03.24.2009  
 
Editor's Note

CNBC features NCL in "Cruise, Inc."

Interview with CNBC Reporter Peter Greenberg

By PAUL MOTTER

Tonight, March 24, CNBC will debut a new documentary on how the cruise industry makes money. Entitled "Cruise, Inc.", the show explores the business model for the cruise industry, using Norwegian Cruise Lines as an example.

This show is groundbreaking for the unprecedented access to information NBC reporter Peter Greenberg was allowed by NCL. I was privileged to get an advance copy of the show from CNBC. As I watched last week I found myself surprised by the many details Peter uncovers. Reporters such as myself have long known how cruise ships make money, but this show gives us a microscopic look into each process, and frankly much of it is surprising.

I was also able to interview Peter Greenberg the day after I watched the show. I learned what it takes to get that kind of access to information. As Peter said to me, "We needed a cruise line to work with us, and it took us six months just to hammer out an agreement with NCL. You have to give NCL a lot of credit for agreeing to that level of visibility."

Peter takes us on a one-week cruise aboard Norwegian Pearl, but planning for that week took much longer. Peter said he spent two years on background research, finding all the different ways cruise ships make money. NCL allowed complete and unfettered access to his six camera crews during the one-week cruise, the only limitation being if they presented a safety hazard to the crew or passengers. There were camera crews onboard, on shore, in the air and in separate sea vessels.

Cruise, Inc. reveals the revenue sharing agreement between the cruise lines and their shoreside tour operator partners for the shore excursions. It tells us how much shoreside chain stores, like Diamonds International found in almost every tropical port, pay to the cruise lines to include them as recommended stores in their onboard port shopping lectures.

Peter reveals that the ship will have calculated to the penny how much revenue each department must contribute before the cruise is profitable. For example, we learn that the target beverage sales for the cruise is $112,000. But Norwegian Pearl goes farther and has it broken down, for a ship that is sold to 95% capacity, to how much it needs to sell per passenger per day.

We also get a look at Art Auctions, how much the average room steward as well as a production show dancer get paid. We learn the economics of alternative dining, pricing strategies for "lead-in rates" and what proportion of revenue is derived from the cruise fares vs. how much from onboard revenue.

Follow this link to read my thorough preview of CNBC's Cruise Inc.

To get behind the scenes, read my interview with reporter Peter Greenberg.


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