Norwegian Cruise Lines
Uploaded by knoxville on May 14, 2005
Executive Summary:
In this study of Norwegian Cruise Lines (NCL) our group analyzed the company’s overall position with focus on their marketing. NCL has been underperforming in their financial reports as compared to the rest of the cruise industry leaders and has been unable to obtain positive income consistently. The cruise industry is rapidly growing with many lucrative opportunities. While there are many different cruise lines, Carnival Cruise Lines and Royal Caribbean dominate ownership and market share.
NCL’s main marketing strategy is known as “Freestyle Cruising.” This new approach to cruising is an industry first and has revolutionized cruising. Recently NCL has also adopted several cruises departing from Hawaii and mainland America, and they have flagged some of their fleet under the U.S. flag. While we believe that NCL offers a high value service, they still struggle to inform many potential clients of this value. Overall we believe that more NCL needs to educate their customers and travel agents of what they have to offer.
History and Financials:
NCL was founded by Knut Kloster and Ted Arison in 1966, creating a single class, casual cruise line, departing from Miami all of which were relatively new to the cruise industry . Arison eventually left, founding Carnival Cruise Line, but NCL still prospered through the 1980’s. In 2000, Singapore-based Star Cruises acquired NCL. Soon after the acquisition, NCL introduced its Freestyle Cruising concept and U.S. Flagged ships. Currently NCL has ten cruise ships and is continually expanding its fleet (See Appendix Q).
NCL has an eleven percent control of the market compared to its competitors Royal Caribbean, with thirty-five percent, and Carnival Cruise Lines, with forty-nine percent. Over a three year period these percentages have changed very little (Appendix A). Since Star Cruises acquired NCL the financials contributed by NCL have been buried within Star’s financials. In figuring out how much income was the result of NCL under Star Cruises, we looked at the past financial history of both. Two years of complete financial statements were found and it was determined that NCL contributed around seventy percent of the revenue, which is lower than industry leaders.
When looking at the competition it was clear that SG&A expenses are more then double that of Carnival and Royal Caribbean as a percentage. It also had higher non-operating and COGS expenses compared to Carnival as a percentage....