALL venues, too.

 

So, good to see them in the black.  But, they’re still spending tons on new ships and reworking itineraries (for the better).

[skittl1321]

28 minutes ago, shof515 said:

they will be more cutbacks, increase in pricing and overall quality decline. all of the extra money will go towards shareholders and other higher corporation people. this always happens to every company. 

It's a CEO's job to increase value to shareholder.

The only reason to consider the customer is because you have to gain them/keep them and not lose them to competitors.   But as long as they can drive profits, that's the goal of a business. That's why it happens in every company/

[laudergayle]

10 minutes ago, graphicguy said:

I know they’re getting ready to launch the Aqua, and have already launched the Prima and Viva since the restart.  

 

From what I can tell, they’re moving away from the typical Buffet and MDR types of offerings on their new ships and working towards having smaller, more focused food offerings in a cafe type of environment.  I don’t know if that costs more or less, though.

 

Not sure, but I think I’ll like those changes.

 

They’re letting entertainment contracts expire on their big shows and getting ready to roll out more internally developed shows…..some smaller (e.g. Rumours in Syd Norman’s), some bigger (rumblings about Cirque “type” shows in the main theaters).  Will that cost more or less?  I would have to think not paying the royalty fees for broadway and east end type productions would be less expensive.  Remains to be seen if their internally developed shows are as good.

 

To me, service has always been really good.  So, haven’t seen a drop off there.  I know some got their panties in a bunch over not having 2X/day cabin service.  But to me, that’s a nothing burger.

 

I feel the food is still quite good at ALL venues, too.

 

So, good to see them in the black.  But, they’re still spending tons on new ships and reworking itineraries (for the better).

I agree with your comments about NCL reinventing their guest proposition.  More creative ways to deliver the food experience with on-demand concepts like Indulge….surely the reduction of waste has to be more cost efficient.  Wish they would turn Food Republic to non-specialty dining!  
 

Also, waiting with open arms, the introduction of new in-house entertainment options.  And, I hope it’s more than the addition of WOF.
 

 

[graphicguy]

40 minutes ago, laudergayle said:

I agree with your comments about NCL reinventing their guest proposition.  More creative ways to deliver the food experience with on-demand concepts like Indulge….surely the reduction of waste has to be more cost efficient.  Wish they would turn Food Republic to non-specialty dining!  
 

Also, waiting with open arms, the introduction of new in-house entertainment options.  And, I hope it’s more than the addition of WOF.
 

 

Agree....WOF would be a let down if that's the only entertainment in the main theater.

Edited November 3, 2023 by graphicguy

[wolft927]

When I worked on board NCL from 2002 to 2007, Smaller Ships had Production Shows by " NCL Productions" and the larger ships had " The Jean Ann Ryan company". They were typical Cruise ship Style Productions shows for that time period and I am sure cost way less then Certain Main Shows on Current Ships. On a 7 day run, there would be 3 production shows the rest were Guest Entertainers from Comedians, Vocalists, Magicians and other Prop Comedy Acts. I for one would love to see more Guests Entertainers. 

 

[9tee2Sea]

I cant believe I haven't seen this answer on this thread.  I bet if NCL wanted to increase traffic with the higher profits, they can do away with the mandatory daily service fee .  Imagine the publicity created if NCL paid higher wages to their onboard workers that rely on the service fee.  I know, you take into account food and lodging that is provided ( which is part of the wage computation), but with world wide workers demanding higher wages, NCL can beat them to the punch.    

[graphicguy]

44 minutes ago, skittl1321 said:

It's a CEO's job to increase value to shareholder.

The only reason to consider the customer is because you have to gain them/keep them and not lose them to competitors.   But as long as they can drive profits, that's the goal of a business. That's why it happens in every company/

Therein lies the balancing act.  Drive shareholder value while increasing customer satisfaction and in turn, increasing revenue as a result.

 

There's way too much choice available in the market for any of the cruise lines to concede customers.

 

They've all carved out their niche and tweak it.  But overall, they don't want to lose what they already have.

 

Royal and NCL are battling it out for the same customer.

