Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Harry Summer, president and CEO of Norwegian Cruise Line joining
Speaker 2: us right now. And Harry, there's been so much talk
Speaker 2: here about the bump that we've seen in this industry,
Speaker 2: the bump that we've seen out of Norwegian specifically here.
Speaker 2: Is there any sense here that that's fading now?
Speaker 3: Well, first of all, thanks for having me on. No,
Speaker 3: we do not see any fading. Consumer demand continues to
Speaker 3: be very very robust. You know when we reported our
Speaker 3: Q one earnings and reiterated again in our investor Day
Speaker 3: last month, we see demand at all time highs occupancy
Speaker 3: at all time high, future book positions at all time high,
Speaker 3: all on higher pricing. We are very very encouraged by
Speaker 3: the American consumer.
Speaker 2: When we look at the American consumer and we look
Speaker 2: at their sensitivity to prices and inflation and the like. Here,
Speaker 2: how sticky do you feel the cruise line business is?
Speaker 2: I mean, there's always been these anecdote said the people
Speaker 2: who love cruises will always cruise no matter the economic conditions.
Speaker 2: Is that really true?
Speaker 4: So?
Speaker 3: Certainly, listen, there are two different sets of people. There
Speaker 3: are people that are store cruisers, that are avid cruisers.
Speaker 4: And absolutely we see them coming back.
Speaker 3: Our repeat rate is ad or near high levels compared
Speaker 3: to where we were on a pre COVID basis. But
Speaker 3: at the same time, we are attracting a record number
Speaker 3: of new to cruise as well, especially in the younger demographics,
Speaker 3: which are our.
Speaker 4: Fastest growing segments.
Speaker 3: You cruising at some point the associated with a slightly
Speaker 3: older client out and now we're seeing younger people in
Speaker 3: their thirties and forties coming.
Speaker 4: To cruising and record numbers also, which we're very pleased with.
Speaker 1: Okay, that's really interesting the breakdown of your demographic. When
Speaker 1: we look at the American consumer and demand from them,
Speaker 1: there is a perception among investors that the more indebted
Speaker 1: cruise lines and I look at your debt to asset ratio,
Speaker 1: it is higher than your peers, they are a levered
Speaker 1: consumer discretion name, and that may seem more vulnerable to
Speaker 1: any weakness in middle class spending. Is that view wrong?
Speaker 3: You know, I'm not necessarily sure if that view is wrong,
Speaker 3: but you have to sort of think about where demographic
Speaker 3: is as well. You know, within our portfolio, we have
Speaker 3: three brands in our Reaching cruise line, which is one
Speaker 3: of the more higher end consumer brands, and then we
Speaker 3: have an Oceanic Cruise brand, which is more of an
Speaker 3: upper premium brand, and then Reaching Seven Sea Cruises, which
Speaker 3: is a luxury brand, and of course our portfolio in
Speaker 3: their respective segments, they are the highest price and therefore
Speaker 3: track the highest quality demographic customer.
Speaker 4: You know, we are not looking at low end consumers.
Speaker 3: We're looking at high middle class, lower upper class consumers
Speaker 3: that seem to be doing very very.
Speaker 4: Well in the current consumer market.
Speaker 3: But there is the second piece to it that also
Speaker 3: point out in that the value proposition between us and
Speaker 3: a hotel vocation has never been higher.
Speaker 4: You know, the typical cruise adr average yeald per.
Speaker 3: Night is about thirty to forty percent less than an
Speaker 3: equivalent hotel vocation.
Speaker 4: Despite the fact that cruise is off for.
Speaker 3: More well, not just transportation and macvitality, we also have meals,
Speaker 3: entertainment and other onboard amenities. So good value, upper consumer
Speaker 3: demographic and good value versus the hotel industry.
Speaker 1: All point is in the right direction, right, And they're
Speaker 1: definitely a group of investors who liked that story, who
Speaker 1: buy that thesis and are bullish on cruise line operators.
Speaker 1: Yet when I look at your stock over the past
Speaker 1: twelve months, up about two percent versus up twenty five
Speaker 1: percent for Carnival and sixty eight percent for Royal Caribbean.
Speaker 1: What do you attribute that difference to. Why the underperformance?
Speaker 3: You know, I think about a year ago, we had
Speaker 3: slightly higher aspirations for twenty twenty three that we were
Speaker 3: able to achieve and that closed a little bit of
Speaker 3: disappointment in the financial community. But I think at this
Speaker 3: point we have to sort of put that behind us
Speaker 3: and focus on for twenty twenty four. You know, since
Speaker 3: coming out with our initial guidance for twenty four, we've
Speaker 3: now raised it twice, just a few weeks apart from
Speaker 3: each other, because our top line revenue number continues is
Speaker 3: to overachieve our expectation, and we'll speak consensus. So I
Speaker 3: agree we might have gotten a little bit ahead of
Speaker 3: our skis in twenty three, which didn't do well for
Speaker 3: our stock in the back half of last year. But
Speaker 3: now coming into this year, we are absolutely seeing a
Speaker 3: rebound off of that.
Speaker 4: Our stocks up eight percent in the last month, which
Speaker 4: we're very very happy with.
Speaker 3: We about a month ago we discussed our long term
Speaker 3: goals on our Investor Day for twenty five and twenty six,
Speaker 3: which seems to be resonating very well in the market
Speaker 3: as well.
Speaker 1: All right, good stuff, Harry, really appreciate your joining us today.
Speaker 1: Harry Summer is President and CEO of Norwegian Cruise Line