NCL stock...actually (NCLH)...tanking today.

[ChiefMateJRK]

On 5/2/2024 at 11:25 AM, PartyPlannerLady said:

Now try explaining fixed and variable cost to everyone and the implications of each.  I bet very few will get it

Really?  Just about anybody who went to college took economics 101.  You're not the only educated person on this forum.

[SeaShark]

28 minutes ago, ChiefMateJRK said:

Really?  Just about anybody who went to college took economics 101.  You're not the only educated person on this forum.

 

Well, taking the class does not guarantee that the student retains working knowledge. You don't have to spend much time on these boards to see just how few people actually understand the economics of cruising.

[mistertomatoe]

Check out the latest ad:

 

[Panhandle Couple]

6 hours ago, BrianLo said:

 

For the moment, it doesn't look like they are reducing the variety, but diluting.

 

All new product through 2026 are being added to the Caribbean market. Rather than seemingly them shifting ships back. The Caribbean market inherently has shorter cruises so I think that also reduced their lengths of cruises fleet wise by dilution.

When Aqua arrives, that is 3 new ships in ~ 3 years.

Each ship has 3 ports per week (maybe more), that is 156 news port calls per year.  3 ships = 468 new port calls in a relatively short time.  They may have to double and triple up on the more popular and easier to reach ports.

 

Since cruising in Europe in the winter is not profitable, more ports in warmer weather need to fill at least 1/2 of those new port calls.  By their own statistics, 85-89% of their customer base is from the US.  No other country exceeds 10%.  Most US customers don't have the time and money to fly to Europe.  But they can afford flights inside the US, or simply drive to the port. 

 

There are many places NCL occasionally sails to, but not frequently or regularly.

St Maarten, St Kitts, Barbados, Aruba, Turks & Cacos, Martinique, etc. 

They don't use San Juan as a terminal regularly, and I think are adding Jacksonville next year.

They had a plan to use Panama City, Panama as a terminal, and it might happen, since the terminal there is nearing completion.  Those would cruise the west coast of S America; Ecuador, Peru and Chile. (I would certainly go on that cruise) 

 

The key is they do have room for "expansion" without simply visiting the same ports over and over.

[cruiseny4life]

Rather than starting a new post, I figured it would be best to just add my thoughts here, given the conversation trending toward NCLH, overall.

 

I'm not sure this came out as part of Investor Day. I'm not a shareholder...well, if I get deep into the ETF's I hold, maybe I have some NCLH, but that doesn't entitle me to the shareholder OBC. I don't think. Anyway!!

 

Here is what I found to be an interesting article from Cruise Industry News.

 

https://cruiseindustrynews.com/cruise-news/2024/05/norwegian-cruise-line-holdings-laser-focused-on-cost-management/

 

Interesting? Because it seems to confirm my explicit bias that I need to continue my hold on booking NCL. Despite all the cuts that have occurred, NCLH is going to continue cutting. A "culture of cutting" is what NCLH is going for. You tell me that building a culture where cutting is the first thought doesn't damage the guest's experience and I'll certainly not believe a word you say.

 

Highlights from the article - for me:

 

- A total of $300,000,000 will be cut

- 2/3's of these dollars will come from ship operating costs

- NCLH will build a "muscle" to remove waste

 

So, I'll continue to hold on to my CruiseNext certificates. Two won't break the bank, thankfully.

 

I'm a bit concerned with the number of longtime posters on these boards that have just wrapped up a cruise and have stated they have cancelled future cruises. I'm also concerned with what Q1 of next year will bring. I'll keep on venturing to the NCL boards, discussing the great, the murky, and hopefully feel comfortable enough to book a cruise. I have enough vacation time for my October road trip and a cruise now. Maybe (but likely not), that extra vacation time will be used for a cruise (still not venturing to other lines, unless it's one like Uncruise).

[erisajd]

consider also for a moment that while they have ships on order  [and the associated hit to the bottom line in the short term] they're sailing mostly full - so growth in the short term is also limited which explains the hit to the share price.  3-5 years its a buy - short term you're not gonna see much growth.  

[richstowe]

Mark Kempa, CFO of Norwegian Cruise ,“Let me be loud and clear. We are laser focused on cost management,” with a goal of $300 million of savings over the next three years.

I'm sure they will. Sounds like a promise of more cost cutting and treating their customers like a piñata.  