 

MSC and Carnival are battling it out for their similar focus.

 

HAL, Celebrity and Princess are going after the same customer base a ½ step above NCL and Royal.

 

Then, there are the "high buck" cruise lines like Oceania, Viking and Seaborne.

 

Cunard slices the pie even thinner for those who want to cruise more formal.

 

That brings me to Virgin.  Not quite sure what to make of them.  When they rolled out, they were one thing (young, hip).  Now, I think they're something else to appeal to a wider audience.  I just don't know what that is.

 

Again, this is just an opinion but I've sailed, HAL, Carnival, Celebrity, Royal, and NCL.  So, it's  my exalted view from my well worn Barco-Lounger.

[graphicguy]

4 minutes ago, 9tee2Sea said:

I cant believe I haven't seen this answer on this thread.  I bet if NCL wanted to increase traffic with the higher profits, they can do away with the mandatory daily service fee .  Imagine the publicity created if NCL paid higher wages to their onboard workers that rely on the service fee.  I know, you take into account food and lodging that is provided ( which is part of the wage computation), but with world wide workers demanding higher wages, NCL can beat them to the punch.    

Yeah....but then we go back to the days where I was tipping everyone I interface with, even peripherally.  I don't want to go back to that.

 

I used to keep a wad of singles in my pocket every day for such occurrences.  Don't want to do that, again.

 

 

[davencl]

Net income is mentioned.  What does that mean for profit?

Edited November 3, 2023 by davencl

[ontheweb]

5 minutes ago, davencl said:

Net income is mentioned.  What does that mean for profit?

It has to help that income is going up, but there still is the large debt caused by the Covid shutdown.

[wilmingtech]

2 hours ago, 9tee2Sea said:

I cant believe I haven't seen this answer on this thread.  I bet if NCL wanted to increase traffic with the higher profits, they can do away with the mandatory daily service fee .  Imagine the publicity created if NCL paid higher wages to their onboard workers that rely on the service fee.  I know, you take into account food and lodging that is provided ( which is part of the wage computation), but with world wide workers demanding higher wages, NCL can beat them to the punch.    

 

Sadly it comes down to how the dollar looks on paper.  On my next cruise I got a decent deal on a balcony for 2300 (4 of us) and then it'll cost me another ~500 for tips.  I think marketing wise if I had an opportunity to jump on a balcony for 2800 and tips were not allowed (Drinks, dining or otherwise) it would be a competitive offer and I think I'd prefer that environment.

 

But on the corporate side taxes and the lighter burden on business overall by calling them "Gratuities" is going to be really hard to separate from the current environment

[BirdTravels]

4 hours ago, wilmingtech said:

NCL has gone from a net income of (-482.48M) in Dec 22 to a +345.87M in the 3rd quarter of this year (2023).

 

How long will it take for that to trickle down to increased service and food quality on the ships? 

I understand the reason for the cutbacks but now with the cruise industry booming, will more of that addl profit go to new ships and expansion of the company with the current cutbacks being the "new normal" or will they focus on improving quality of food and service on the ships to retain the clientele?

The minuscule net profit barely scratches the costs incurred during the pandemic shutdown. A unfair shutdown that was not imposed on any other industry anywhere. 
 

Additional cut backs are forthcoming. Every department has their cost reductions quotas to meet. You have not seen the “new normal” yet. 
 

If you didn’t notice, NCLH stock tanked because they underperformed their projections. 

Edited November 3, 2023 by BirdTravels

[graphicguy]

9 minutes ago, BirdTravels said:

The minuscule net profit barely scratches the costs incurred during the pandemic shutdown. A unfair shutdown that was not imposed on any other industry anywhere. 
 

Additional cut backs are forthcoming. Every department has their cost reductions quotas to meet. You have not seen the “new normal” yet. 
 

If you didn’t notice, NCLH stock tanked because they underperformed their projections. 

I think the guidance was more a reflection of removing Middle East itineraries from NCL’s revenue plans!

 

That’s a temporary situation!

