Can you briefly overview Norwegian Cruise Line Holdings, including its history, mission, and the three cruise lines it operates?
Norwegian Cruise Line Holdings is a prestigious 57-year-old company, founded in 1966. We pride ourselves on hosting three world-leading brands: Norwegian Cruise Line, in the upper contemporary space; Regent Seven Seas Cruises, an epitome of all-inclusive luxury; and our third prestigious brand, Oceania Cruises, which operates in the upper premium space. Our passion lies in delivering great vacation experiences. Our current fleet comprises 31 ships, which will reach 32 ships by year-end with the imminent introduction of the Regent Seven Seas Grandeur, marking a new milestone as the most luxurious ship ever built.
We are committed to excellence and innovation, boasting high repeat rates that attest to our unwavering quality and guest satisfaction. Each year, over 2.5 million guests entrust us with their vacation experiences.
How is your company addressing sustainability, given the environmental impact associated with the cruise industry?
Our Sail & Sustain global sustainability strategy is centered around our commitment to drive a positive impact on society and the environment. The cruise industry is working to be the best way to travel responsibly and allow our guests a lower carbon intensity method to explore the world. Our pledge is to pursue net zero greenhouse gas emissions by 2050 across our operations and value chain. We have also set interim goals of a 10% intensity reduction by 2026 and a 25% intensity reduction by 2030. Our strategies include substantial investments in technology and efficiency improvement projects which provide a clear, actionable path to meet these interim targets.
The journey beyond 2030 will embrace future technologies and innovations including alternative low or zero-emission fuels. We are investing in methanol-based engines, including with 2 of our Norwegian Cruise Line ships on order for delivery in 2027 and 2028, and partnering with others to enhance green methanol infrastructure worldwide. While our path to net zero will be complex and we do not have all of the answers today, our commitment is anchored in concrete plans, investments, and collaborations with shipyards, governments, and ports globally.
Could you elaborate more on the Sail and Sustain strategy and how it aims to achieve the sustainability goals you have outlined?
As part of our overarching Sail and Sustain strategy, we have a long-term climate action strategy that stands on three pillars: efficiency, innovation, and collaboration. We are meticulously reworking ship deployment and itineraries to optimize fuel consumption. Initiatives like optimizing engine usage, transitioning to LED lighting, and upgrading to high-efficiency air conditioning units are some of the enhancements underway. We are also committed to reducing waste, exemplified by our efforts to reduce and eventually eliminate single-use plastics, and conserve water, including our efforts to source water onboard, mitigating resource depletion on land.
In terms of innovation, we are pioneering the use of green methanol and biodiesel, while still actively exploring other future fuel alternatives like hydrogen and ammonia. We are not solitary in this journey - collaboration with entities like the EU underscores our collective pursuit of innovative and sustainable solutions.
With all the investments in sustainability, do you foresee a hike in prices, potentially making cruises a more high-end vacation option again?
The value proposition of the cruise industry has always been compelling. Even today, a cruise vacation is typically 30 to 40 percent less expensive than a comparable land vacation. As we invest in long-term decarbonization and greenhouse gas emissions reduction, there might be a modest increase in prices. However, the value and experience we offer will continue to outweigh the cost.
How have you managed to recover from the impacts of the COVID pandemic, and has this affected your sustainability investments?
We are optimistic about the future, particularly as we head into 2024. Our bookings are robust, customer satisfaction and repeat rates are promising, echoing or even surpassing our 2019 performance, our previous best year. However, the pandemic forced us to raise capital, impacting our balance sheet. Despite this, we have a multi-year plan to de-lever and restore our balance sheet.
While the pandemic affected our financial flexibility, it did not halt our sustainability initiatives. If 2020 and 2021 had been normal years, we might have accelerated our investments in decarbonization even further. Nevertheless, we optimized the period of inactivity by enhancing the efficiency of certain ships, which concurrently reduces their carbon footprint, and also took the time to develop a new climate action strategy, roadmap and targets. Every challenge, including COVID, is an opportunity for innovation and improvement.
Do you find it challenging to convince the public about the seriousness of your sustainability commitment given the sensitivities around climate change?
The cruise industry has made strides in articulating our sustainable initiatives and accomplishments, especially in recent years. The focus is not only on future plans but also on the significant contributions made over the past five years. We recognize the public's interest and concerns regarding climate change, and we share those concerns; addressing environmental issues is vital for the planet's long-term health and for our business as we travel to over 700 destinations around the world.
We believe we are at the forefront of combining travel enjoyment with environmental responsibility, and while we have made progress, there is always room to improve and enhance our messaging.
Do you have a final message for those attending COP28 regarding your sustainability efforts?
Two key messages stand out. First, the maritime industry, including the cruise sector, is keen on establishing partnerships. We are looking to collaborate with the EU and other stakeholders to create private-public partnerships and regulatory support that advances sustainability efforts in a fair and equitable way. Our commitment transcends mere compliance; we are enthusiastic about contributing more than our fair share to address climate change.
Our dedication to reducing our greenhouse gas intensity by 25% by 2030 is backed by concrete plans and allocated capital. It is not an abstract goal but a commitment with specific, actionable projects spanning the next six to seven years. We are unwavering in our mission to contribute substantially to global efforts in reducing carbon and other greenhouse gas emissions and are focusing on tangible, impactful actions.
