Norwegian Cruise Line Holdings Working to Rightsize Cost Base

According to Norwegian Cruise Line Holdings’ president and CEO Harry Sommer, the company is working on margin enhancement initiatives to rightsize its cost base.

In reality, we operate against a different backdrop today compared to 2019. Thus, balancing the top line with the cost structure that supports our unique business model is even more important. “Our margin recovery will accelerate and we will be more resilient to external and macroeconomic changes,” Sommer said.

During the second quarter, Kempa, CEO, said cost reductions were driven by lower food costs and crew optimization.

Like its peers, the company did not have the benefit of disposing of older and less efficient tonnage in 2019.

We have also expanded capacity at our high-end Oceania Regent brands, which have higher operating costs even though they are accretive to margins.

“Moreover, keeping in mind that expenses such as drydocks can fluctuate over time can also affect these metrics. During the pandemic, we optimized the schedule while ships were already out of service, which is why we have limited drydocks in 2023,” he said, noting the company has engaged a third-party consultant to benchmark best practices across sectors and identify incremental opportunities.

Kempa said the company will save millions of dollars by optimizing crew movements.

To put this into perspective, we have approximately 90,000 crew movements each year, including 6,000 or so between ships. Despite the fact that it is only one example, it demonstrates how incremental changes can add up to a bigger impact.