Full Ships! Norwegian Expects 103% Occupancy Rate in 2023

The company calls it the “Great Cruise Comeback.” Following the pandemic pause and the gradual return of sailing, it’s safe to say that cruising has fully returned. In fact, it’s set to be back more than 100%… literally.

Norwegian Cruise Line Holdings expects that it will sail ships at more than 100% occupancy on average in 2023 for the first time since the pandemic.

Norwegian Cruise Line Holdings Ltd. (NCLH) — the parent company behind NCL, Oceania, and Regent Seven Seas Cruises — is one of the three major cruise companies that trades publicly. And as a public company, it reports results each quarter to investors.

Since the company returned to sailing following the cruise pause, it has gradually returned to having more and more people on its ships. For instance, over all of 2022, NCLH saw a total occupancy of 72.8%. But that has continually increased. In just the last three months of 2022, occupancy was at 86.6%.

So the ships continued to see more passengers, but still didn’t sail completely full. Now the company is anticipating occupancy percentage to hit 100%… and even more.

In forward guidance that Norwegian released, it now says it expects to average 100% occupancy in the first quarter of 2023. And for the year overall, it expects occupancy of 103.5%.

How a 100%+ Occupancy Rate Is Possible

So how can a ship sail at more than 100% occupancy? The measure is defined as “the ratio of passenger cruise days to capacity days.”

Put simply, for each cabin on a ship there are expected to be two passengers for 100% occupancy. So if a ship has 2,000 cabins and sails with 4,000 passengers, then it reached the 100% metric.

Add in more people into a cabin and the occupancy level can go even higher. For instance, when two parents and two kids sail in a cabin, then it bumps up the occupancy level. An expected rate of 103.5% for the coming year means NCLH expects each cabin occupied by two people on average, with a few sailing with more than two passengers.

Still Room for More Passengers

While ships are sailing full again, there is still room for more passengers.

What might surprise you is that an occupancy of 100% — or even 103.5% — is still considered below normal.

In 2019, the last full year of sailing before the pause, NCLH saw an overall occupancy of 107.3%!

But it shouldn’t be long before cruises do reach that level again. In fact, while the company says that occupancy is expected to be 100% in the first quarter of 2023, it also disclosed it “is on track to reach historical levels for the second quarter.”

That boost in occupancy should also return NCLH to profitability soon. The company now expects to earn approximately $0.70 per share in 2023, compared to its loss of $5.41 per share last year.

So if you had been spoiled by having a little more elbow room since cruising resumed, you can plan on full ships going forward.

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