Norwegian Cruise Line paves the China way

Andy Stuart’s cruise credentials are unchallenged. He has been in the cruise business for many years and remained with Norwegian Cruise Line through various changes in management until taking the top spot last year. As president and chief operating officer, he is now steering the Norwegian ship into a new future with the Chinese market very much on the radar.

“China is clearly a very important topic in our industry today and it’s an area of major focus in our business,” says Stuart. “We are deploying our largest, newest ship to China next year so there is a great emphasis on that.”

The China connection is “a pretty big commitment” as far as Norwegian is concerned, particularly because it is positioning Norwegian Joy, its first ship tailored to the Chinese market, there in 2017. Over the past eight months, the company has opened offices in Shanghai, Beijing and Hong Kong and has already employed 30 people, but that number is growing pretty quickly.

Now that the newbuild project is underway, managing and building the market is key. “We are developing distribution,” Stuart explains. “It’s a new market and it’s quite complicated, but it’s important that it’s successful.”

Doing business in China is different from the US and Europe. “There is a learning curve in just opening offices and getting regulatory approval for doing business,” Stuart explains. “There is a higher level of complexity than most places where Norwegian operates today. The way cruise has evolved in China is different to other major markets. It has developed into a charter market where the ship is filled, or large groups of space are taken up, by travel partners who then redistribute on our behalf.”

However, highlights Stuart, Norwegian is not trying to impose on these travel partners. “We are working hard to listen, to try and understand what is important for our partners, to work in a way that understands the consumer and the market as a whole,” he comments. “It’s something we have to learn. In some senses it is quite good that we don’t have to go and develop thousands and thousands of individual travel agents, but for them, taking bigger blocks is a big thing.”

Learning curve aside, Stuart says Norwegian is bullish on China. “The sheer scale of the population vis-à-vis the capacity going there, [means] we only need to convince a very small percentage of people to jump on a ship,” he remarks. “We are pretty excited as a whole, but also bullish about our ship in the market being the newest and most exciting and we believe the most appropriate product for the consumer.”

Although Norwegian Joy was originally designed as a sister to Norwegian Escape, the vessel has been completely customised for China. “The decision was taken early enough to really spend time talking to folk in the local market and to make some substantial changes to the ship,” Stuart says, explaining that this includes changes to décor, public spaces and cabin configuration. “The staterooms have been expanded on the family offerings and we have added a new level of VIP accommodation. The Haven was very well-received by China, so we’ve added a concierge tier, which will offer a Haven-like experience, but not quite to the same level as The Haven.”

Norwegian has also shifted its thinking about itineraries. “Historically we’ve been a brand with seven days with repetition, but the strategy as we go forward is to offer more choice in our deployment,” Stuart says, adding that this will apply to China and core markets like the Caribbean, where the line will add more flexibility and variety. As Norwegian has not yet sold any itineraries on Norwegian Joy, Stuart says that it is far too early to confirm whether it will add more capacity to the region. “Clearly our ambition is to have more, but the strategy is one ship at a time,” he notes. “We will get some experience and then decide if and when more capacity comes.”

Norwegian believes using knowledge is the absolute key to getting it right. “No one is sitting in Miami guessing,” says Stuart. “All our research work has been done with local companies to really understand what Chinese customers are looking for. The ship has a Chinese name (Xı˘ Yuè Hào), [sounds like Norwegian] with words that are positive for the Chinese. The marketing campaign is being conducted in consultation with an agency in China. Nothing has been done with a western view of what the Chinese customer wants, but with a Chinese view of what the Chinese customer wants.”

Much smaller than China, but clearly a significant destination, is Cuba. Stuart sees this as not only an exciting new destination, but also one that will have a positive effect on the Caribbean generally. “There are multiple benefits,” he remarks. “One is the sheer conversation around Cuba, which is bringing more conversation around cruising in the Caribbean. We are very enthusiastic about it for the three brands and we hope to have something to say about it [in future].”

However, the availability of ports remains an issue. “I think this is one of industry’s bigger challenges as more capacity comes and brands continue to develop more globally,” Stuart says. “It’s up to us and our partners in destinations to continue to have exciting places to take the capacity to. There are some areas where there is phenomenal investment and tremendous foresight in seeing the capacity coming, but other areas where there are different priorities and they haven’t seen it come.”

While Stuart says that this issue is still manageable today, the arrival of more and bigger ships will put infrastructure under increasing pressure, making investment crucial. “I think you will see cruise lines developing their own facilities and partnering with destinations, or destinations making their own investments and cruise lines getting together to develop infrastructure,” he predicts. “Different places will merit different kinds of investment. Some destinations don’t want cruise line involvement, others do. There’s a good dialogue between the supplier side and cruise lines and both sides recognise it is very important to continue to collaborate.”

Guest experience also remains a major focus for Norwegian. The company wants this experience to be the same whether the passengers are on an existing ship or a newbuild, which is a major driver behind its huge US$400 million investment to change both the ships’ software and hardware, the Norwegian Edge project. Norwegian Dawn, for example, emerged from a massive drydock at the end of June. Guests were able to watch footage from time-lapse cameras during the building to show how the ship was taken back to steel and then rebuilt with some completely new venues and a whole new look. Both the software and the hardware are undergoing major changes. “This was not a ribbon around a drydock,” says Stuart. “Our guests will feel like they are walking onto a new ship.”

Getting the experience right and the message is paramount, particularly because of how it affects the business. “We are really putting a lot into marketing to tell everyone what we are doing,” Stuart says. “It is vital we get a return on investment.”