Norwegian Cruise Line CEO: Attracting millennial guests through Instagram

By Cnbc.com  | Mar 28, 2019 03:29

Millenials make up 25 percent of Norwegian Cruise Line's bookings and the company is putting more accommodations on board its ships to attract the fastest-growing customer base, CEO Frank Del Rio told CNBC Tuesday.

"We are now building ships with the understanding that Instagram is something to deal with," he said in an interview with "Mad Money's"Jim Cramer. "We're actually creating Instagram venues so that, when you get the urge, they're going to go there and that's the best publicity [we] can have."

Instagram is owned by social media giant Facebook.

 

Norwegian has ordered nearly a dozen new ships to be delivered through 2027 and their completion dates are staggered as to not "choke on the inventory," Del Rio said. He noted that some people, who worry that a recession is looming, think it's not an opportune time to add more ships to the fleet because the cruise industry is a "discretionary product," but the chief is optimistic about the future.

"First of all, there's no recession. We're past that, I hope. And the thing to understand, unlike the hotel industry, the airline industry, our ships run full and they run full all the time," he said. "So if you've got full ships all the time and you can finance the brand new ones at interest rates of less than 3 percent over 12-years fixed ... You'd order more ships."

The future for Norwegian Cruise is looking bright because customers are booking as far as eight months out, Del Rio said. He pointed out that 65 percent of 2019 inventory was sold at the the turn of the year and 35 percent of 2020 inventory in some brands has been booked. Cash flow is "off the charts" and is the most "misunderstood variable in this whole equation," he added.

Norwegian Cruise is also refocusing on Turkey where trips were cut due to geopolitical events in 2016, Del Rio said. The cruise line has a dozen planned sailings to the country, set to increase to 20 next year, he said.

Itineraries that include Turkey have been selling fast and at higher prices, he said.

"So the good news is that Americans are willing to go back to Turkey," Del Rio said.

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