Is Too Much Ever Enough? NCL to Gouge Customers Again

Travel Weekly and Cruise Critic are reporting that Norwegian Cruise Line (NCL) is raising gratuities on April 1st from $13.50 per person, per day, to $13.99, on all ships except the Norwegian Sky. Daily gratuities for standard cabins on the Norwegian Sky will increase to $18.99 (an increase over 40%). 

Travel Weekly says that NCL will increase daily gratuities for suites from $15.50 to $16.99 on all of its ships except for the Sky where it will charge $21.99. 

It seems that there is no limit to the greed of cruise executives. NCL CEO Frank Del Rio just spoke at Seatrade Global about how the stock market was at all time high and fewer regulations and President Trump's pro-business tax cuts were good for his business. Del Rio collected nearly $32 million in Miami Cruise Ship Capital of the World2015

Del Rio's NCL has gouged its customers before, with extra charges, including increased room services charges, automatic gratuities and restaurant cover charges. He made this statement at an earning conference in 2015: "... we have looked across the fleet to identify areas where marginal changes ... can be implemented to improve performance. A few examples include a 6.7% average increase in beverage prices, the introduction of a nominal room service fee and lower costs from renegotiated shore excursion agreements. To put into perspective how these small changes can add up quickly, every dollar increase in yield translates to approximately $15 million to the bottom line."

Of course, all the major cruise lines nickel-and-dime their customers. Royal Caribbean just began charging for room service and, in the past, increased its gratuities while attempting to create the appearance that the increases were for its hard-working crew members (Read: Loyal to Royal? Expect to Pay Higher Gratuities! And the Money's Not for the Crew). Carnival Corp. did exactly the same thing while it also pocketed the increased gratuities (Read: Carnival Hikes Pre-Paid Gratuities But Will Passengers Secretly Remove Tips?)

Today, I read an article by David Grace Author titled When Greed Is Thought To Be A Virtue - When More Is Never Enough. He discusses what he calls the "more-more-more-until-it-all-blows-up" business phenomenon. The cruise executives, Del Rio in particular, put on quite a demonstration of unbridled greed at the Seatrade Cruise conference last week. The CEO's have an unhealthy, unchecked pursuit of profits in an industry which has always overreached into the American public's pockets.  The cruise industry pays virtually no taxes, exploits their workers from around the world, and still nickle-and-dimes their tax-paying customers whenever they have a chance. 

When is enough, enough? 

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Photo credit: Marc Averette - CC BY-SA 1.0, commons / wikimedia.

The "Trump Effect" - Cruise Industry Reinforces Its Image as an Enemy of the Environment

Falmouth, Jamaica Dredge and FillYesterday, I attended the annual Seatrade Global conference in Fort Lauderdale. In the morning, the "state of the industry'' featured the usual cruise tycoons extolling on the billion dollar cruise industry. Carnival Corporation's CEO Arnold Donald, Norwegian Cruise Line Holdings CEO Frank Del Rio, MSC Cruises Executive Chairman Pierfrancesco Vago, and Royal Caribbean Cruises CEO Richard Fain all spoke glowingly to an audience of enthusiastic cruise attendees that the cruise lines were enjoying a booming business.

The most talked about statistic was that over 25 million passengers around the world will be welcomed on board cruise ships this year.

But there was a troubling undercurrent at the convention. 

“NCL's cruise executive, Frank Del Rio, who received nearly $32 million in compensation in 2015, said that the industry was benefiting because of what he called the "Trump Effect." 

CNBC reporter and moderator, Susan Li, encouraged Del Rio to explain the "Trump Effect" to the attentive audience.  

Del Rio said that because of President Trump, the stock market was at all time high and fewer regulations and pro-business tax cuts were good for his business.

Del Rio also said that he "loved" the NCL cruise destinations, including cruises to his native Cuba, "because they make us money."   

Del Rio's comments about the "love" of more money and "fewer regulations" seem to be the essence of the "Trump Effect." President Trump is aggressively taking steps to gut the Environmental Protection Agency (EPA), as evidenced by his appointment of Oklahoma attorney general Scott Pruitt to head that federal agency. Pruitt has a record of trying to destroy the environmental protections that the EPA is responsible for enforcing. He has built his political career by trying to undermine the EPA’s environmental protections and has even disputed the effects of climate change. 

Cruise Ship Smashes Reef in Raja Ampat, IndonesiaThe cruise industry has always struggled with its environmental image.

Just two days ago, a British cruise ship smashed into a pristine and beautiful reef on Raja Ampat in Indonesia and then caused further damage when the captain insisted that tugs drag the cruise ship off the ancient reef.

There are few travel industries which can wreak havoc on rare, biodiverse marine habitats as effectively as the cruise lines. 

Damaging reefs is not an usual event in the world of cruising, as the cruise lines have recently demonstrated time after time. But the damage is not just due to the reckless operation of cruise ships but is often the intentional acts of dredging old reefs and filling native mangroves with the pulverized coral to make way for deeper ports in the Caribbean to accommodate the larger and large cruise ships which are dominating the cruise industry today.

