WEBVTT - Norwegian Cruise Lines CEO Talks Upgrading Fleet 

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>I want to talk a little bit about cruise lines.

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<v Speaker 2>Right now. Norwegian is embarking on its largest new build

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<v Speaker 2>order in company history as it looks to surpass the competition.

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<v Speaker 2>Over the past five years, the company's stock has lagged

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<v Speaker 2>behind competitors Royal Caribbean and Carnival. The industry as a

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<v Speaker 2>whole has seen demand rebound while costs continue to climb.

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<v Speaker 2>Joining us now is Harry Summer, Norwegian Cruise Lines President

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<v Speaker 2>and CEO. And Harry, we've been talking about cruises for

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<v Speaker 2>the entire morning now because Carnival came out with better

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<v Speaker 2>numbers and expected and yet it's stock also traded down.

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<v Speaker 2>What do you think the problem is? Why isn't the

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<v Speaker 2>market embracing you know, better numbers and newer product.

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<v Speaker 1>Well, you know, I'm not, first off, nice to be

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<v Speaker 1>here this morning. Thank you for having me. I'll see,

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<v Speaker 1>I'm not really here to discuss Carnival's earnings. I think

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<v Speaker 1>overall the cruise lines have had a tremendous up and

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<v Speaker 1>stock us included. I think over the last three months

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<v Speaker 1>of stock is up the most in the industry and

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<v Speaker 1>we're very, very proud of that consumer demand is robust,

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<v Speaker 1>the guests love the guests experience. It reflects a tremendous

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<v Speaker 1>value and a much better experience than hotels and resorts.

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<v Speaker 1>And our stock price has seen a run up in

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<v Speaker 1>the last few months as a result of that.

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<v Speaker 2>Well, I mean, the reason I ask about better results

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<v Speaker 2>is I was just reading in a story that you

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<v Speaker 2>make more money at Norwegian than any of your competitors

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<v Speaker 2>in terms of the amount passengers spend on board, right,

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<v Speaker 2>And that seems to be what investors want. That's what

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<v Speaker 2>analysts are after. Plus you have higher end, newer ships

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<v Speaker 2>coming out to court the luxury consumer. That also is

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<v Speaker 2>what we read that people want. And yet your stock,

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<v Speaker 2>even though you've had a great three months, has really

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<v Speaker 2>underperformed over the longer term. So why aren't investors seeing

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<v Speaker 2>these products and these results and rewarding you for them.

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<v Speaker 1>Listen, we are super passionate about delivering a fantastic onboard

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<v Speaker 1>guests ex experience, and I think the spending results you've

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<v Speaker 1>talked about in terms of onboard revenue are reflection of

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<v Speaker 1>the great experience our guests get on board the ship,

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<v Speaker 1>that we give them things that they value and are

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<v Speaker 1>willing to pay for, and we're very super excited about that. Listen,

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<v Speaker 1>I can't talk about you know, I can't really talk

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<v Speaker 1>to what happened six months ago or a year ago.

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<v Speaker 1>I'm very happy with what our stocks performed the last

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<v Speaker 1>three four or five months now again out performing all

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<v Speaker 1>the other stocks in the industry. And our goal is

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<v Speaker 1>to continue this run by delivering great experiences to our

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<v Speaker 1>guests and great financial results of the investment community.

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<v Speaker 3>Hey, there's certainly a lot more people going on cruises

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<v Speaker 3>that maybe didn't in the past. I say, my parents

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<v Speaker 3>are among them. They went on one of your luxury

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<v Speaker 3>competitors who shall not be named on this program. Even so,

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<v Speaker 3>this question is for them because they looked around and said, hey,

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<v Speaker 3>everyone is our age or older. Everyone's in their sixties

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<v Speaker 3>and older. And that's something you hear about cruise operators.

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<v Speaker 3>What do you do to attract the younger generations? And

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<v Speaker 3>if you can't, is it a problem down the line

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<v Speaker 3>for this industry?

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<v Speaker 1>You know, I think if you look at the industry,

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<v Speaker 1>there's really a bifurcation. There are a series of luxury lines,

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<v Speaker 1>perhaps like the ones that your parents went on. We

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<v Speaker 1>have two luxury lines in our fleet, Oceanna Cruises, which

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<v Speaker 1>is our entry luxury level product, and Region seven Seat Cruises,

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<v Speaker 1>which is our ultra luxury product. It's true in that

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<v Speaker 1>demographic these cruises are a little bit more expensive. We

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<v Speaker 1>do tend to attract an oiler clientele, but we also

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<v Speaker 1>have our contemporary brand, Norwegian Cruise Line, where a large

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<v Speaker 1>percentage of our guests are forty and younger. We continue

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<v Speaker 1>to develop amenities, entertainment activities on board the ship that

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<v Speaker 1>are relevant to those people, and they're absolutely responding that.

