An Epic Tale

May 09, 2010

The word epic is both a narrative of historic feats and a description of something impressive and beyond the ordinary. It couldn’t apply better to today’s Norwegian Cruise Line and its landmark ship, which debuts this summer. The 4,200-passenger Norwegian Epic is clearly impressive and far beyond the ordinary with its studio accommodations for singles; New Wave Staterooms with curved walls; villas and suites with private restaurants; bars and pools; name entertainment offered day and night; and 21 restaurants to choose from.

However, Epic is also the culmination of a long series of historic feats in Norwegian’s 40-year history and of the company’s recent changes. The ship is both the embodiment of a new level of Norwegian’s Freestyle Cruising concept and a reflection of what CEO Kevin Sheehan calls “a corporate sea change.”

“We’re moving from good to great,” Sheehan said. “We have the opportunity to take this brand, which hasn’t been optimized for 40 years, into greatness. Norwegian is a very different organization today.”

One difference is evidenced in profitability: with all the challenges of 2009, Norwegian reported a net income of $67 million on revenue of $1.9 billion in 2009, a reversal from the net loss of nearly $212 million on revenue of $2.1 billion a year earlier.

“A lot of it is just stepping back and looking at others,” Sheehan said, “seeing how Carnival Cruise Lines runs its cost structure or how Royal Caribbean Cruise Line runs its revenue structure and taking the best practices.”

A big move for Norwegian was bringing in Roberto Martinoli as president and COO in 2009. Martinoli had been an advisor to Apollo Management, which has owned 50 percent of Norwegian since 2007, and has a long history with cruise lines, including Carnival.

“We are definitely not following the ‘that’s how we’ve been doing it’ point of view any more,” Sheehan added.

Agents certainly have seen changes in their interaction with the cruise line.

“When you are the small guys, you have to be in the faces of the agents,” Sheehan said. “In some ways, we were harder to deal with than other lines, and we had to make the
process more seamless. We put 100 initiatives to work in Partnership 2.0 starting in December 2007.”

The program has introduced features from Norwegian University (NCLU) to earlier processing of group commissions, a seven-days-a-week resolution desk, simplified and consistent pricing quotes, improved credit card policies, electronic payment processing and enhanced confirmations. The company also added a premium air desk and a flight assistance hotline among its initiatives. By 2008, Norwegian was voted “most improved cruise line” by CruiseOne and Cruises Inc.

Sheehan also sees the company entering a new phase in its marketing.

“I think we’ve successfully differentiated ourselves as a young company and, now, we’re changing from NCL to Norwegian Cruise Line,” he commented. “The mainstream U.S. may not have even known what the letters stood for.”

Sheehan said Norwegian is turning away from its commercials showing passengers moving together like robots on other ships and vacationing freely on Norwegian. Although Norwegian has won awards for these ads, he sees the “us and them” ads as targeted against the rest of the industry. Now, Norwegian will stress its upscale features and communicate what the line is and what it is not.

“Focus groups put us at the top of the premium brands, and we were living at the bottom,” he said.

Internally, too, there have been sweeping changes.

“People didn’t communicate well here in the past,” Sheehan said. “Now, they want to come and work here from other cruise lines. We have a tremendous future ahead. Mine is the best job in America — with the brand that has the most potential.”

Innovative Ships
Epic is a display case for that potential, the single manifestation of a new leap in a brand that has defined itself with freedom of choice, brand-name partnerships and the ship-within-a-ship concept. Andy Stuart, executive vice president of global sales and passenger services, looks at the ship as the extension of the Freestyle era that began in 2000.

“It was really seen as a great opportunity to differentiate the brand,” Stuart said. “The industry was in a lockstep then, with two-seating dining — people thought it wouldn’t be possible to break that with the existing vessels. It was not just about dining; it was more lifestyle than a program attribute. We moved away from regimentation and from things like people reading the onboard newspaper in the morning to see what they were going to have to wear that evening.”

Norwegian has since created an entire fleet of ships purpose-built for the Freestyle experience, gradually phasing out the vessels that preceded them.

“We had a few hiccups at the beginning, but we learned quickly,” Stuart said. “Now, we have a very young fleet with at least 10 or 11 restaurants on each for people to choose from and cuisines people would have believed were impossible onboard, such as our Teppanyaki room. We’ve sparked innovation across the industry, and we’re still at the
forefront.”

With dining flexibility, the entertainment schedule had to change as well, and Norwegian learned how to handle multiple options that spread the passengers around. It also made its entertainment attractive by bringing in recognized name brands that suited its individual philosophy.

