Norwegian Cruise Line (NCLH) dropped mandatory covid vaccinations on sailings from U.S. ports, making it the first major cruise line to do so.
In theory, that should bring more passengers onboard and maybe win over some former Royal Caribbean International (RCL) and Carnival Cruise Lines (CCL) passengers who were barred from sailing on those lines.
Norwegian Chief Executive Frank Del Rio trumpeted those changes during the cruise line's second-quarter-earnings call.
"To put it simply, vaccinated individuals, including those embarking on NCLH ships from U.S. ports, will no longer have any precruise-related protocols," he said.
"And those who are unvaccinated or choose not to provide proof of vaccination will be required to test negative within 72 hours prior to embarkation. In addition, all guests 11 years old and younger will be exempt from vaccination and testing requirements of any kind."
Del Rio also tried to make clear that the company was not making these changes simply to get more passengers onboard.
"Last month, the CDC discontinued its voluntary covid-19 program for cruise ships. This was a strong signal of confidence by the CDC that the industry's covid-19 mitigation and management plans are robust and effective," he added.
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Norwegian Sees a Strong Trend
Del Rio also noted that booking trends remain strong and that onboard spending has been higher than normal. Royal Caribbean CEO Jason Liberty also discussed those subjects during his company's call.
Like his counterpart, Del Rio sees this as a very positive sign for not just Norwegian but for the industry.
"Second is our onboard revenue generation, which is a real-time-now indicator of how our guests are feeling about their financial situation right now and while onboard our ships," he said.
"Onboard revenue generation has continued to be impressive, even as we continue to ramp up occupancy, carrying more guests across all ships and cabin classes. In the second quarter, onboard revenue per passenger cruise day was approximately 30% higher than during the comparable 2019 period."
That number matches what Liberty said Royal Caribbean passengers were spending.
Norwegian Customers Buy Early and Often
Del Rio explained that passengers weren't spending just once they got on the ship. They also opened their wallets before they boarded.
"We continue to focus on enhancing our market-leading bundled offerings and increasing quality touch points with our guests starting from the time of booking to capture even more revenue precruise, allowing guests to arrive on board with an ever fresher wallet, which ultimately results in higher overall spend," he said.
Precruise revenue per passenger for second-quarter 2022 went up 50% compared with 2019 prepandemic levels. Del Rio noted that precruise spending generally works as a predictor of onboard spending.
"At a high level, guests who make precruise purchases tend to spend approximately double that of guests who do not pre-book onboard activities," he added.
"And while the broader economy has experienced a pullback in consumer spending for physical goods, we continue to see a strong propensity for spending on travel and experiences, particularly from the affluent consumer."
