In 15 days, Harry Sommer will become CEO of Norwegian Cruise Line (NCL), replacing Andy Stuart, who is stepping away after 31 years with the company, the last four as its leader.
Although Sommer has been with Norwegian Cruise Line Holdings (NCLH) for 10 years and has worked in some aspect of cruise distribution for 27 years, he is not well known to U.S. travel sellers.
I first met him four years ago in Beijing when Travel Weekly’s CruiseWorld China was launched and he was attending as president of the line’s international business. It was at that event that NCLH CEO Frank Del Rio announced that a ship, the Norwegian Joy, would be built for the Chinese market.
Much has changed in just four years. The market in China developed strong headwinds, and the Joy was redeployed to Alaska. Given Stuart’s age and relatively short tenure as CEO, his decision to leave the company was unexpected by most of the industry, and Sommer rose.
Although Sommer’s profile has not been high, his experience, in many regards, seems almost tailored to prepare him for his new assignment. I recently spoke with Sommer about his path, and I heard in his story a microcosm of how the careers of many people in and out of the industry evolved over the past few decades, shaped by the forces of changing assumptions, advancing technology, updated information and personal experience.
Sommer entered the cruise industry in 1992 as a product development manager at Renaissance Cruises. A year later, Del Rio joined as CFO. Sommer rose through the ranks, developing the company’s air and hotel programs, running record management, leading loyalty marketing, then direct marketing and eventually heading the entire marketing department.
Right about now, a number of you who remember Renaissance, which went out of business shortly after 9/11, might be thinking, “Is he the guy who decided to shift policy to internet-direct-only, with the intention of cutting out travel advisors?” That move, which outraged agents, is thought to have contributed greatly to the line’s demise.
So I asked: “Were you part of the fateful decision to say, ‘We can do without the trade?'”
“That was [then-CEO] Ed Rudner,” Sommer said. “Many people at the time were caught up in the dot-com bubble and thought everything was going to be disintermediated. Interestingly, even [Rudner] has come to rethink that. He now runs a travel agency!
“In the airline and hotel industries, they still look at commission as an expense, and the accountants say, ‘Well, if we could only shave a percentage off commission, that’s all going to fall to the bottom line, and that’s an extra point in margin, and our earnings go up, everything goes up.’
“But it’s a false savings,” he asserted. “We need the trade to succeed. When you look at it strictly from a numbers perspective, it’s the trade that’s driving demand. You have 15,000 to 20,000 entrepreneurs out there who all have unique business models: OTAs, affinity groups, call centers, timeshares, storefronts, home-based, on and on and on it goes. It’s an entrepreneurial spirit that drives overall cruise demand, day in and day out, so yes, we pay commission, and we’re happy to pay commission. We have 17 beautiful ships, each with anywhere from 2,000 to 4,000 guests, that we have to fill every week. We need and rely on trade support.”
Sommer’s conversion to an advocate of retailers is not simply borne of reaction to Renaissance’s mistaken assumptions. In 2005, he opened what turned out to be a very successful cruise-only travel agency, which he built for six years before selling it. “We were a top seller for Oceania Cruises, so my relationship with the brand continued. [Del Rio was Oceania’s founding CEO, and its first ships had previously been in the Renaissance fleet.] We did quite a bit of business with NCL, so I got to know Andy, too.”
NCL’s incoming chief said his biggest insight into what leads to success for an agency is having a “narrow focus.”
“We only sold cruises,” he said of his agency. “If someone called us and wanted to book a resort or air, we referred them to someone. We didn’t get any commission or anything, we just wanted to provide our guests with good service.
“And even within the cruise industry, we would only sell five to six cruise lines. Our thought process was, ‘If we’re going to provide expert advice to guests and provide them with a perfect vacation, we have to know the product.’ One needs to be an expert, especially in the age of the internet. A client has likely spent an hour or two online researching before they call the agency; if you don’t know what you’re talking about, you’re just a call center. I’ve seen statistics that the typical frontline agent has six months’ experience and never left their hometown. That’s not the recipe for success.”
In contrast, he said that at Norwegian, “we believe in getting experienced agents. We bring them onto the ships at inaugurals, so they learn the product. But again, focus. Focus. Figure out what it is that you think you can be great at, focus on it and do a great job, especially if you’re a small or midsize agency. Some of these larger ones have enough different niches that they can have a group of people that focus on luxury, another that focuses on premium and another focusing on resorts. But if an individual agent tried to do all those things, I don’t think that provides the best service to the customer.”
I asked Sommer what he learned from his time running NCLH’s international business.
“I did that rotation for four-and-a-half years and previously didn’t have much experience outside the United States,” he said. “In the end, you learn that people all over the world are much more similar than different. A couple works hard, 48 or 50 weeks a year, and then they want to take two to four weeks with their family where they unwind and have an excellent vacation. I don’t care whether you come from Africa, Asia, the Middle East, Europe, South America, North America, there is an appeal to a good, upscale, premium product that everyone can enjoy.”
Of China, Sommer said: “We did our best, but you don’t really know until you’re there. The Joy in China was the highest-rated ship in our fleet and the highest-rated ship in China. Yet still, the Chinese consumer is a little different, and cruise is in a different place in their evolution, maybe where the U.S. was 20 years ago. Everything in China operates at warp speed, so what it took the American consumer 20 years to figure out, it’ll take the Chinese consumer five years to figure out. I’m sure that in the future, NCL will be back in China.”
So that brings his career up to the present. What’s his vision for Norwegian going forward?
“Perhaps more important than what I’ll do differently is what will stay the same,” he began. “I look at what Andy has done as CEO, and the product is simply amazing. It’s better than any resort in the world, underpinned by a wonderful crew giving excellent service to guests day in and day out.
“Andy has really developed a reputation of being a tremendous advocate for the trade. He goes to lots of conferences and has great personal relationships with so many travel partners. We want to continue that. To develop the kind of relationships that Andy has is going to take time and effort, which I plan to invest.”
What Sommer plans to do differently falls under marketing.
“Early on,” he recalled, “I asked Frank, ‘What are the two most important things about running a cruise line?’ At the time, I think I was trying to get him to buy a new accounting system or something, and he said, ‘We need to do good accounting, but the critical part of running a cruise line is the product and the marketing message, and if you get those two things right, we’ll do everything else well. We don’t want bad accounting. We don’t want bad IT. But we have to have a great onboard product and marketing.’
“We’ll always look to continue to improve things onboard, and we’ll make small tweaks over time to make it better. The marketing is very good, but I want to make the marketing great. The rest is just details.”
They say the devil is in the details, of course, but Sommer’s background should provide him with a good sense of which details need his attention and which can be delegated. It might seem counterintuitive, but of all his experiences, the one that should reassure travel advisors most — even more than the fact he was among their ranks for six years — is his experience at Renaissance. What happened there seems to have powerfully affected everyone involved.
Speaking with Sommer — and frankly, to Rudner and Del Rio, as well — is like talking to a reformed smoker who knows firsthand the danger of past behavior. Having once underestimated the power of travel advisors, they’re not only true believers but have become advocates and evangelists.