Norwegian Cruise Line has seen resilient demand from travelers across all markets, including both mass-market and luxury travelers, defying concerns about leisure travel spending. With strong key metrics in pricing, ship occupancy, and onboard spending, the company is performing well. Pricing has increased year-over-year, occupancy levels are stable, and onboard spending remains strong, with nearly all passengers pre-booking onboard purchases.
The company is reporting strong advance bookings extending into 2025 for all its brands, with pricing up 7% in the third quarter compared to the previous year. While overall ship occupancy remains slightly below historical peaks, this is a strategic choice rather than a reflection of demand weakness. The company plans to focus more on pricing rather than filling up cabins, with occupancy expected to remain stable through 2025.
In recent quarters, Norwegian Cruise Line has seen stronger “close-in” demand from customers, giving the company more pricing power for near-term sailings. This, along with healthy advance bookings, has allowed the company to maintain higher pricing. Onboard spending remains strong, with passengers pre-booking a variety of purchases before their cruises. The company is also implementing new revenue management techniques for onboard products.
The company is focusing on expanding its Caribbean deployments and larger ships to attract younger travelers. With plans to double “fun in the sun” passenger volume by 2026, Norwegian Cruise Line is investing in a new pier at its private Bahamian destination. The Caribbean is seen as key to attracting younger demographics, with repeat booking rates for Millennials and Gen Z nearing that of older travelers. The company’s three-brand strategy effectively targets different market segments, appealing to higher net worth individuals.
Under the leadership of CEO Harry Sommer, Norwegian Cruise Line is focusing on cost control, capital allocation, and boosting margins. The company aims to achieve adjusted EBITDA margins of 39% by 2026 and reduce leverage to 4.5x. With a moderate passenger capacity growth strategy and plans to streamline vessel operations to achieve $300 million in savings by 2026, Norwegian Cruise Line is positioning itself for long-term success. The company reported a third-quarter profit of $475 million on revenue of $2.81 billion.
