In the 1980s, we saw an entertaining TV serial, “The Love Boat”, that shows us how beautiful the yacht is and what romance the passenger might have. In addition, almost a century ago, in 1912, we also witness that the Titanic, the biggest passenger ship in the beginning of 20th century sank during the journey between Paris and New York, in which 1,503 people lost their lives. From the two stories above, we learn that yacht or cruise line have been in the business for decades.
Their target markets, as their luxurious ships suggest, are those who enjoy a journey in the sea and are willing to pay a considerably high price for the comfort. To meet such customers’ demands, the cruise line owner should provide a first-class service including the workers, foods and beverages, entertainments, and the cruise line itself. According to one report, the cruise line industry is a fifteen billion dollar worldwide business and it continues to grow at a rapid pace. Between January 2001 and December 2005, the cruising industry adds their fleet with over fifty ships.
While there are tens to hundreds cruising companies, in this paper, we will only focus the discussion on Norwegian Cruise Lines (NCL). Concerning the NCL, we will discuss about background of NCL, its offerings and differentiation strategies, global cruise market, pricing competition, competitors, and financial analysis. At the end, we will provide conclusion that describe the competitiveness of Norwegian Cruise Line in the cruising industry. 2. Norwegian Cruise Line.
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2. 1 Company Background Norwegian Cruise Line (NCL) is a 40-year old cruse line that originates from Miami, Florida in the U. S. Unlike other cruise line companies, NCL asserts that they offer distinctive services that guests/customers would not get from other cruise line companies. The so-called freestyle cruise line becomes the company’s tag line and perceived quality. The company’s business principle is to encourage innovation in all aspects of cruise line services. That principle guides the company to record several awards and ‘the first company’ records in some aspects as following: ? The First Caribbean cruise ? Provide the First Internet cafe at sea.
The First cruise line that has children's programs ? The First. cruise line to provide Freestyle Cruising ? The first cruise line that has WiFi connection ? Provide the first bowling alley at sea (NCL Corporation, 2007 - Our Company) 2. 2 Offerings and Differentiation strategies In order to keep alive in Cruise industry that has hundreds of players (cruise lines), a company may have to be perceived different from the rests. The situation also occurs for Norwegian Cruise line, a Miami (Florida – USA) cruise line that becomes one of well-known cruise line in the U. S. due to unique offerings.
The unique offerings called Freestyle where guests can choose services they want. The freestyle services come in many forms such as freestyle dining where customers can select 13 different restaurants on a single ship, freestyle fund where guests can experience many kinds of entertainment and fun activities like bowling, jogging, hiking, surfing, and spa, to name a few (NCL Corporation, 2007 – freestyle) 2. 3 Global Cruise Market Hospitality industry is a business dealing with the provisions of food, beverages, and accommodation.
According to one research, the industry is found to be the fastest growing industry in the world surpassing manufacturing and banking. In addition to airlines and restaurants business, one of branches in hospitality industry is Cruise Lines industry. Burke (2000) said that the cruise industry had maintained good performance within the past decades for two reasons: ? Cruise lines industry always show astonishing records in the number of passengers who sail the cruises.
In 1998 alone, the number of passengers was over five million passengers with occupancy rates about 91 percent. ? The industry continues maintains astounding growth rate about 10 percent per annum (Burke, 2000) The Cruise Industry started in 1960’s as a merely leisure cruising. During its first years, the industry grew enormously. By the 1980’s the larger cruise companies already constructing larger ships and the smaller companies trying to compete by acquiring second hand ships.
In the 1990’s the cruise companies built “post-Panamax” ships, the ships weigh over 100. 000 tons and apparently too large to pas trough the Panama Canal. The largest market for the cruise industry is from the North America where Norwegian Cruise Line (NCL) exists. The other prospective market is European. In 2001, The North American Market consists of 7 million cruise passenger (72 % of world demand), 1. 9 million passenger originated from Europe (20 % of world demand) and 800. 000 passenger (8 % of world demand) are from Asia. For the last 5 years, the industry has grown faster than any other types of vocations.
Continuous growth from years to come is expected to be 8 to 20 % of current market (‘Commission’, 2002). 2. 4 Pricing Strategies of of Norwegian Cruise Line (NCL) Competitors 2. 4. 1 Carnival Corporation (CCL) CCL is a company operating in the cruise ship industry. It provides cruise vacations leisure travels and sightseeing packages to customers worldwide. During 2004 the company has built 11 new ships. By February 2005, the company owned 77 cruise ships operating under 12 cruise brands (Eidam, 2004).
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