Consider the seas choppy when it comes to a major investor in Norwegian Cruise Line.
Elliott Investment Management is turning up the heat on Norwegian Cruise Line Holdings after disclosing a more than 10% stake in the company and publishing a sweeping 59-page indictment of its leadership, strategy and governance. The campaign, launched Monday under the banner “Norwegian Now,” lays out a detailed case that the cruise line has squandered a decade of industry tailwinds — and that its stock, hovering around $21 per share at the release of the report, could reach $56 with the right fixes in place.
The move comes less than a week after NCLH announced a jarring CEO shakeup: the abrupt ouster of Harry Sommer and his replacement by John Chidsey, a 10-year NCLH board member who previously ran Subway and has no executive experience in the cruise industry. Elliott wasted no time making clear it views that appointment as yet another symptom of the same disease.
Elliott’s claim is straightforward: Norwegian is a fundamentally strong business — modern fleet, loyal customers, premium brands, a private island — operating at the bottom of its peer group because of chronic mismanagement and a board that has refused to hold anyone accountable. The root causes, the fund says, are threefold: a decade of strategic errors, runaway costs, and a board that enabled both.
Since Norwegian’s IPO in January 2013, when its stock closed at $25, shares fell to roughly $21 amid the release of the report (though the stock was trading just north of $24 at the time of publication) — meaning Norwegian has actually lost ground over 13 years despite enormous industry growth. Meanwhile, Royal Caribbean’s stock went from $37 on that same IPO day to around $320 today. Norwegian has underperformed its cruise peers by approximately 230% over the last three years alone.
The CEO Shakeup That Triggered Elliott’s Full Campaign
As Travel Agent Central has previously reported, NCLH’s leadership situation turned chaotic earlier this month when Sommer was shown the door and Chidsey — former CEO of Subway and Burger King parent Restaurant Brands International — was named his successor. The announcement caught the market off guard, arriving alongside cautious fourth-quarter guidance.
Elliott is scathing on the subject. The fund says the board “conducted no comprehensive search” and “had no credible succession plan,” instead reaching for an insider with zero cruise industry operating experience. Analysts quoted in Elliott’s presentation were equally blunt: One Stifel note called it “more noise into a story that doesn’t need more noise right now,” while Barclays said the abruptness of the announcement “reaffirms our concerns over how badly the company may be missing its internal targets.”
Not every analyst was as harsh, however. Truist Securities noted at the time of the leadership change that Chidsey’s “background with turning around brands and companies initially sounds promising,” and pointed to travel agency praise for leadership across Norwegian, Oceania and Regent Seven Seas. But even Truist’s more measured take came with a clear-eyed warning: Many of Norwegian’s problems, the firm said, are years in the making and simply cannot be fixed overnight.
But for Elliott, the Chidsey appointment is less an isolated bad decision than the latest in a pattern. The fund traces the same dynamic through two prior CEO tenures: Frank Del Rio, a luxury cruise entrepreneur whose eight-year run ended with NCLH’s stock down more than 50% versus peers, and Sommer, Del Rio’s longtime lieutenant, whose tenure produced a further 143% of underperformance relative to peers. Each time, Elliott says, the board chose an insider rather than running a proper process.
NCLH did not respond to Travel Agent Central’s request for comment in time for publication.
But the company did issue a statement to the Wall Street Journal, which first reported news of the Elliott presentation: “Our board of directors and management team regularly engage with our shareholders to hear their views on our strategy and progress, and we appreciate their perspectives. Of note, this is the first we are hearing from Elliott Investment Management.”
What Elliott Is Demanding
Elliott’s demands are organized around three pillars.
Comprehensive Board Overhaul: Elliott is calling for a wholesale refresh of Norwegian’s eight-member board, which it says is collectively responsible for more than a decade of value destruction. The fund points out that no current director — including the newly appointed CEO — has executive experience running a cruise line. The board’s backgrounds include a private equity executive focused on sports, a funeral services CEO, a gaming company CEO and a former fast food executive. The WSJ reported that Elliott has already been privately working with Adam Goldstein, the former president and COO of Royal Caribbean, as one potential board nominee.
Elliott says it is prepared to bring its preferred candidates directly to shareholders at NCLH’s upcoming annual meeting if the company won’t come to the table.