Of course, the cruise industry just witnessed the spectacle of the Department of Justice fining Princess Cruises a record $40,000,000 fine after its investigation uncovered wide-spread illegal practices involving dumping oil at sea around the world by the Caribbean Princess, Star Princess, Grand Princess, Coral Princess and Golden Princess over the course of nearly a decade. Meanwhile, the cruise executives at the helm of the Princess organization at the time of the dumping have continued to be promoted to lucrative positions in the Carnival corporation

"Magic pipes" and shady environmental shipboard practices have long been part of the history of the cruise industry.

The fine seemed to be déjà vu of the early 2000's when the major Miami-based cruise lines, NCL, Carnival and Royal Caribbean, paid tens of millions of dollars in fines and pled guilty to multiple felonies for dumping oil into the oceans, falsifying ship logs and lying to the U.S. Coast Guard about the environmental crimes.

Reef Damage in Cayman IslandsSo, in an industry with a history like this, it's troubling to see a CEO of a major cruise line excited about the benefits of fewer environmental regulations under the Trump presidency. Yes, the cruise executives will earn lots of more millions of dollars, but the reefs and waters around the world will pay a heavy price for such short-sightedness.

Interested in more articles about the "Trump Effect?" Read:

Skift (by Hannah Sampson) - Cruise Executives at Odds Over the Trump Effect.

Seattade (by Anne Kalosh) -  Strong demand, record orderbook, China, 'Trump effect' boost cruising, top leaders say.

Miami Herald (by Chabeli Herrera) - Cruising is booming, thanks in part to the ‘Trump Effect,’ but there’s a catch.

Take a moment and read: Donald Trump is preparing to make massive policy changes at the EPA and Trump to environment: This is war.

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Photo credits:

Top - Dredge and fill in Falmouth - Jamaca Gleaner

Middle - Reef in Raja Ampat, Indoneasia - AFP via the newspaper

Bottom - Anchor damage in Cayman Islands - Don Foster's Dive Cayman via Cayman Compass

CEO Del Rio Buys $3,000,000 Worth of NCLH Stock

The Securities and Exchange Exchange Commission reported this past week that the president & CEO of Norwegian Cruise Line Holdings Ltd ("NCLH"), Frank Del Rio, bought 83,498 shares of NCLH at an average price of $35.94 a share. (Photo below, right, during interview on CNBC).

The transaction took place on on August 31, 2016.  The total cost of cruise stock purchased was $3 million. 

The price of the stock decreased to $35.61 by the end of the week. It is at a 52 week low. 

It was widely reported earlier last month that NCL had slashed its earnings forecast for this year and announced that it would miss its profit target for next year, because of "continued weak demand" for European travel, Brexit's impact on the pound, and some U.S. consumers reconsidering Frank Del Rio NCLMediterranean cruises following ISIS-inspired violence worldwide.

Analysts say that its been a "choppy year" for the cruise industry in general, and for shares of Norwegian Cruise Line in particular. NCLH stock reportedly "retreated to levels last seen in mid-2014." Frank Del Rio's $3 million cruise stock purchase, according to Wolfe Research analyst Jared Shojaian, is "the largest open market purchase by a cruise-line executive in history."

Bloomberg says that Del Rio is attempting to demonstrate confidence in NCL to "sail through choppy waters."

It is a move similar to Royal Caribbean's Chairman Richard Fain who bought 29,190 shares of RCL stock, in a series of trades for an average of $68.5161 per share, worth nearly $2,000,000. Cruise executive Fain made the transaction shortly after his cruise line's stock price dropped substantially following the release of Royal Caribbean's second quarter earnings. But in Fain's case, unlike Del Rio's, the cruise stock quickly bounced back over 6.5 %, earning the cruise executive a one-day profit of around $140,000. 

Del Rio certainly has boatloads of money to buy stock. In 2015, he received almost $32,000,000 in total executive compensation.

The SEC states that he directly and indirectly holds 919,173 worth of his cruise line stock. The SEC forms reveal he owns 451,171 shares directly. He indirectly owns 27,875 shares through a family trust and the SEC forms state that he indirectly holds 304,373 and 135,754 shares through investment limited liability corporations.  The total shares are worth over $34,000,000 at the current depressed stock prices. The Norwegian Cruise Line stock price hit a high last year of $64.27 a share which, at that price, would be worth a total of nearly $60,000,000 to Del Rio.

It's no wonder that cruise passengers freak out when NCL nickel and dimes them with room service charges, increased gratuties and high-end restaurant cover charges.

Yes, cruise executives pocket an obscene anount of money. It's funny money, I say, at a time when crew members are working harder and longer than ever before for less and have no job security.  

Interested in "fat cat" cruise executives? Read Andy Stuart - No Wonder He's Smiling (NCL), Micky Arison Sells $433,700,000 Worth of Carnival Stock (CCL), and Cruise Executive Richard Fain Hits the Jackpot Again (RCL). 

Photo Credit: CNBC

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