Harry J. Sommer
President & Chief Executive Officer at Norwegian Cruise Line
Well, thank you, Jessica, and good morning everyone. Thank you all for joining us here today. So today marks exactly one month since I began my new role as President and CEO of Norwegian Cruise Line Holdings. I am humbled and honored to have been trusted to lead this incredible company and I'm excited about the significant opportunities I see at. The responsibility I have to our vast network of stakeholders, including our 40,000 team members worldwide, our guests, our travel advisory partners, suppliers, lenders, shipyards, the over 700 communities we visit and all of you in the investment community is not something I take lightly. Rest assured, my leadership team, the Board of Directors and I are committed to best positioning Norwegian Cruise Line Holdings [Technical Issues] more value to our shareholders and broader stakeholders.
With new leadership not only in my seat [Phonetic] but in all three of our award-winning brands and most recently for our vessel [Phonetic] operations function, there is a probable feeling of re-invigoration and excitement about the future across the entire company. We are approaching every decision with fresh perspective and new energy challenging the status quo at every level and encouraging our entire team to think outside of the box and come to the table with new ideas, however big or small.
Along with these changes, you can see for yourself on Slide 5 that while many of the senior leaders are new to their roles, there's still continuity and extensive experience among all of the leaders, allowing for a smooth transition without skipping a beat. Our Executive team has an average of over 20 years in the cruise industry and nearly all has been with NCLH for a decade-plus. I have the utmost confidence that this team is the right one to take the company to even greater heights.
As we are fine tuning our longer term strategic vision and priorities, we are also focused on execution today, and Slide 6 outlines my near-term priorities. First, we are focused on capitalizing on the healthy demand environment for cruise, which I will talk about in more detail a little later in my commentary. At a high-level, this means remaining within a book position of approximately 60% to 65% on a 12 month forward basis, while increasing pricing and maximizing onboard revenue generation. After years of experience, we believe this level to be the sweet-spot based on our current deployment mix and I'm pleased to say we are comfortably in this range today. Our revenue management process is dynamic and we carefully monitor on a granular level how each ship itinerary and voyage is tracking against its optimal booking curve and adjust marketing spend, promotional construct and pricing as-needed depending on the market environment to maximize each voyage's contribution to the bottom line.
The next priority is rightsizing our cost base through our ongoing margin enhancement initiatives. Mark will guidance in more detail on the great progress we've already made on this critical effort but I want to emphasize that we have many additional opportunities in the pipeline to do even more and we are not shying away from this challenge. The reality is we're operating against a different backdrop today than we were in 2019 requiring an even keener focus on balancing the top-line with a cost structure that supports our unique business model and allows us to accelerate our margin recovery and help build resilience to vary [Phonetic] external and macroeconomic environments.
We are undertaking this effort with the strategic and data-driven approach that allows us to identify additional opportunities for efficiencies, set, monitor and maintain accountability against concrete KPIs, and increase agility to adapt quickly as market or consumer preferences evolve. I'm pleased to report that we are already seeing a change in the core culture of the company at every level of the organization to emphasize efficiency, cost mindfulness and results without impacting the guest experience. We built significant momentum in recent months of this initiative, and we look forward to demonstrating continued improvement in the coming quarters.
This dovetails nicely to our next priority, which is to make strategic and intentional modifications to enhance our offerings and better aligning to our guests needs and wants. There's no question that investment in our product and service offerings are critical to keeping our brand, value propositions intact. However, we are refocusing the business and making smart investments in areas that generate the highest returns and maximize guest satisfaction over the course of their entire cruise journey starting from the time they book. For example, we are deep in the development of a streamlined booking concept at the Norwegian Cruise Line brand which uses generative AI technology to personalize the experience for guests while also simplifying and reducing the number of considerations required to book by orders of magnitude. This along with several other initiatives underway to translate to more satisfied guests who spend more on-board and return to sail with us more frequently, resulting in a win-win of higher yield and stronger loyalty.
Turning to the fourth priority on the list. The entire team is hard at work preparing for the delivery of Norwegian Viva on Thursday, as well as Regent Seven Seas Grandeur in November, which you can see on Slide 7. I just came back from Italy where I visited the shipyards to check on their progress and I left even more excited than I was previously to welcome these new additions to our already best-in-class fleet. Both our sister ships' existing vessels that have been elevated even further, so we have a high degree of confidence that there will be an overwhelmingly positive reception of these ships from our guests and travel partners which we are already seeing in their incredible advanced booked position.
I'm also pleased that both are on-schedule and on-time for delivery despite supply-chain and other challenges, a testament to our great working relationship we've developed with our partners at Fincantieri. In June, we announced the global music sensation and Latin music icon Luis Fonsi will serve as Godfather to Norwegian Viva. The announcement alone generated a reach of over 200 million globally, including new audiences in the targeted Spanish language demographic. The ship will be christened in Miami later this year and home port in San Juan, Puerto Rico starting in December for a season of Caribbean itineraries. We also recently announced Seven Seas Grandeur's Godmother Sarah Faberge, the great granddaughter of Peter Carl Faberge, the legendary artist jeweler and creative and entrepreneurial genius to found a world renowned company that bears his name. This is a natural choice and celebration of Regent's partnership with Faberge.
