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Del Rio forecasts ‘boom time’ for cruise industry

The head of Norwegian Cruise Line (NCL) Holdings has forecast “a boom time” for the industry once cruises resume.

NCL Holdings president and chief executive Frank Del Rio said demand would exceed supply from the moment cruising restarts in North America.

Del Rio said he expects “additional technical guidelines” from the US Centers for Disease Control (CDC), but he added: “We’re not awaiting a green light for cruises in the next few days.”

NCL Holding, which operates Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises, reported a $4 billion loss for 2020.

But Del Rio said: “This has the making of a boom time for the industry.

“The industry has been shut at least a year. That means 30 million people who want to cruise cannot. Demand is going to exceed supply especially after northwards of 20 ships have been removed from the North American supply.

“Pricing is going to dictate the day.”

He noted: “We’re spending a fraction of what we would normally on marketing and we have the bad news cycle. [But] we are slightly ahead of an all-time high on pricing even with the dilutive effect of Future Cruise Credits [issued for cancelled cruises].”

Del Rio said: “We are so well booked. It’s astonishing.”

The company’s cruises are currently cancelled through to the end of May. Del Rio said: “We keep cruises available as long as we believe there is a chance we may operate.

A limited resumption of sailings between the US and the Caribbean had been expected in the first quarter of this year after the CDC issued a Conditional Sailing Order at the end of October.

Del Rio said: “There was great expectation when the Conditional Sailing Order came out.”

But he said “the continuing reluctance of public health authorities to lift restrictions” led to a postponement. “It proved more difficult than we expected.

“Today we’re in a more encouraging place than six weeks ago. The prevalence of the disease in America and around the world will be the greatest indicator of when we can resume and the prevalence is dropping. Should that continue, it gives us a chance to restart.

“When we get the green light, we would like to give ourselves a 90-day window more or less.

“It will take us six to seven months [to fully restart] depending on what ports are open.  We would need to start up by June-July to be operating 100% by the end of this year, early 2022.”

Cruises are likely to start at about 50% occupancy, he said.

“The CDC has yet to give the industry a target occupancy rate. We assume maximum occupancy will be in the 50% range.”

He explained: “Every ship has bookings. [But] when we’re able to start, we won’t start all ships. It will be a ship a week, so there will be customers who are displaced. Some [bookings] will be cancelled, some will move ship.

“We’ll have excess bookings at the restart. Of all the things we worry about, filling vessels isn’t one of them.

Del Rio said he remains “cautiously optimistic” that Canadian restrictions on cruise operations to Alaska, recently extended to 2022, “may be rescinded.”

He said: “I’m optimistic Alaskan cruises may be allowed to operate in 2021. [But] we’ve suspended taking new bookings for Alaska – the whole industry has.”

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