Demand for Holidays at Norwegian Fails to Crack Under Consumer Pressure, Displaying Brand Prowess

With pandemic-related changes in consumer behavior around travel well behind, economic performance of Norwegian Cruise Line Holdings is on a path to the generation of excess economic rents. As consumers returned to cruising after the 15-month sailing halt that ended in July 2021, they regained their appetite for travel, bolstered by the value proposition the holiday provides, an interest that continues to persist. With ships fully deployed at historical occupancy levels, pricing surpassed prepandemic levels in 2023 and continues to show momentum in 2024. While Norwegian could intermittently see pricing competition in periods of macroeconomic distress, we believe its attractive itineraries, tactical revenue management, and data-driven marketing will keep elevating sales across the brands. On the cost side, while higher oil prices and unfavorable foreign exchange could raise costs at times, we expect management will focus on extracting further efficiencies as the business continues to scale. Over time, we expect both pricing and costs to normalize at low-single-digit rates.