The disciplined addition of new build is a key component to our strategy, and we have said consistently in the past, we welcome new hardware introductions as they not only generate excitement and bring more attention and awareness to our brand but they are expected to be meaningful drivers of the company's future earnings growth and margin expansion. As the smallest of the three large public cruise operators, we continue to believe that we have outsized opportunity to grow our footprint and meaningfully drive the bottom line. Our new build pipeline, which you can see on Slide 8, represents approximately 50% capacity growth by 2028 versus 2019, a CAGR of approximately 5%. After the delivery of three new builds in 2023, a record for the company, we have no additional ship delivery scheduled until spring of '25. In the interim, we expect to benefit from both organic growth as well as the annualization of the 2023 new builds next year.
And lastly, the final priority on the list but arguably the most important is charting a path to reduce leverage and de-risk the balance sheet. Given the necessary actions we took to navigate the past few challenging years, our leverage ratios are currently not at optimal levels. Our goal remains to evaluate all options available and then clearly define a multi year pathway to return to an investment-grade like financial position. This won't happen overnight, but as you can see on Slide 9, the company has successfully reduced leverage in the past and I am confident we will do so again.
In the interim term, our expected cash-flow generation boosted by our robust new-build pipeline along with normal-course debt instalment payments are expected to result in significant organic improvement in our net leverage. Over the next several months, we are focused on the successful execution of our near-term priorities while fine-tuning the future vision and strategy for the company. With three strong brands, a world-class fleet and best seen in the industry, we are starting from a strong foundation and a position of strength. And I can say without a doubt that we have a bright future ahead with significant potential to unlock incremental value for our stakeholders.
Shifting our discussion now to our current bookings, demand and pricing trends, we achieved record revenue of $2.2 billion in the second quarter, an increase of 33% over the same period in 2019. We've been able to tap into strong consumer demand environment achieving the right balance of underlying revenue growth with net per diems up 6%, while at the same time materially growing our fleet with capacity at 90% for the quarter. We also kept our ships full, reaching a load factor of 105% in the second quarter in line with guidance and long awaited milestone as we return to normalized levels which you can see on Slide 10.
As previously mentioned and as illustrated on Slide 11, several years ago we strategically shifted our deployment to longer, more immersive itinerary at the Norwegian Cruise Line brand and increased our concentration of premium destination while reducing our Caribbean deployment. This is designed to attract a higher-quality guest and maximize our competitive position. A natural byproduct [Phonetic] of this new deployment mix is less third and fourth passengers in the cabin, which has what historically pushed passenger occupancy above the 100% mark. As a result, we expect full-year occupancy going forward to be roughly 200 basis-points lower than 2019 levels. This shift has also resulted in an elongation of our booking window, which was 255 days in the second quarter, an increase of 51 days or 20% compared to the same quarter in 2019, meaningfully enhancing our future visibility and reducing our exposure to volatile and less predictable close-in bookings. Taken together, we believe this strategy will drive higher yields, higher guest satisfaction and higher guest repeat rates with longer runway to optimize our pricing and marketing strategy at macro-environment evolved over-time.
Turning to Slide 12, our cumulative book position for the second half of 2023 remains ahead of 2019's record performance and at higher prices, another indication of continued healthy demand environment and the resilience of our target consumer. This trend continues past this year to sailings in 2024 and beyond which at this point in the booking curve is our primary focus. In fact, over the past 90 days, over 70% of our ticket sales were for 2024 and '25 sailings considerably higher than in 2019.
Onboard revenue generation, our best real-time indicator of how consumers are feeling financially today, also continues to perform exceptionally well. During the quarter, gross onboard revenue per passenger cruise day was approximately 30% higher than the comparable 2019 period. Our efforts to enhance our market-leading bundled offering and increased quality touch points with our guests starting from the time of booking and continuing throughout their cruise journey are clearly bearing fruit. In fact, pre-sold revenue on a per passenger day basis for the second quarter of 2023 was over 75% higher than in 2019, an important contributor to our onboard revenue strength as these guests tend to spend more overall throughout their journey than guests who do not pre-book onboard activity.
Before I turn the call over to Mark, I'd like to provide an update on our global sustainability program Sail & Sustain, in which Slide 14 outlines key accomplishments and milestones. Since we last spoke, we published our annual Sail & Sustain Report and SASB aligned disclosure on World Environmental Day in June. The report provides transparency in our progress and initiatives on top ESG priorities. Some of the highlights this year include more detail on our new climate action strategy and enhanced data and disclosures on community impact, human capital and greenhouse gas emission reported. In addition, we demonstrated progress against several of our environmental goals, including targets to equip our ships with short power capabilities and reduced bunkering of fresh water. I encourage all of you to take some time to explore the report and welcome -- I'm sorry, to explore the report and visit our website for more information.
I'm also proud to share that just last week we announced the winners of our annual Giving Joy recognition program that has been celebrating teachers across North America since 2019 for their hard work and relentless dedication. Each of the 20 winning educators won a free seven-day voyage for two, and the top three grand prize winners were invited to attend the exclusive christening voyage for Norwegian Viva. This year's context drew support from over 3,400 teachers across the U.S. and Canada and garnered hundreds of thousands of votes [Phonetic] With that, I will now turn the call over to Mark for his commentary on our financial position and outlook. Mark?
