On a night in late April, Norwegian Cruise Line President and CEO Kevin Sheehan celebrated the delivery of his company’s new 4,028-passenger ship in Germany with a low-key, stress-free cocktail party.
What a difference three years had made.
During an inaugural cruise last month aboard the Manhattan-based Norwegian Breakaway, Sheehan recalled the much different scene in 2010 as the cruise line’s previous ship, Epic, was getting ready to debut in France.
“The night before I took delivery of the Epic, I was chasing a thousand Frenchmen all over the ship trying to get them to work,” he said.
The contrasting experiences are symbolic of the transition Norwegian Cruise Line — previously referred to as NCL — has undergone in the past few years. Since taking the helm in 2008, Sheehan has resolved long-standing problems, instituted a new corporate climate, placed a fresh focus on travel agent ties, taken the company public and launched a new class of ships that he hopes will further elevate the line’s reputation. After this year’s Breakaway, sister ship Getaway will arrive in Miami in January.
His tenure has coincided with the economic recession, which pummeled travel-related companies, and more recently a stretch of bad publicity for the cruise industry that started with the fatal Costa Concordia shipwreck last January in Italy and continued this year with fires aboard competitors’ cruise ships.
“There’s been obviously some negative press about the industry, but Norwegian, pun intended, seems to be sailing right through,” said Brad Tolkin, co-chairman/CEO of cruise distributor World Travel Holdings.
Norwegian went public in January with shares priced at $19, but the stock price hit $30 by mid-February and has generally hovered between $30 and $32 ever since. Competitors Carnival Corp. and Royal Caribbean Cruises, by contrast, have seen their stock prices drop by more than 11 percent and more than 7 percent respectively since mid-January. Carnival was trading at $33.84 when markets closed Friday; Royal Caribbean was at $33.98.
“It’s significantly outperformed its peer group, not only since the IPO but also year to date,” said Harry Curtis, senior leisure analyst at Nomura Equity Research.
DOING IT ALL
And Norwegian — a tiny player in a market dominated by giants Carnival Corp. and Royal Caribbean Cruises — has done it all while posting increased adjusted earnings before interest, taxes, depreciation and amortization for 19 quarters in a row and consistently improving customer satisfaction surveys for the last 40 months.
Five years ago, Sheehan could have predicted as much.
With a professional background that includes stints in leadership at companies as diverse as Telemundo and Cendant Corp. Vehicle Services Division and a couple years as a professor at Adelphi University, the New York native said “the joke was my longest cruise was on the Staten Island Ferry.” He came to Norwegian as chief financial officer in 2007, shortly before private equity firm Apollo Management invested $1 billion to become controlling shareholder in the company that had been wholly owned since 2000 by Genting Hong Kong. He moved into the CEO job the following year when his predecessor, Colin Veitch, departed.
Sheehan gathered his team on the Norwegian Sky for a weekend in 2008, integrating ship- and shore-based leaders for the first time. He kept them working from early in the morning until evening hours as an example of the new corporate culture and then unveiled his five-year plan.