Edited November 3, 2023 by graphicguy

[Mojito85]

14 minutes ago, BirdTravels said:

The minuscule net profit barely scratches the costs incurred during the pandemic shutdown. A unfair shutdown that was not imposed on any other industry anywhere. 
 

Additional cut backs are forthcoming. Every department has their cost reductions quotas to meet. You have not seen the “new normal” yet. 
 

If you didn’t notice, NCLH stock tanked because they underperformed their projections. 

Are they going bankrupt?

[Yesimapirate]

3 hours ago, laudergayle said:

Until you start losing market share because your price:value relationship is rejected by potential cruisers. At which point, they will begin to make trade-offs between shareholders/corporate and guest experience.  But, then again, NCL could take the leadership position and start adding value back sooner to grow market share first.  

And yet the airlines,  which have been a downward spiral in service since deregulation, are more full than ever.

 

It seems like many here let there personal feelings overshadow basic economics.   The cruise lines are sailing at record capacity and ADR.  They aren't losing share.  For every person who complains they'll never sail that line again,  there are more people to replace them.   There is absolutely no economic reason to increase services. 

 

Services will increase and costs will drop when there are empty rooms.  A recession is when the customer has power, not during a boom.

[Langham1865]

I think we will see more for fee game shows (deal or no deal style), possibly in the main theater, and fewer production shows, as they generate revenue.  I really hope they keep the Broadway shows like Jersey Boys and Six.   I hope they don't cut the Broadway shows completely, as I would imagine many passengers enjoy them and there might be an uproar if they are cut completely.  

 

I think @BirdTravels is right, they've barely scratched the surface of what costs were incurred during the pandemic.  It may be some time before they really put a dent in it.  

[laudergayle]

22 minutes ago, Yesimapirate said:

And yet the airlines,  which have been a downward spiral in service since deregulation, are more full than ever.

 

It seems like many here let there personal feelings overshadow basic economics.   The cruise lines are sailing at record capacity and ADR.  They aren't losing share.  For every person who complains they'll never sail that line again,  there are more people to replace them.   There is absolutely no economic reason to increase services. 

 

Services will increase and costs will drop when there are empty rooms.  A recession is when the customer has power, not during a boom.

Agreed.  My comment wasn’t implying a market drop, at least not yet.  However, even at current rate x occupancy (RevPAC), there is always market share shift. To gain more share than your competitors you have to have a more attractive or compelling value proposition.  That being said, I don’t believe NCL is finished with their cost cutting yet.  

[hallux]

28 minutes ago, Langham1865 said:

I really hope they keep the Broadway shows like Jersey Boys and Six.

Six is already on the way out.

https://www.cruisecritic.com/news/norwegian-cruise-line-set-to-discontinue-7-stage-productions

I am, fortunately, on one of the last sailings with Six - I disembark the Bliss on Feb. 11

[julig22]

40 minutes ago, Langham1865 said:

I think @BirdTravels is right, they've barely scratched the surface of what costs were incurred during the pandemic.  It may be some time before they really put a dent in it.  

Not only are they probably still trying to recoup pandemic losses, the cost of everything has gone up, especially food. 

[IAcruising]

6 hours ago, wilmingtech said:

How long will it take for that to trickle down to increased service and food quality on the ships? 

 

It will take until capacity drops significantly. Running at 106% gives no cruise line any incentive to change.

 

[graphicguy]

2 hours ago, hallux said:

Six is already on the way out.

https://www.cruisecritic.com/news/norwegian-cruise-line-set-to-discontinue-7-stage-productions

I am, fortunately, on one of the last sailings with Six - I disembark the Bliss on Feb. 11

Personally, was not a fan of SIX.

 

On a couple behind the scenes tours conducted by the stage director, both mentioned that there were shows in rehearsal in their FL HQ that were original.

 

That told me two things.  First, NCL won't have to pay for the big production shows via hefty licensing fees.  2nd, they can craft the shows to their ships, vs crafting the ship's theaters to the shows.

 

The question is, will those internally developed shows be as good as the ones that have a contract expiring?

 

I think there's no doubt they'll. be cheaper to produce.

Edited November 3, 2023 by graphicguy