Under new leadership, Norwegian Cruise Line goals take shape

In the office of Norwegian Cruise Line President Andy Stuart is a jersey from London’s Arsenal Football Club, his favorite soccer team. Photo Credit: Tom Stieghorst

MIAMI — Five months after new senior executives were named at Norwegian Cruise Line Holdings and its biggest brand, the company’s strategic direction is coming into sharper focus.

Company CEO Frank Del Rio has laid out priorities meant to grow the company’s business and bring some of the best practices of his luxury lines at Prestige Cruise Holdings to Norwegian Cruise Line.

While not gone, references to Freestyle Cruising are less frequent than under Kevin Sheehan, Del Rio’s predecessor for seven years. The company’s “Cruise Like a Norwegian” marketing theme is also set for a makeover.

Del Rio’s growth strategy for Norwegian is focused on three areas: improving the shipboard product, expanding overseas markets and ending the use of discounts to fill ships in favor of value-add items as incentives.

A fourth area of attention is continuing Norwegian’s drive to become more agent friendly, first formalized four years ago as Partners First.

This year, Norwegian hopes agents will notice a faster decision-making process for issues that are important to them, as it vests more authority in a newly beefed-up field sales operation.

“We’re the third or fourth largest cruise brand,” Norwegian Cruise Line President Andy Stuart said during an interview at the line’s headquarters here last week. “We’re not the biggest. So what can we do to be different? 
“The answer is we can be more responsive. Smaller should be more nimble.”

The new emphasis comes as Norwegian has completed a hiring binge that increased the size of the field sales function by 40%. One new hire in particular came from a position selling high–end vacuum cleaners door to door, and Stuart said he was eager to have him talk to the rest of the sales force about sales dynamics, such as overcoming customer objections.

All of the new sales hires have been on Norwegian ships in the past few weeks learning some of the product features firsthand.

Stuart said the payoff phase for the increase in sales managers should begin this summer.

In pursuit of ‘flawless’ execution

Under Sheehan, Norwegian’s ships got a wealth of new features, such as water parks, dinner theaters, alternative restaurants and specialty pastry shops.

Del Rio’s passion is making the guest experience on the ships as perfect as possible.

“In a nutshell, we want to flawlessly execute on the good strategies that were in place when I took over the company,” Del Rio said at last month’s annual meeting of shareholders in Miami.

Del Rio said the shipboard experience should be so good that guests will want to come back again and tell their friends and acquaintances when they get home.

An example of that, according to Stuart, was the recent attempt to stop guests from bringing food back to their rooms, which results in a pileup of dirty dishes in the corridors outside cabin doors. However, the solution — a ban on food being brought back to cabins — provoked a backlash that eventually forced Norwegian to rescind the policy.

“We picked the wrong solution,” said Stuart, adding that Norwegian will instead step up corridor inspections to see that dishes are removed more quickly. “We’re still going to fix the issue, because the issue is the same."

Another strategic emphasis has been to add more distribution internationally, and to get Norwegian’s marketing to reflect a more global appeal.

In a few weeks, Norwegian will announce a new ad agency, Del Rio said in an interview after the shareholder’s meeting. The “Cruise Like a Norwegian” slogan will likely be phased out in favor of a brand platform “more global in nature,” he said.

The current slogan has worked pretty well domestically, Del Rio said, “but when you tell a German that he has to cruise like a Norwegian, he says, ‘What are you talking about?’”

Norwegian’s global push will also include a hard look at China, the subject of a study group that is expected to report by year’s end.

Value adds

A third pillar is the adoption at Norwegian of the “market-to-fill” strategy Del Rio pioneered at the Prestige Cruise Holdings brands Oceania Cruises and Regent Seven Seas Cruises, where he was president and CEO before his Jan. 9 promotion at Norwegian.

The concept is to use value-add items, such as a free beverage package or reduced-cost airfare, as enticements to fill lagging ships.

As a result Norwegian is more booked for the next six quarters than it has ever been in its history, Del Rio said.

“When you have that kind of load factor it gives us more confidence to raise prices over time, and that’s what we’re all trying to do,” he said.

That alone should give agents more incentive to book with Norwegian, said Stuart, who also noted that value-adds play to an agent’s strength more than discounts do.

Stuart said agents should also like the “engaged, empowered, responsive” mantra developed by Nathan Hickman, Norwegian’s new vice president of field sales and national accounts. He said Hickman, who was vice president of national accounts for Oceania, is encouraging business development managers to make more decisions.

Faster decisions are part of Norwegian’s Partners First promise, a program first publicized four years ago.

Stuart said Partners First was created to focus the company internally on agent welfare and to put a spotlight on existing agent initiatives.

“Sometimes its hard to communicate all of the things you do to support travel agents,” he said. “We sat down and said, ‘We’re making a huge investment in all sorts of different areas and not really getting a lot of credit for it.’”