A Management Review to Install the Right Executive Team: Once the board is reset, Elliott wants it to conduct an objective review of the full executive leadership team and ensure the right people are running the company. The fund explicitly holds open the question of whether Chidsey stays. What Elliott wants is a structured process — not another insider appointment made in haste.
Elliott points to the tenure of former CEO Kevin Sheehan — who led Norwegian through its pre-IPO turnaround — as proof that best-in-class performance is achievable. Under Sheehan, Norwegian improved its profit margins by 20 percentage points, cut its operating costs significantly, and grew revenue per passenger while pioneering innovations like freestyle cruising and launching “The Haven” premium enclave concept.
A New Business Plan: The operational overhaul Elliott envisions covers five areas: better revenue management, a strategy aligned with industry trends (particularly around private island development), deep cuts to bloated corporate overhead, investment in the guest experience and technology, and a sharper marketing strategy.
On costs, Norwegian’s biggest problem is that it has allowed its back-office and corporate overhead spending to balloon far beyond what competitors spend. Norwegian currently spends $102 per passenger per day on administrative and marketing overhead; Royal Caribbean spends $86 and Carnival $81. Elliott sees a potential $550 million to $825 million in annual savings just by bringing those numbers in line with industry norms.
On the revenue side, Elliott says Norwegian’s biggest self-inflicted wound has been neglecting Great Stirrup Cay, its private island in the Berry Islands. Norwegian actually acquired the island in 1977, making it the first cruise line to own a private destination — a massive head start it largely failed to use. Royal Caribbean’s Coco Cay, acquired in 1988 and heavily developed starting in 2019, now generates more than five times the revenue of Norwegian’s island.
The gap matters more than it might seem. Truist notes that ships stopping at developed private islands typically command around a 20% premium on ticket prices compared to similar Caribbean itineraries without one — and that’s before factoring in the additional money passengers spend once they’re on the island. Norwegian has been missing out on both.
Norwegian is now rushing ships to the Caribbean to capitalize on Great Stirrup Cay, but there’s a problem: The island’s new amenities won’t be finished until this summer, and the company had already committed to a 40% jump in Caribbean capacity before realizing the timeline wouldn’t line up. The result is Norwegian selling Caribbean sailings that can’t yet deliver the private island experience that was supposed to make them worth the price. Truist notes that even once the island does open, it will still be years behind Carnival’s Celebration Key, which debuted last summer, and well behind Royal Caribbean, which is already developing a second enhanced private island expected to open next year.
Other challenges won’t be quick fixes either, Truist notes. Royal Caribbean’s enormously popular mega-ships — like the new Star of the Seas — have no equivalent in Norwegian’s fleet, and building a competing vessel would take at least four years. Meanwhile, Truist says Norwegian’s Oceania brand has been losing ground to Viking Ocean over the past two years, with industry contacts pointing to service quality issues around dining and shore excursions. New brand leadership has been brought in, and progress is reportedly being made, but that, too, is a slow rebuild.
What Comes Next for NCLH
Elliott says it wants to reach a negotiated resolution and is ready to meet with the board immediately. But it is also explicitly prepared to take its case to shareholders at the annual meeting if necessary — a process that could result in Elliott nominating its own candidates for board seats.
One scenario Wall Street is starting to whisper about, though it hasn’t been raised publicly by Elliott: a sale of the company. Truist points out that Norwegian now trades at a fraction of the valuation of its rivals — roughly half what Carnival trades at and less than a third of Royal Caribbean — which could make it an attractive acquisition target. The firm speculates that private equity or one of Norwegian’s larger rivals could be potential buyers, though it notes NCLH’s current debt load and potential regulatory hurdles would be factors in any deal.
Chidsey’s own track record — he has a history of selling companies rather than operating them long-term — is likely to keep that speculation alive regardless of what Elliott does next.
For travel agents whose clients sail Norwegian, Oceania and Regent — all NCLH brands — the upheaval is worth watching closely. Elliott’s campaign, if successful, could bring significant operational changes, new leadership with different commercial priorities, and potentially a renewed push on private island experiences and onboard revenue that could reshape how those brands are positioned and priced in the market.
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