[9tee2Sea]

its all a swing of the pendulum.  If they go far away from what cruisers expect, they will suffer by loss of cabins sold.  If they go too cheap on prices, then they will feel they are giving things away and that's why everything is sold out.  If other cruise lines start taking away cruisers, NCL will figure out why, and make it  competitive for active cruisers.  I think taking away the big production shows will help trim expenses.  MAYBE NCL can invest in technology ( and royalties) to broadcast LIVE Broadway shows in the theatre  I would pay $20.00 in the theatre to see a Broadway show that costs over 300.00 in person 

[cruiseny4life]

41 minutes ago, 9tee2Sea said:

its all a swing of the pendulum.  If they go far away from what cruisers expect, they will suffer by loss of cabins sold.  If they go too cheap on prices, then they will feel they are giving things away and that's why everything is sold out.  If other cruise lines start taking away cruisers, NCL will figure out why, and make it  competitive for active cruisers.  I think taking away the big production shows will help trim expenses.  MAYBE NCL can invest in technology ( and royalties) to broadcast LIVE Broadway shows in the theatre  I would pay $20.00 in the theatre to see a Broadway show that costs over 300.00 in person 

And, unfortunately (for passengers) the pendulum is absolutely on the side of the cruise lines. Occupancy rates on cruises are at all time highs, advanced bookings are really high, and (unlike air travel) there isn't any sign of this stopping. Fares are also at all time highs. Cruise lines won't stop hiking fares until passengers decrease their bookings. And, until the passengers start sounding an alarm on the cuts, the cuts will keep on coming. Why stop if fares are at record highs and bookings are at record levels? I get why the lines are doing this. I just don't like it, because I appreciate purchasing an experience that is actually delivered (rather than cut by the time I take the voyage).

Edited May 21 by cruiseny4life

[Menocchio]

53 minutes ago, 9tee2Sea said:

 MAYBE NCL can invest in technology ( and royalties) to broadcast LIVE Broadway shows in the theatre  I would pay $20.00 in the theatre to see a Broadway show that costs over 300.00 in person 

The technology exists. Lots of events are streamed live to movie theaters all over the world. The Metropolitan Opera does it. The only reason Broadway shows don't do this often is because they don't want to. (For several reasons)

 

Personally, I'd hate it. I'm not flying across the country and paying thousands of dollars to watch a movie. It would make the cruise much less appealing. Though I still might cruise if it was a just a good place to sleep and transportation between interesting ports. But NCL is also getting less reliable in meeting its itineraries. So there's that. 

[RocketMan275]

1 hour ago, 9tee2Sea said:

MAYBE NCL can invest in technology ( and royalties) to broadcast LIVE Broadway shows in the theatre  I would pay $20.00 in the theatre to see a Broadway show that costs over 300.00 in person 

Would work sometimes but don't forget there is an issue with time zones.

[Panhandle Couple]

10 hours ago, richstowe said:

Mark Kempa, CFO of Norwegian Cruise ,“Let me be loud and clear. We are laser focused on cost management,” with a goal of $300 million of savings over the next three years.

I'm sure they will. Sounds like a promise of more cost cutting and treating their customers like a piñata.  

People are forgetting that each quarter is almost 2 BILLION in business.

 

300/3 = 100 million per year required savings

100/4 = 25 million per qtr. required savings

2/3 from ship operating costs * 25 = 16.5 million

(assuming then 1/3 comes from shoreside operations)

 

1st qtr 2024 "ship operating costs depends on which line they are referring to.

 

Gross cruise cost = 1.75 Billion

Net Cruise cost excluding fuel = 983 million, the more likely number.

 

16.5 / 983 = 1.7 %

 

What CEO talking to shareholders won't say they can't cut cost by 2%?

 

(shore side 8.5/568 = 1.5 %)

 

So, how does this compare to the cruise population?

736,559 passengers

16,112,370 passenger cruise days

 

Per passenger = 16,500/737 = $22.39 per cruise

Per passenger day  16,500/16,112 = $1.02 per day.

 

[richstowe]

16 minutes ago, Panhandle Couple said:

Per passenger = 16,500/737 = $22.39 per cruise

Your point? If it's that 300 million translates to only $22 per cruise I'd say there are lots of ways the experience can be lessened for that amount. For instance, how much does eliminating Broadway shows save them? I'm betting much less then that.

[Panhandle Couple]

6 minutes ago, richstowe said:

Your point? If it's that 300 million translates to only $22 per cruise I'd say there are lots of ways the experience can be lessened for that amount. For instance, how much does eliminating Broadway shows save them? I'm betting much less then that.

Well, $22 * 4000 passengers (BA/BA+) = $88,000.  Eliminating a Broadway show probably saves a lot more than that.

 

But, taking away the casino card tables that no one ever uses, and the pay for the dealers (say 4) manning them easily saves (and I have no idea on wages paid) 

$25,000 wages / yr * 4 = $100,000.

