Special Features & Items of Interest

 

Norwegian Cruise Line - New shareholders, Hawaii out, Bermuda in

 and new ships for old

I stumbled over this article a couple of weeks ago.  It lays out NCL's current situation very well and as this is a topic that comes up in conversation with our clients on a relatively regular basis, we have included it our news letter - with credit to Mark Tré - Cybercruises.com

Apollo Management's acquisition of a $1 billion half interest in Norwegian Cruise Line, swift action to stem serious losses in NCL's US-flag Hawaiian operation, a ten-year contract with Bermuda and a new generation of F3 "Freestyle Cruising" ships all show that NCL now has its priorities in order.

After losses of $130.8 million in 2006 and $227 million in 2007, much of this due to its loss-making US-flag operation in Hawaii, and part of it to a falling dollar while building ships in euros, NCL Corporation Ltd has taken drastic action to return to profitability. Along with these 2007 results came revenues that had risen from $2.0 billion to $2.2 billion, for a 10% increase in revenues on a 10% increase in capacity. But recent moves are intended to bring the line back on track.

New Shareholders
Apollo Management's $1 billion investment in NCL was finally closed in January. As agreed in August 2007, Apollo has now taken a half interest, along with previous parent Star Cruises of Hong Kong, and the right to appoint a majority of the directors. As part of this agreement, Apollo also entered into a sub-agreement relating to NCL America's Hawaii operations, providing for deferred consideration to be paid to Star by NCL that should place NCL's overall value at about $4 billion.

Hawaiian Losses Cut
Having introduced three US-flag ships in the three years between 2004 and 2006, competition from other lines sailing from California to Hawaii via Ensenada, Mexico, caused NCL America serious losses that ultimately led to the withdrawal this February of the 2466-berth Pride of Hawaii, now sailing in Europe as the Norwegian Jade.
This withdrawal took place five years to the month after President Bush had signed legislation giving NCL the US-flag monopoly on cruising in Hawaii that had earlier been held by American Classic Voyages. ACV had failed in 2001 before its Hawaii ships could be completed.

As the Pride of Hawaii left, it was announced that the 2002-berth Pride of Aloha would also be withdrawn, this May, to be transferred to Star Cruises. This leaves one US-flag ship, the 2144-berth Pride of America, built on the hull of the original American Classic vessel, operating in the Hawaii market for NCL.

A bi-product of these changes is that Fanning Island in Kiribati, which had seen regular calls by NCL's foreign-flag ships in order to qualify for cruising from Hawaii, is being dropped. And a number of NCL staff were laid off at the line's Miami headquarters last month in addition to fifty that were let go in Honolulu.

NCL claims that the effect of these changes will be to make NCL America immediately profitable. But where 501,698 cruise passengers were reported to have visited Hawaii on all lines in 2007 that number is expected to fall to 266,420 in 2008. The Pride of America on a weekly turnaround will now provide something over 100,000 berths a year.

Bermuda Contract Signed
In November 2007, while sorting out its Hawaii problems, NCL announced the signing of a ten-year contract with another set of islands. To run from 2009 to 2018, the new agreement calls for two of its newer ships to run to Bermuda from New York and Boston, while a third would operate from ports further south in 2009. Meanwhile, in 2008, NCL becomes the only line still to offer the traditional three-day stay in Bermuda.
Being too large for Hamilton harbour, its ships will dock at King's Wharf rather than Front Street, which will see only eleven calls by smaller vessels this year.

NCL will make 68 Bermuda calls offering close to 125,000 lower berths in 2008, which is 60% of the 112 regular calls or half the 137 calls by all ships. The 2244-berth Norwegian Dawn will sail weekly from New York, the 1750-berth Norwegian Dream weekly from Boston and the 1460-berth Norwegian Majesty from Charleston, Philadelphia and Baltimore to the port of St George's, at Bermuda's east end.