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<v Speaker 1>The demographic between thirty five and say forty five is

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<v Speaker 1>our fastest growing demographic for that brand right now, and

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<v Speaker 1>we continue to focus on that so that we can

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<v Speaker 1>have a generation, a new generation of people that will

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<v Speaker 1>cruise over and over and over again. The repeat rate

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<v Speaker 1>of these guests are at all time highs. On any

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<v Speaker 1>given ship, about forty five percent of our guests our

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<v Speaker 1>repeat customers, which is one of the reasons we announced

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<v Speaker 1>our Loyalty Match program this morning so people can go

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<v Speaker 1>between lines and have a great experience, the experience that

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<v Speaker 1>they deserve.

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<v Speaker 2>You have the Oceania, that's the luxury brand that you

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<v Speaker 2>that you operate a Lura. It's a new boat coming

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<v Speaker 2>back from its maiden voyage. I think tomorrow. Yes, tell

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<v Speaker 2>us what's different, what's new? What are you offering consumers

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<v Speaker 2>that differentiates this boat from you know, other sort of luxury,

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<v Speaker 2>high end big cruise lines.

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<v Speaker 1>So at Oceana Cruizes, we're super passionate about delivering a

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<v Speaker 1>fantastic guest experience in terms of luxury amenities on board

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<v Speaker 1>the ship, large cabins and suites, fantastic staff on board,

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<v Speaker 1>and a large staff to guest ratio, so guests feel

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<v Speaker 1>like they're being pampered at every single moment. Of course,

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<v Speaker 1>the bedrock of Oceanna Cruises is the finest cuisine at sea.

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<v Speaker 1>We win every culinary award out there, and for this

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<v Speaker 1>new ship, the Alura, we have uped the game even further.

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<v Speaker 1>We've reintroduced a French restaurant concept, Jock, which is extremely

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<v Speaker 1>popular with our guests. We have a new crapery which

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<v Speaker 1>has f fantastic suites, freshly made all day long crapes,

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<v Speaker 1>ice cream and things like that, and pastries, but I

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<v Speaker 1>mean super high and not the normal fair you would

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<v Speaker 1>get on a contemporary cruise line, and our guests are

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<v Speaker 1>enthusiastic about it. We have new shopping on board. We

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<v Speaker 1>have all different We have new experiences in the theater,

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<v Speaker 1>all the things that our guests value.

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<v Speaker 3>And Harry goes back to what Matt was saying that

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<v Speaker 3>you have this great capture rate of getting guests to

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<v Speaker 3>spend on the boat itself. But you're talking about some

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<v Speaker 3>serious luxury offerings, as we were saying, things that are

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<v Speaker 3>expensive that not everyday people can necessarily afford. You also

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<v Speaker 3>have more mass premium type offerings too. How does the

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<v Speaker 3>behavior differ between the more luxury offering and those more

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<v Speaker 3>mass offerings that you're giving.

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<v Speaker 1>You know, Traditionally, on the higher end brand that we

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<v Speaker 1>have reach It, which is our ultra luxury, it is

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<v Speaker 1>all inclusive by nature, so guests are getting you know,

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<v Speaker 1>freeshore excursions, lots of free things, gratuities are included you know,

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<v Speaker 1>on board, so they're not really paying that much extra

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<v Speaker 1>on that brand. Norwegian is a little bit different. We

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<v Speaker 1>do have some fantastic bundles that guests can buy into,

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<v Speaker 1>like seventy percent off drinks packages that we're running right now,

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<v Speaker 1>seventy percent off specially designing and things along those lines,

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<v Speaker 1>so that guests can get a deal and enjoy luxury

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<v Speaker 1>amenities on board our contemporary ship, but it tends to

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<v Speaker 1>be a little bit more on the on board spin

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<v Speaker 1>side than the ticket price on our contemporary brand.

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<v Speaker 3>Hey Harry, this has been great. Thank you so much

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<v Speaker 3>for joining us. Please come back again soon, Harry Summer

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<v Speaker 3>of Norwegian Cruise Lines ahead of their maiden voyage of

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<v Speaker 3>the Alora coming back to the US shores.