Odell: Homeporting isn’t everything

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Norwegian Cruise Line Holdings may have been a “latecomer” when it came to establishing a significant presence in the Australian market, finding it a challenge to secure prime slots at Sydney’s Overseas Passenger Terminal. But the company isn’t deterred, committing ships to the local market for the next two years, and is increasingly optimistic about securing a large chunk of the Australian cruise market that heads overseas. Speaking exclusively with LATTE, NCLH’s Senior Vice President and Managing Director Asia Pacific, Steve Odell, says the ramped-up impetus on cruise infrastructure underway across this region is encouraging. “New Zealand’s progress is fantastic. They understand the value of cruise tourism. They are doing work around it. Subject to approvals, Auckland is ready to invest in the dolphin at Queens Wharf and new ports are being developed around the country. “In Queensland, the state government has a $48 million tourism plan called the ‘Attracting Tourism Fund’ and a portion of that is dedicated to cruise. They are opening up Cairns, they are building better facilities. And then there’s the $150 million cruise project in Brisbane. So I think regionally we’ve got a lot of understanding and a lot of commitment,” said the executive behind the regional operation of Norwegian Cruise Lines, Oceania Cruises and Regent Seven Seas. However, the widely reported cruise infrastructure crisis in Sydney has taken longer to resolve, “and for obvious reasons”. “We’ve got a beautiful harbour; we have the Navy and there are limitations, but at the end of it, Sydney is the hub. If we’re going to develop an international business, then people want to come to Sydney to join a cruise and that affects New Zealand, that affects Eden, Newcastle, Victoria,” Odell said.

“Melbourne is great, but it’s too far to operate north. It can operate New Zealand and it’s good to have it, but I think Sydney is the core of the issue because if Sydney doesn’t get it right then you’ll see a slow-down, and that’s exactly what happened.”

“When CLIA Australasia released the numbers and it was 18% growth every year, and then suddenly it was 5. Why? Because if you look at the Sydney Ports’ schedule there are no gaps. It’s absolutely blocked. And NCLH felt it more than any because we were the last to come,” Odell remarked. “We have the Jewel here, and it’s been very successful, but it’s sub-optimal itineraries compared to what Carnival and Princess and Royal can operate because they’ve got the grandfather slots.” That’s where the international fly/cruise market is crucial to cruise companies such as NCLH. “One of the things we all get caught up in is we talk all the time about homeport, because it’s the most visible part of what we sell. We have to remember the approximately 400,000 people who do fly/cruise out of Australia annually,” Odell told LATTE. He says the fly/cruise market is particularly important to frontline sellers, as it’s more revenue for the travel agent when booking a cruise that operates outside of Australian waters. “Fly/cruise is actually higher-yielding business; it’s people getting on a plane to go somewhere. So my point is, yes, that homeport market is really important because it gives good exposure to the cruise business, but actually we want the people that we get into the business to go and do something else on a higher price, so I think that’s where the potential lies. And when you break that down, you’ve got expedition ships, you’ve got luxury ships, you’ve got premium ships and you’ve got big ships. I think sometimes we lose sight of what else is out there because we only talk about homeporting. Local cruising.”

“I think sometimes we lose sight of what else is out there because we only talk about homeporting. Local cruising.”

Specifically for NCLH, the fly/cruise market is strongest out of Australia to Europe and the Baltic regions due to seasonality. Australians travel long-haul to escape the winter from May through to September, Odell explained. “The demographic we have is a little bit older than Royal and Carnival in the local market who go to Europe. They book early, they travel for six weeks and a cruise might be part of what they do.” “So I believe that Europe will still really be the core fly/cruise business for us, but we are really having a big push on Alaska. We want to attack the family market with the Norwegian Bliss and Norwegian Joy next year.” Odell said the local operation will also be expected to support NCLH’s presence in the Asia market where Norwegian will be operating Jade and Spirit. Australian cruise passengers are earmarked to fill between 40-50% of capacity on the ships in Asia. “It’s doorstep stuff for us. They’ll be longer cruises of around 10–12 days duration. We are not going into Asia and mirroring what Royal does with three- or four-day itineraries, or what Genting does, because that’s too competitive in that marker. We’ll source from Europe, America and Australia.” And while the Caribbean accounts for the largest cruise slice of the cruise industry in the world, only a small percentage of Australians consider the region for a fly/cruise holiday. Odell suggests that is because Australians are already spoilt at home with surf, sand and sun.

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