“We’ve been working with Second City for a number of years; they are a name brand that works well ashore, and we have expanded our relationship with them,” Stuart said. “With Epic, we have a dedicated comedy club onboard, which will make it much easier.”

He noted that previous shows have either been in the theater, which is too large, or in the Spinnaker Lounge, which is not quite the right venue for the group.

“In Chicago, Second City’s theater is very intimate, and it brings the atmosphere up a few notches,” Stuart explained. “We’re doing the same, and we
expect it will make a huge difference. They are expanding their content, too.”

The famous Blue Man Group, which will perform on Epic, also comes from a small theater in Manhattan’s East Village; they will use a 600-seat theater on Epic, twice the size of their original home, but far smaller than their Las Vegas venue. Howl at the Moon, a rock n roll piano show, will get audiences involved with 1970’s rock the same way they do on land from Hollywood to Chicago. And Legends in Concert will bring their land-based celebrity impersonations from Vegas and Foxwoods Resort and Casino in Connecticut to the ship, while Cirque Dreams and Dinner combines acrobatics, colorful costumes, audience interaction and dining. The schedule of the entertainment, with daytime performances as well as greatly varied evening options, takes the Freestyle concept to the next level.

“We’re trying very hard to change the face of cruise-ship entertainment,” Stuart said. “Right now, people don’t choose a cruise because they want the entertainment, but all the people who go to see ‘Miss Saigon’ are there for the show. Certainly people could sail because they want to see the Blue Man Group or The Legends’ Elvis perform on their vacation.”

Stuart pointed out that it’s hard for a cruise line to tell its entertainment story without a brand name, and the same is true for its family story.

“The Nickelodeon partnership has rounded out our family product,” Stuart said. “We’re happy with our active sports and the three waterslides on Epic are really exciting. The sports court will have soccer tournaments and basketball; there are bungee trampolines, a great teen club and, of course, bowling. We’ll have the Nickelodeon game show for families in the theater, and character breakfasts available. Also, we have dedicated family accommodations close to the kids’ facilities. We’ve tried to make it easier for travel partners to show clients these family areas across the fleet.”

Epic also makes multiple use of areas that have been underutilized in the past.

“You see these cavernous spaces standing empty at various times,” Stuart said. “Usually, the main theater is primarily an evening venue, and it extends up three decks. We’ve made it smaller and put in family shows in the daytime. With time set aside for rehearsal, there will be tremendous usage and occupancy.”

Epic’s comedy club will be in use by Second City and Howl at the Moon and, in the daytime, Second City will offer classes there as part of Norwegian’s enrichment program. In addition, spaces like the Posh Beach Club transform themselves and set up for different kinds of activities several times a day, from sunning in private, poolside cabanas during the day to dancing on the covered pool at night.

Accommodations on Epic take Norwegian’s ship-within-a-ship concept further. Besides the Studio staterooms with a common lounge targeted for singles, the curved New Wave accommodations and the family rooms, the ship also has designated spa staterooms and has a dedicated upscale restaurant and informal dining for suite guests, along with their own courtyard lounging and sunning area, gym and spa services.

The 21 dining venues are more than anyone is likely to experience on a seven-day cruise. They not only offer different cuisines, but each has a different ambience and some are associated with other activities, such as a restaurant with dinner dancing, the upscale bistro and O’Sheehan’s Pub with bowling. Epic will have a completely separate Chinese restaurant, the first Brazilian churrascaria at sea, shipwide pizza delivery, a noodle bar, a tapas bar and Latin-Asian fusion poolside dining, not to mention a real ice bar.

Since the pleasures of the ship are at such a high level, Norwegian has done a great deal of planning to make sure that the transition from ship to shore is smooth.

“With 4,200 passengers, we have set up our itineraries so there are no tender ports and, by Epic’s launch, the online check-in will leave almost nothing to do at the pier,” Stuart said. “We’ve worked closely with Miami and the ship will be at a double terminal that normally handles two vessels. The destinations are ready to accommodate our guests, and we feel very confident that it will all work well.”

With its new fleet spearheaded by Epic, the line is looking toward substantial growth.

“We are seeing higher numbers and higher prices,” Sheehan said. “Results in 2010 will be very good; pricing looks good in the first quarter and the wave season was unprecedented. To take the company public, we need growth and partnerships.”

One area earmarked for strong potential growth is Europe.

“Europe is the Wild West for us; we see it as a market we haven’t penetrated as we should,” Sheehan said. “Andy [Stuart] is now in charge and we’re going to expand.”

Meanwhile, Sheehan is very pleased by both the improved position of the line, its relationship with agents and with its corporate culture.

“Universities are calling to see how we have transformed ourselves,” Sheehan said. “It’s become a great case study.”