$100,000/52 = $1923 / wk

 

1923/4000 = $0.48 $.wk/passenger / 7 days = $.069 per passenger day.  Already 6% of the $1.02 per passenger day required.  I would never miss those employees, and I think hardly anyone else will.  (OK casino is contracted out, but somewhere that contract will be reduced.)

That doesn't factor in the on-board cost of food, etc for those people. 

 

 

[richstowe]

3 minutes ago, Panhandle Couple said:

Well, $22 * 4000 passengers (BA/BA+) = $88,000.  Eliminating a Broadway show probably saves a lot more than that.

Except they don't get rid of a show. They eliminate paying royalties on a brand name show. Even a no-name show pays music royalties, staff, and production costs. I have no idea if the difference between the two is 88 thousand a week. But that's getting into the weeds. My point is that Norwegian has always been "laser focused on cost management" and this is just more on more cuts.

[dexddd]

You can do all the math you want, but FDR got the $5.00 plus many times over many years ago.  

[Panhandle Couple]

15 hours ago, richstowe said:

Except they don't get rid of a show. They eliminate paying royalties on a brand name show. Even a no-name show pays music royalties, staff, and production costs. I have no idea if the difference between the two is 88 thousand a week. But that's getting into the weeds. My point is that Norwegian has always been "laser focused on cost management" and this is just more on more cuts.

What S&P 500 company will admit to NOT being focused on cost mgmt?

My point is that relatively small changes add up on a weekly basis, fleet wide.  If that change is permanent (maybe reduce the amount of slot machines that no plays) then the savings are year over year.  And the savings goal isn't far fetched.

[BirdTravels]

On 5/21/2024 at 11:36 AM, richstowe said:

Mark Kempa, CFO of Norwegian Cruise ,“Let me be loud and clear. We are laser focused on cost management,” with a goal of $300 million of savings over the next three years.

I'm sure they will. Sounds like a promise of more cost cutting and treating their customers like a piñata.  

NCLH is a publicly traded company. Seriously, what else would you expect the CFO or the CEO to say????? This is not a commercial to get more passengers. This is a message to the market analysts and the shareholders.

[Buford T Justiice]

21 hours ago, Panhandle Couple said:

People are forgetting that each quarter is almost 2 BILLION in business.

 

300/3 = 100 million per year required savings

100/4 = 25 million per qtr. required savings

2/3 from ship operating costs * 25 = 16.5 million

(assuming then 1/3 comes from shoreside operations)

 

1st qtr 2024 "ship operating costs depends on which line they are referring to.

 

Gross cruise cost = 1.75 Billion

Net Cruise cost excluding fuel = 983 million, the more likely number.

 

16.5 / 983 = 1.7 %

 

What CEO talking to shareholders won't say they can't cut cost by 2%?

 

(shore side 8.5/568 = 1.5 %)

 

So, how does this compare to the cruise population?

736,559 passengers

16,112,370 passenger cruise days

 

Per passenger = 16,500/737 = $22.39 per cruise

Per passenger day  16,500/16,112 = $1.02 per day.

 

 

Could you break this down so even I could understand it?

 

How many cookies, Chocolate covered strawberries and hash browns does this equate to?

[luv2kroooz]

17 hours ago, BirdTravels said:

NCLH is a publicly traded company. Seriously, what else would you expect the CFO or the CEO to say????? This is not a commercial to get more passengers. This is a message to the market analysts and the shareholders.

So, the analysts adjust their price target based on this and when NCLH misses the mark, as it did recently with revenues, the stock tanks and people blame the analysts for having unrealistic expectations. Hahaha! Turn a blind eye to falsehoods spewed by Dirty Harry Sommer and company. The hypocrisy on these boards is second to none.

[ChiefMateJRK]

9 hours ago, luv2kroooz said:

The hypocrisy on these boards is second to none.

You must not be on many boards....

[luv2kroooz]

14 minutes ago, ChiefMateJRK said:

You must not be on many boards....

Second to none.

[BrianLo]

On 5/21/2024 at 7:38 PM, richstowe said:

Your point? If it's that 300 million translates to only $22 per cruise I'd say there are lots of ways the experience can be lessened for that amount. For instance, how much does eliminating Broadway shows save them? I'm betting much less than that.

They used the example of duplicated onboard casts. Removing SIX opened up 10 revenue cabins being occupied by the cast. Which isn’t entirely Insignificant.

 

Though they used the example of SIX versus elements. How the latter is better received by guests and is cheaper and is done by their onboard cast. All of which I believe (and I liked SIX).

 

It is a bit silly they have 10+ day sailing and the casts do a single show. So I’m not actually that negative on their thought process, but at the same juncture they didn’t have the replacements line up. They thought they could sub in Wheel and it blew up in their face.

 

I’ll be very curious to see how they handle the entertainment on Aqua.