The 2009 contract will see three ships again, with the 1966-berth Norwegian Spirit replacing the Norwegian Dream, giving a 12% increase out of Boston, although after 2009 no provision has been made for Charleston, Philadelphia or Baltimore.
As part of the contract, NCL will partner with local restaurants to offer discounted shoreside dining and will also support the Bermuda Music Festival and other local institutions.

Newest Fleet in the Industry
Since the 2000 introduction of "Freestyle Cruising," an adaptation of a Star Cruises concept that had been introduced by the Superstar Leo (now Norwegian Spirit) in 1998, NCL has included the concept of multiple dining venues and flexible dining times in all its new ships, starting with the 2002-berth Norwegian Sun in 2001, the 2244-berth Norwegian Star and Norwegian Dawn, originally ordered by Star, in 2002, the 2376-berth Norwegian Jewel in 2005, the Pride of Hawaii (now Norwegian Jade) and 2394-berth Norwegian Pearl in 2006 and sister ship Norwegian Gem delivered in October.
Only the Superstar Virgo, sister of the Norwegian Spirit, remains with Star Cruises. Now boasting the "newest fleet in the industry," NCL intends to stay there as it introduces its next generation of ships. And for the first time, it has three of its newest ships, Norwegian Gem, Jade and Jewel, in high-yield Europe, a 40% capacity increase, while older ships remain in North America.

F3 Project Details Revealed
Two of NCL's third generation of "Freestyle" ships, dubbed F3, are now under construction at Aker Yards France in St Nazaire, for delivery in 2010. With 4,200 lower berths and a length of 1,120 feet, they will be twelve feet shorter than the Queen Mary 2 and 51 feet shorter than Royal Caribbean's new "Genesis" class.

This week, NCL announced some initial details for these ships. Their "New Wave Staterooms" will be unlike those in any other cruise ship as they will be installed in pairs, with a flat wall to one side and a wavy one on the other, with its curved lines reflected in the adjoining cabin so that beds will fit into the rounded alcoves and settees on the convex part of the wave.
As well, shower and toilet will be accommodated in two different rooms on either side of the entrance with a vanity sink in the cabin. More revelations will follow as the ships approach completion.

Also this week, NCL announced that Andy Stuart, formerly executive vice-president sales, marketing & passenger services, would become evp and chief product officer, in charge of the F3 Project and the continuing development of "Freestyle Cruising." Like NCL CEO Colin Veitch, who came from Princess Cruises in 2000, Stuart originates from the UK, having joined NCL UK in 1988 and moved to Miami in January 1997.

Ship Sales
With the new F3 ships under way, two of the first generation ships they will replace were sold just last week. Owned by Star Cruises, the Norwegian Dream and Norwegian Majesty, both built in 1992, have been sold to Louis Cruise Lines of Cyprus for $380 million. However, they will continue to run for NCL until November 2008 and December 2009, respectively, as the F3 ships are completed.
The Norwegian Wind, sister of the Norwegian Dream, was transferred to Star Cruises last year and now sails as Superstar Aquarius. A third sale candidate, NCL America's Pride of Aloha, a 1999-built victim of the Hawaii cutbacks, is also on the market, although a reported $300-310 million sale to either Spain's Pullmantur or a client of Miami's International Shipping Partners has not been confirmed.

Coasting Law
NCL is also believed to be behind the present attempt by the US Bureau of Customs & Border Protection to change the coasting regulations for passenger ships to bring in unheard of requirements for non-US-flag operators.

Requiring foreign ships departing from US ports to spend 48 hours in a foreign port on their way to Hawaii, the new rules could gut an industry and wreak havoc in other trades such as Alaska and Canada-New England. Earlier this month the governors of both California and Hawaii, the two states that would be most affected by the proposed changes, urged Washington to reject the new rules.

