Transcript
Million passenger brands: Carnival Cruise Lines Dream World Cruise Destinations Spring 2010
Arison not afraid to use the F* word . . FUN C
arnival Corporation & plc Chairman and CEO Micky Arison only has to go to the movies to see just how much impact the cruise line, which his father (Ted) created and he developed into a global corporation, has had on the American way of life. “Carnival Cruise Lines (CCL) has become synonymous with cruising in the US,” he says. “When someone wants to reflect cruising, that is the brand to which they usually refer. “Two recent Golden Globe-winning movies – ‘Up in the Air’ and ‘The Hangover’ – both have CCL moments. The first shows a CCL funnel in one scene; the other has a character referring to CCL. It’s not an entirely complimentary reference but, hey, it shows just how much CCL has become the US cruise brand.” It still carries more passengers – 3.8 million last year (including 625,000 children) rising to an expected 3.9 million this year, and more than 4 million in 2011 – than any other brand in North America (or anywhere else for that matter). But, in terms of total number of berths, Royal Caribbean International (RCI) has edged ahead with the arrival of Oasis of the Seas. And the gap will increase when
sister ship Allure of the Seas arrives at the end of this year. It will, though, be nip and tuck again between the two brands when the second of CCL’s two sister ships on order arrives in 2012. No-one should be under the illusion that it was any kind of coincidence when Arison chose to break the industry-wide, 18-month hiatus in new ship orders at the precise moment that RCI introduced Oasis of the Seas. The rivalry between CCL and RCI (which now extends to their parent companies: Carnival Corporation and RCCL) is as strong as ever, though Arison will contend that in many ways CCL stands alone. “When my father started CCL nearly 40 years ago,” says Arison, “he wanted it to be a cruise line which offered high value but also high quality cruises that could be afforded by the largest possible number of people. “Other brands which also started back then have all, at some stage, looked to move themselves upmarket in terms of their target markets. CCL has never tried to go down that route. The core values have remained the same, even though the ships and the line have changed a great deal over the years.
Other brands which also started back then have all, at some stage, looked to move themselves upmarket in terms of their target markets. Carnival Cruise Lines has never tried to go down that route.”
Micky Arison
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Million passenger brands: Carnival Cruise Lines Dream World Cruise Destinations Spring 2010
Our target market has not changed – just their expectations.”
“In 2010 we have a new logo, a new advertising campaign and a new slogan – but we are still talking about people having ‘fun’ just as we did when we had that first ship.” CCL has always called its fleet the ‘fun ships’. It used to play that down in the UK and Europe, for fear of being seen as downmarket rather than mass-market (a subtle but important difference in these markets), but is now confident that it has sufficient brand awareness outside North America to make its new tagline – Fun for All, All for Fun – a global one. In 2009 the TV advertisements to back this up featured an improvisational comedian ‘playing’ a Fun Director on one of the ships. And in 2010 – when CCL is to be the exclusive cruise line advertising during the Winter Olympics – they highlight the difference between life at work ashore and on board a CCL cruise, with all the participatory fun on tap. In its 38-year history CCL has expanded from a single, ageing acquired ship to 22 modern vessels of increasing size
The whole management structure has changed, though we do try to maintain the family ethos through training and involving the staff”.
