Norwegian Cruise Line Holdings (NCLH 0.64%) reported better-than-expected onboard revenue last quarter -- even better than 2019 levels. While the company continues to recover from the pandemic, the stock is still down more than 70% from its January 2020 highs.

With the cruise industry showing signs of recovery, it might finally be time to buy the dip on this American cruise line stock. Let's take a look at Norwegian's Q3 results and future prospects.

Passenger revenue up 14% from 2019 levels

A combination of robust ticket pricing and onboard revenue generation contributed to the impressive total revenue per passenger cruise day. It was 14% higher than 2019 levels and above Norwegian's own expectations. Total revenue landed at $1.6 billion -- the upper end of Norwegian's expected range but more than 15% below Q3 2019 levels.

Occupancy, also known as load factor, also improved during the third quarter, reaching 82%. This marked a 17-point improvement over Q2 and was in line with company guidance.

With cruise tickets substantially more expensive than 2019 levels, Norwegian acknowledged that cheaper prices would have raised demand and boosted load factor last quarter. However, CEO Frank Del Rio explained the cruise line is "holding firm" on its pricing strategy of "high value over low price." He feels this will best steer the company toward long-term, sustainable profitability, especially once the pandemic is securely in the rearview mirror.

Perhaps the most exciting highlight from last quarter, onboard revenue generation, or Norwegian's ability to earn additional money from cruisers during their trips, jumped to roughly 30% above 2019 levels and set a new company record. It also underscored Del Rio's strategy of high prices over packed ships, considering third-quarter occupancy was about 30% below 2019 levels.

Continued disruption in the Baltic region

The Russia-Ukraine conflict has impacted Norwegian significantly this entire year, and Q3 was no exception. Del Rio referred to the conflict and its fallout as "a real blow," pointing out the loss of the port in St. Petersburg, Russia, from which Norwegian was operating many of its Baltic cruises.

The loss of business in the Baltic resulted in a substantial amount of missed revenue. The long Baltic cruise season can last from May to September and is known for strong excursion sales and high yields onboard ships. The missed opportunity took a major toll on performance in the third quarter, which normally enjoys a wave of Baltic travel business then.

Inflation and global supply chain disruptions continue to hinder Norwegian and the rest of the cruise industry. "Pressuring margins in the near term," CFO Mark Kempa expects net cruise costs other than fuel to decrease as the year comes to an end. Observing a moderation in food and other expenses during the quarter, Kempa is confident that the current "hyperinflationary environment" won't last forever.

2023 bookings match pre-pandemic levels

While current-quarter load factor is expected to be similar to Q3's, 2023 occupancy is expected to reach "historical levels." And while the Q4 projection might seem on the mediocre side, it is actually optimistic, considering the fourth quarter is a historically slower one due to seasonality.

Cruise bookings for 2023 have been promising thus far, on pace with record 2019 levels amid "significantly higher" pricing. Encouraged by strong consumer spending on travel, Norwegian has observed a persistent demand for cruising -- especially among affluent Americans. Since it caters to a wealthier target market than the broader cruise industry, Norwegian feels that it is better positioned to weather a recession than competitors such as Carnival and Royal Caribbean

The addition of Norwegian's new Prima ship in July marked an promising catalyst for the cruise line, which anticipates another three ships to be christened next year. During the earnings call earlier this month, Del Rio cited "many unserved and underserved markets around the world," suggesting an abundance of potential new port locations in Norwegian's future. 

Why you should buy the dip on Norwegian

While Norwegian stock trades down more than 72% from its highs of early 2020, aspects of the company match and even outperform pre-pandemic levels. If Norwegian Cruise Line Holdings can stay on course as a company, I think the stock's performance will follow.