Norwegian Cruise Line has enjoyed the best 10-day booking stretch in NCL’s history, which hints at a “exponentially strong” Wave season, Norwegian Cruise Line Holdings CEO Frank Del Rio told investors Tuesday during the company’s third-quarter earnings call.

“I think it will be an extraordinary Wave season. It’s already started,” he said. “I think that will carry on throughout the fourth quarter and into Wave.”

Wave season is typically the busiest booking season for cruise lines, lasting from January through March.

NCL’s 10-day hot streak follows last week’s announcement that the line would pay agents on the noncommissionable portion of cruise fares beginning Jan. 1, 2023, if they book at least 120 days out and submit a marketing plan, which Del Rio predicted would result in stronger bookings as the company continues its recovery from the pandemic.

On Tuesday, NCLH reported $28 million in positive adjusted earnings for Q3, the company’s first positive earnings since the pandemic began. However, the company reported an overall net loss of $268 million for the quarter. NCLH collected $1.6 billion in total revenue. 

Del Rio said he was encouraged by the company’s sequential improvement throughout the year, aided by the CDC dropping mandatory Covid requirements to sail on cruise ships. Cruise lines did away with vaccination and testing requirements in late summer and early fall, allowing the company to reach a wider population of cruisers who previously opted for land-based vacations. 

Norwegian says it has avoided discounting

NCLH averaged 82% occupancy in Q3, an improvement from 65% in Q2. The company contends its pricing has grown 5% over 2019 levels while other publicly traded cruise companies have dropped their prices by 5%.

“We have taken a very disciplined approach to filling ships. We don’t care if we’re behind others by a quarter or two in terms of load factor. We simply won’t sacrifice price because we’ve seen historically that those who drop prices to ridiculous levels in order to fill ships take years, if not decades, to recover, and we’re simply not prepared to do that.” 

Until recently, the cruise industry’s recovery has been painfully slow with a lot more disappointments than happiness, said Patrick Scholes, stocks analyst for Truist Securities. But that has changed since Covid restrictions have waned and largely gone away in Q3. 

“The industry is starting to turn a corner, but a higher-cost environment has affected everybody,” he said, noting inflationary pressure. In short, he said, “No negative surprises is a positive surprise for investors.” 

NCLH is feeling the impact of inflation and global supply chain issues on profit margins, although the company feels confident its customer base skews heavily toward customers with a net worth of at least $250,000 and will be resilient to inflationary pressures, said Del Rio. 

Royal Caribbean Group turned a profit in Q3, its first quarterly profit since the pandemic began. Carnival Corp. is still in the red. 

The cruise companies have different approaches to recovery, said Scholes. In Royal Caribbean’s case, the company has higher occupancy at lower prices. Royal reported a 96% load factor in Q3.

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