The Lost Year of the Cruise, Part 2: The Hopeful Year: Travel Weekly
Frank Del Rio, CEO, Norwegian Cruise Line Holdings
This year has passed faster than any other. It was a whirlwind. Days become weeks, weeks become months, and months become quarters. It’s just a blink of an eye.
The first thing that crossed my mind the first time we had to sit out – and at that moment no one really knew how long it was going to take – was the general consensus: it’s a cold, it’s a flu, it will pass be. I thought we are having such a great year, we are marching towards record profits, and that will cut our earnings per share by maybe 10 cents.
Of course, it was a much bigger topic than that. We had an executive meeting, like at the end of every quarter; It was the last time we were in our boardroom together. I remember saying, “We are at war”. We’d suspended or canceled rides in Asia and I remember saying, “Boy am I glad I pulled? [the Norwegian] Joy out of China ”because that was the first place that was hit. But when we had that meeting, I knew we were at war, and I told my team, “You have to prepare for war and you never know how long it will last.”
The cruise industry is very predictable: we book cruises so far in advance that you have a good overview of when cash is coming in and what your expenses are. It becomes a machine. When the receipts stop, it’s a big problem because for a company our size we have very little cash because we don’t have to – we know that tomorrow and the next day there will be more cash, down to the penny. So when the money runs out and your spending continues, it is a shock to the system. Especially when the money runs out in the form of refunds too. This turned the whole business model upside down.
Liquidity has always been a concern, and the cruise industry has done an excellent job of strengthening its balance sheets through capital increases. We are well placed to survive longer if we have to – and we hope we don’t have to. Because what kind of good money to waste. We raised over $ 7 billion and we have nothing to show. Imagine what we’d do in the good old days with $ 7 billion in cash? The islands would be developed to the limit and the ships would be completely renovated. We would do anything with this capital city that we only use today to survive until we are allowed to cross. It’s sad that we had to raise so much capital just to survive and that at the end of the day we have nothing tangible to show.
But that’s what you do in war. Your whole life is disturbed. You leave your family, your job, your future behind and you have one goal: to survive and return home. And that’s how we did it.
I would love to see what happens to every other industry – auto, technology, banking, healthcare, retail – to have no income after a year. It would be massive losses. Our whole industry survived. I am proud of the work my team has done, proud to stand next to my colleagues. We have proven that even an event as dramatic as a 1-in-a-100-year event didn’t throw us off track.
The demand for cruises is incredible. We have seen that the price strength has persisted since the pandemic, with no marketing incentives, without a full team of travel agents working, the whole world is closed and it is uncertain when it will open again. For 2022, we are booked significantly better at this point in the booking cycle than at the same point in time for 2019, and 2019 was a record year. This demand shows the loyalty and resilience of our customers. They love cruises, what cruises offer, the value, the variety. You want to go on a cruise and we have been closed for a year. That means that more than 30 million people could not cross.
I see boom times, the golden era of cruising again when we are allowed to cruise. So we just have to grin and take it and know that after every great war there will be good times. We will come back better, stronger, more efficient and more customer-oriented than ever. We owe the customer their loyalty and I can’t wait to repay them.
“I see boom times, the golden era of cruising, when we’re allowed to cruise. … good times come after every great war. “
We never give up, that’s our motto and our corporate culture. We knew we would win this as long as we can raise the capital we have.
The low point of last year was after the No Sail Order was repealed, it was replaced by a Conditional Sail Order (CSO) at the end of October. And the word conditional is really conditional. But the vaccine changes everything. The [CSO] was issued when the vaccine didn’t exist and the main line of defense was testing and masking. The healthy sail panel that we have [formed] In addition, 74 recommendations were drawn up in collaboration with Royal. We were disappointed that the CDC didn’t pay more attention to it. But the vaccine is making great strides. We hope the CDC will begin to see that the vaccine is effective and that travel is only part of life. We can’t be further under a rock. Great damage has been done to this world, our country and our travel industry, be it airlines, hotels or cruise lines. But among all of these, the cruise industry is the only one to be shut down by the CDC. I can’t tell you how disappointing and frustrating that is. The CDC is easy to point, but we are a global industry. We visit over 500 ports around the world and you can count on one hand the number of ports open for cruises today. So it’s not just about the CDC.
I’m very excited to see Singapore opening, Israel opening, Greece opening soon, and the UK opening soon. Italy and Germany are already open. You have momentum. The more countries around the world open up, that bodes very well for the industry. To really get back to normal we have to visit the 500 ports we visited earlier. And it will take time.
My team makes it a lot easier for all of us to get through this. I have the best team in the business. The culture that we have [Norwegian] is one of partnership, brotherhood, sisterhood, collaboration. We’re all in the same boat. There are days when they pick me up and there are days when I pick them up. It really is a team effort. But at the end of the day, I’m the boss of the company, and to a certain extent everyone is doing my thing. And I remain optimistic that we will not only survive this war but show up, in the style of the roaring 20s, 50s and 60s expansion styles, 80s and 90s technology rules the world. You never really know what you have until you don’t have it.