and with a growing range of facilities, with a maximum of about 65,000 berths between them. Half were built in the past ten years; the other half in the previous decade, but all recently upgraded through the US$250 million ‘Evolutions of Fun’ refit programme. “If today’s passengers were timetransported back to the original ships,” says Arison, “they would probably find a similar level of fun and enjoyment – but only because then they would have had lower expectations.” Entertainment would have been a lone magician and an Israeli musical trio; now it is shows of Vegas style and quality. Food would have been burgers and more burgers; now there are many options, including fine dining. “Our target market has not changed – just their expectations. And so we have had to make a huge investment in adding the facilities that today’s passengers want to see. For example, we could not get away with having just a single treadmill in the fitness centre as we had on one new ship in the 1990s; now even 30 would not be enough.” Looking ahead at what might change on board cruise ships of the future, he says that this would depend on how passenger tastes and demands change. “We have always reflected changing public tastes, and the fact is that – subject to cost – cruise lines can always provide anything that people enjoy on land. That is how we have come to see water chutes and rock
climbing walls become features on ships.” The range of facilities for families with children has seen one of the most significant changes. The latest Dream class CCL ships contain a 5,000 sq.ft. Camp Carnival and 193 ‘family cabins’ with five berths and two baths. But it is not just the ships that have changed. The whole company has had to develop to cope with being a major, multi-ship brand (as well as being just one brand among many within the Carnival Corporation). “The whole management structure has changed, though we do try to maintain the family ethos through training and involving the staff,” says Arison. “Of course, evolving technology has enabled us to manage a much bigger company more easily, through automation and satellite communications.” The biggest change in public behaviour affecting the cruise industry will – he believes – turn out to be the rise of the Internet. “This has already resulted in a huge change. Just ten years ago, most people looked for cruise advice at travel agents in newspaper and magazine travel sections – that has all gone. “Now nearly everybody uses the Internet for their research. Far fewer actually book cruises directly online, but any travel agent still without online booking capability is going to lose out.” They would also lose out on the webinars which CCL runs, at which its executives give advice on selling cruises. “People are increasingly growing up with the Internet, and they will be the cruise passengers of the future,” Arison says. “My children are in their late 20s, and they do everything on the Internet.” He also points out that having a Chief Marketing Officer still in his 30s is bound to help the brand keep up to speed on incorporating new technology into the marketing mix. Social media is now a crucial part of that mix, too. Senior Cruise Director John Heald’s blog has attracted a huge following and boosted brand awareness; it now appears within the revamped www.Carnival.com website’s new Funville
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Million passenger brands: Carnival Cruise Lines Dream World Cruise Destinations Spring 2010
community/social media hub section. This also features blogs updated by other CCL on-board staff, from captains to dance captains, and there is an opportunity for the public to post their own views about CCL or comment on those in the blogs. There are also links to Carnival pages in Facebook, Flickr and Twitter. “There has been a pattern in the growth of cruising which has seen the North American market run about 5–10 years ahead of the UK, and 10–15 years ahead of the rest of Europe,” says Arison. “I can see no reason why the UK market should not double in size to match the kind of growth the market has experienced in North America. “I believe the biggest change will be that it will become just like North America is right now in offering cruises of just about any length and suitable for just about everyone. For example, there are very few short cruises in the UK right now; but this will change over time because of the new higher quality ships with their greater range of facilities.” Arison also believes that similar growth in the range of cruising on offer will extend to Europe and, eventually, Asia too. The question is how much of this will be contributed by CCL deployments as opposed to those of other Carnival and rival brands. “Although the cruise product may have to be slightly tweaked for different nationalities, the fact is that everybody is attracted by the value and quality experience it represents.” But, until recently, Arison was reluctant to risk those all-important yields by deploying
CCL in the notoriously price-sensitive UK and European markets. The belief was that there were always other Carnival brands (notably P&O Cruises, Cunard Line and – more recently – Ocean Village and Princess Cruises in the UK, Costa Cruises across Europe, AIDA Cruises in Germany and Ibero Cruceros in Spain) better placed to source from those markets. CCL put a toe in the water with Mediterranean and then ex-UK Baltic cruises, before pulling back again in 2009 in the face of the economic downturn, higher air fares and adverse exchange rates. But it will return for a full Mediterranean season in 2011 with the new Carnival Magic making its inaugural
People are increasingly growing up with the Internet, and they will be the cruise passengers of the future.” season cruising from Barcelona between May and October. This suggests that the brand believes there is a role for its ships in future outside its North American and, in particular, Caribbean comfort zone. One reason is that featuring ships in the UK and Europe and targeting local markets raises the overall profile of the brand and increases sales of its other, North America-based cruises. So logic suggests that – unless the feared double-dip economic downturn occurs – CCL will again extend to UK
departures and Northern European itineraries in 2012/13. But its ability to surprise and be flexible in its deployment decisions has been a feature of CCL over nearly four decades, so nothing can be taken for granted. It is also unlikely that CCL will ever forsake its prime North American market to any significant degree, especially now it offers cruises from such a wide range of homeports (18 in all, compared with 12 in 2008) that – according to President and CEO Gerry Cahill – 50% of the US population lives within a five-hour drive of at least one of them. This year it will have 12 yearround programmes from US homeports (including newly extended ones from Baltimore and Charleston). On the environmental front, Arison says: “We (the Carnival group) are lowering energy consumption every year by between 3% and 4% through a variety of solutions, from new paints and hull coatings to simply slowing the ships down. “Technology is one answer to the challenges we face but, in terms of finding another radically different way of powering our ships in an even more environmentally friendly fashion, there is no silver bullet out there as yet. “Various alternative energy sources have been put forward but they all have their problems – even liquid natural gas – due to the massive on-board storage space that would be required. “The fact is that we need to have the technology catch up to us, even though we are a small shipping sector and therefore a small market.” D
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