In a groundbreaking development for the cruise industry, Norwegian Cruise Line Holdings (NCLH) has introduced a new metric called ROEx, which stands for Return on Experience. This innovative approach, revealed during the company’s Investor Day, represents a shift from traditional indicators of profitability to a more nuanced understanding of customer satisfaction and engagement. As NCLH CEO Harry Sommer explained at the recent CruiseWorld conference, this metric centers around the idea of delivering experiences that are genuinely valued by guests, rather than merely focusing on cost-effectiveness.
The establishment of ROEx can be understood through a contrast of leadership philosophies employed by previous CEOs of NCLH. Sommer discussed Kevin Sheehan, who approached the business with a finance-oriented mindset, emphasizing measurable returns—return on investment (ROI)—where every dollar spent was expected to yield two dollars in revenue. In contrast, Frank Del Rio, Sommer’s mentor, prioritized creating exceptional guest experiences. However, Sommer pointed out the flaw in this approach; not all the experiences crafted under Del Rio’s vision resonated with guests. An illustrative case is the sculpture garden on the Norwegian Prima, a reflection of Del Rio’s passion for art that didn’t necessarily align with the broader preferences of cruise-goers.
This realization has led NCLH to adopt a more balanced perspective that integrates both previous philosophies. By focusing on ROEx, the company aims to ensure that every amenity, whether it be dining options, entertainment, or excursions, aligns with guests’ needs and desires. This is not merely about aesthetics or luxury; it is about understanding what travelers value and are willing to pay for, thereby enhancing guest satisfaction while also driving profitability.
A significant element of NCLH’s strategy revolves around data utilization. Sommer recounted his experience during his onboarding as CEO when he requested detailed insights into guest dining preferences. This request, which surprised the hotel operations team, demonstrated a pivotal shift in the company’s focus. By gathering data on meal choices, NCLH can better curate its offerings and tailor them directly to guest expectations, paving the way for a more personalized cruising experience.
As Norwegian Cruise Line Holdings embraces ROEx, the cruise industry may witness a fundamental transformation in how it understands and delivers value. By marrying guest feedback with operational strategies, NCLH is poised to redefine the essence of cruising, ensuring that every aspect of the journey resonates with guests’ preferences. In a highly competitive market, this focus on genuine experiences that foster connection and satisfaction could set the company apart, creating a model for others in the industry to follow. Ultimately, ROEx represents a progressive step towards a more customer-centric approach in a sector that thrives on delivering memorable journeys.
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