NORWEGIAN Cruise Line Holdings (NCLH) is seeing greater Q1 yield pressure than initially anticipated, due to capacity increases in the Caribbean, as well as the slower-than-expected roll-out of Great Stirrup Cay’s (pictured) upgrades (CW 08 Jan).
NCLH leadership met with investors earlier this week, with the company saying deployment growth in the Caribbean has not been absorbed as well as initially hoped for.
An equity research report from bank holding company Truist, published overnight, estimated yield growth to be flat for Q1 or as much as -2%, in what NCLH described as a “commercially difficult” quarter.
This compares with the approximately 4% yield growth for the quarter NCLH had expected in its Q3 earnings update from last year.
NCLH did however note at the time Q1 could be “under pressure” as a result of the large Caribbean deployment increase.
The report noted better news for the rest of the year, which is currently trading as previously expected, with yield pressures isolated to the present quarter.
Caribbean deployment is increasing by around 10% year-on-year in Q2, which NCLH said it will be able to better absorb, relative to the current quarter.
Initial customer response to the upgrades at GSC has been overwhelmingly positive, NCLH told investors, and the company still expects to see “good” margin expansion, both this quarter and for the full year.
The new pier, pool, and welcome centre have been up and running for around a month and a half, and passenger feedback has been positive, NCLH leadership said.
The pier currently has capacity to dock one ship, with a second berth to come online later this year, alongside the water park, which is expected to open around the middle of summer.
GSC’s continued ramp-up means the facility is not expected to materially contribute to results this year.
The company said it also expects to report an expanded EBITDA margin for Q1 and the full year, thanks to a larger mix of more cost-favourable shorter duration itineraries. MS
