Former Royal Caribbean International CEO Adam Goldstein is back, but he's on his way to work with a different cruise line.
Norwegian Cruise Line Holdings (NCLH) has undergone big changes and the drum beats demanding more change are echoing still.
NCLH is the parent company of Norwegian Cruise Line (and two other lines). The major problem has been NCLH has struggled financially compared to competitors, and some of its investors have had enough. Especially when competitors, like Royal Caribbean, are doing so much better.
On Thursday, Mr. Goldstein announced he's now working with activist investor Elliott Investment Management to help reshape Norwegian's future. As the former head of Royal Caribbean, it has potential major impact for the industry.
This isn’t just a board seat pursuit. It's part of a broader bid to sharpen strategy, performance, and shareholder returns.
Who is Adam Goldstein?
Adam Goldstein is a name within Royal Caribbean that used to be among the most important people in the company.
Adam Goldstein joined the company in 1988 and later went on to serve as President & CEO of Royal Caribbean International from 2007 to 2014. From 2014 to 2018, he served as President & COO of Royal Caribbean Cruises Ltd. His last role was vice chairman.
Then he suddenly left the company in 2020 without any explanation.
On Thursday, he announced Elliott has put his name forward as a potential director to serve on the Board of Directors.
"If appointed to the board, I would serve as a director for all of Norwegian’s shareholders, cruisers and travel agent partners – not any single investor," he said in his open letter to the cruise industry.
Norwegian Cruise Line investors call for big changes, want to be like Royal Caribbean
Things are getting dicey at NCLH as change has churned up more change.
Elliott Investment Management has built over a 10% stake in NCLH, and earlier this week went as far as to set up an activist campaign.
They believe Norwegian has lagged behind Royal Caribbean Group and Carnival financially because of mismanagement, overspending, and poor decisions.
They presented an entire new program that illustrates the differences between the three companies, and routinely uses Royal Caribbean Group as an example of how to do things better.
Elliott is calling for board changes, strategic overhaul, and stronger execution.
Why Adam Goldstein is getting involved now
After leaving Royal Caribbean abruptly, he's been largely missing in action from the cruise industry. Now, he wants back in.
In his post, he says many people have reached out and asked him out of concern what is happening at Norwegian.
He believes Norwegian has world-class assets and can do much better financially.
"There are signs that Norwegian could be doing much better. Norwegian possesses industry-leading assets, leading the industry in investment-per-berth and featuring a premium cabin mix and compelling onboard amenities."
Financial results, he says, follow a strong guest experience and differentiated product.
"Financial results follow the guest experience, not the other way around."
He sees such strong demand for cruising across the entire industry, and believes Norwegian should be taking advantage of that growth.
"Norwegian Cruise Line Holdings... should be capitalizing on this moment."
Mr. Goldstein's involvement signals not just financial pressure, but adding someone who can help drive strategic and operational fixes.
Can this really fix things?
The investor counterstrike is massive in its scope, but its ambitions might be more than what's practical.
Vince Ciepiel is an Analyst with Cleveland Research Company, and reviewed the "Norwegian Now" plan that outlines the problems and ways to fix the poor corporate governance, cost mismanagement, and strategic errors.
He believes the plan has merit, but isn't realistic with how quickly it could make changes, "We view much of Elliot’s overall messaging in the plan as fair in general but likely too aggressive/optimistic on the solutions and timeline."
He was also quick to point out that Elliott takes special aim at Norwegian costs, but believes NCLH has gotten better at managing costs in recent years.
Moreover, he raised a red flag that cuts have already begun to negatively impact the customer experience.
"We would also flag that investors have been concerned on Norwegian’s cost cuts leading to brand/customer experience damage (i.e. reducing portion sizes in F&B, cutting back on onboard shows/performance budgets, reducing housekeeping) so the $ value of low hanging fruit operationally may not be as easy to capture as the Elliott presentation implies."
NCL: The new Southwest Airlines?
Cruise fans have already taken note of what's happening at NCLH, and it has them concerned.
X user The Cruise Life laid out the potential problems with Elliott's plan and how it could spell cutbacks and poor guest experiences. They base this on the fact Elliott Management is the same activist investor group behind the major changes at Southwest Airlines that have been criticized for disrupting what made that airline so beloved by fans.
"Loyal NCL cruisers have definitely seen unpopular cost cuts over the past decade in favor of profits. But let me make it clear: If Elliott Management has their way, the cost cuts of the past were paper cuts. This group wants to cut off the entire head in favor of profit."
"Make no mistake, change is coming for Norwegian Cruise Line Holdings. Today is a dark day for a brand we love so much. And while we disagree with several recent changes (Subway CEO?!), trust me when I say an activist investor group is NOT the solution any of us want."
