Did Norwegian Cruise Line make its new ships too small? Executives trace at a solution

Are Norwegian Cruise Line‘s new Prima-class ships too small?

Norwegian executives suggested as much Tuesday during a conference call in which they announced a major change to the design of future vessels in the series.

Norwegian Cruise Line Holdings president and CEO Frank Del Rio told Wall Street analysts on the call that the third and fourth ships in the six-ship series would be about 10% bigger than the first two vessels in the series.

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He said the fifth and sixth ships in the series would be about 20% bigger.

Norwegian Cruise Line Holdings is the parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.

In making the announcement, Del Rio suggested the bigger size was necessary partly to accommodate bigger fuel tanks that could carry more environmentally friendly fuel.

But soon after Del Rio spoke, the head of the company’s Norwegian Cruise Line subsidiary, Harry Sommer, suggested that a push to achieve better economies of scale with the vessels was also a significant part of the move to go bigger with the ships.

The first vessel in the series, Norwegian Prima, debuted in August 2022. The second ship in the series, Norwegian Viva, will begin sailing later this year.

“We were really excited about the performance of Prima,” Sommer said during the call. He noted that the vessel had “come out of the gate as our best-booked ship, [with] great yields, great onboard revenue and, most importantly, great guest satisfaction scores.”

However, he also said, “When we look at the platform now that it’s in operation, we think we can take that great guest experience [and] great financial performance and get slightly better economies of scale by driving the ships a little bit bigger.”

Sommer suggested that the 10% increase in the size of the third and fourth vessels of the series was related to boosting their economies of scale. The even-bigger increase in size for the last two ships, by contrast, was related to both boosting economies of scale and plans to add the bigger fuel tanks, he suggested.

The larger fuel tanks will be able to accommodate methanol fuel, which Norwegian believes will be more environmentally friendly than the fuel it currently uses.

“The [bigger size for the] last two is really a combination” of the two factors, Sommer said. “In addition to having the ships larger to house the methanol tanks, we’re able to get more scale on those as well [as] more passenger count.”

The goal of making the last two ships about 20% bigger is “to deliver a fantastic guest experience and see what we can do to leverage scale and become more decarbonized along the way.”

Norwegian had previously told investors that future Prima-class ships would carry more passengers, but it hadn’t talked about the ships growing in size by as much as 20%.

Related: The 8 types of Norwegian ships, explained

Under development since 2017, the Prima class is Norwegian Cruise Line’s first new series of ships in a decade. It was designed specifically to be smaller than the line’s last new series of ships.

At 142,500 gross tons, the first new ship in the series, Norwegian Prima, is about 16% smaller than the last ship the brand unveiled — the 169,145-ton Norwegian Encore. The second ship in the series, Norwegian Viva, will be essentially identical. It’s currently nearing completion at a shipyard in Italy.

Compared to earlier Norwegian vessels, the downsizing of Norwegian Prima was a major shift for a line that had been hitting the supersize button on its new ships since 2010. That was the year the brand unveiled the 155,873-ton Norwegian Epic — the world’s sixth-largest cruise ship at the time.

In announcing the Prima-class series, Norwegian executives heavily touted their smaller size, saying it was critical to growing the brand.

“Bigger isn’t necessarily better,” Sommer told TPG in 2019 during an exclusive interview on Norwegian Encore (which is Norwegian’s biggest ship). The interview occurred during the ship’s inaugural and included a discussion of the line’s reasons for going smaller with its future vessels.

While megasize ships like Norwegian Encore were hugely popular with vacationers and had great economies of scale, a line like Norwegian needed a range of ship sizes in its fleet, Sommer told TPG at the time. He ticked off several reasons, starting with the fact that the biggest ships are restricted in where they can operate due to limitations in port infrastructure.

Norwegian’s new Prima class of ships debuted in August to rave reviews, including one from TPG that called it elevated and elegant and praised its smaller size.