Affiliated Cruise Lines
Until this spring, NCL had operated only one other single-ship brand in addition to NCL America. Orient Lines, acquired in 1998, operated the Marco Polo, but she was sold earlier this year to Greek owners and now operates for Transocean Tours in the UK and German markets. Former parent Star Cruises has operated in the Far East market since 1993 and new shareholder Apollo operates in the deluxe and luxury markets through Oceania Cruises and Regent Seven Seas Cruises, which both fall under the umbrella of Apollo subsidiary Prestige Cruise Holdings.
Unlike Carnival Corporation and Royal Caribbean Cruises, however, NCL's affiliated brands fall under totally separate management. Whether synergies will eventually emerge is an open question as Star has no interest in Oceania or Regent while Apollo has no interest in Star's cruise operations.

NCL's future, with Apollo's backing, now looks better than it has at any time since 1980, when it introduced the Norway as the world's first mega cruise ship. New ships are replacing a mixed bag of older tonnage, only one of which, the Norwegian Dream, had been built for NCL, its Hawaiian losses should now turn into a profit, a new ten-year partnership with the Bermuda Government gives it priority in that market and its next generation of F3 ships is under way at St Nazaire.

Genoa cruise shipyards join forces

Two of Italy’s specialist cruise shipyards are to join forces in a new alliance.  Genoa-based shipbuilder T. Mariotti and next door neighbour San Giorgio del Porto, which specialises in repair and conversion, are now owned by the newly established holding company Genova Industrie Navali.  However, both shipyards will continue to operate under their existing names.

Upgrading The Regent Experience (Article by Art Sbarsky  from Cruise Week)

The industry is wondering what changes Regent Seven Seas purchase by Apollo will bring. Many hope the new owners will recognize just how good this brand is and won't start changing things. Art Sbarsky reports on a recent sailing of Seven Seas Mariner.

Even before the Apollo purchase was made, Regent management did not sit back on its increasingly high pile of awards. They invested $20 million in refurbishing the fleet. Each ship offers wireless, fast Internet connectivity and cell phone service. They've upgraded and added bed linens, duvets, cashmere throws, and bathrobes from a lovely brand, Anichini. There are new towels and slippers, new Regent bathroom amenities, and new carpets in public areas.

OK, this is all nice, but it doesn't work without great service. Here's an example: on my cruise, the room stewardess must have noted after two nights that I wasn't thrilled with any of the four pillows on my bed. Proactively, she asked me if I want to try another kind, providing an assortment which included some of the most comfortable pillows I've ever enjoyed at sea.

On Mariner, they've also reconfigured the library/computer area and added in a terrific coffee/bar/dining spot, Coffee Connection. Open from 6:30 a.m. to 6 p.m., it's a great place to have something light to eat or grab any one of a vast assortment of coffee items or a drink (remember, Regent does not charge for practically any alcoholic beverage). It's a great meeting place; for comparison purposes, think of Crystal's Bistro.

Regent has also modified its entertainment program. All production shows include a live nine-piece orchestra on Mariner, Navigator, and Voyager. Having live music without recorded tracks really makes a difference. And the cast of twelve (including four leads who can actually dance in addition to sing) put on four production shows, which were quite good with no lip-synching or recorded back-up singing.

As part of the rebranding last year, all Regent employees received training in the "Tao of Regent," which contains the guiding principles for its brand essence, values, and service philosophy. It really does show, with the crew doing an exceptional job of remembering guest names and preferences.

In conclusion: so far, so good under Apollo Management. All across the board, there's investment in the product, and Apollo shows no sign of messing up a successful formula.

The NTSB Urges action to prevent "ship heeling"
The National Transportation Safety Board recommended that CLIA and the U.S. Coast Guard take steps to prevent the "heeling" of cruise ships. The NTSB recommendations resulted from the July 18, 2006, incident in which the Crown Princess tilted at a 24-degree angle, causing 14 serious and 284 minor injuries to passengers and crew members. The NTSB determined that the probable cause was the second officer's incorrect wheel commands, which he took to counter an unanticipated high rate of turn and then to counter the heeling. NTSB is recommending that the Coast Guard propose to the International Maritime Organization that it require training for watchkeepers in integrated navigation systems, which include autopilots, and also that it mandate record-keeping of heel angles. To CLIA, the NTSB recommended that its cruise line members voluntarily provide training in the navigation systems and relate information about the incident.