The business model driving Carnival Corporation is recognition and respect for each brand. “The value of each company is more than its name,” said Micky Arison, chairman and CEO. “Each brand needs its own unique history and unique future in order to be successful,” he said. “Each company has its own true culture, which the customer expects to find.

“Separate organizations are in the best interest of the overall profitability of the group, and in the viability of each brand,” he continued. “Wherever we have reasonable scale, we let each brand stand on its own.

“The history of the industry has shown that when brands were acquired, and organizations were partially or fully merged, the brands have eventually disappeared,” Arison pointed out.

Global Reach

After Carnival’s acquisition of P&O Cruises, management was realigned with specific brand responsibilities.

Peter Ratcliffe, CEO of Princess Cruises, is responsible for all of Carnival’s U.K.-oriented brands, including Cunard Line, P&O Cruises, Ocean Village and Swan Hellenic. Pamela Conover, president of Cunard Line, and David Dingle, managing director of P&O Cruises, report to Ratcliffe, who also oversees P&O Cruises’ Australian operation with Gavin Smith as its managing director.

Pier Luigi Foschi, CEO of Costa Crociere, is also responsible for Carnival’s German cruise operations, and Lars Clasen, president of Seetours, the parent company to AIDA Cruises, reports to Foschi.

Bob Dickinson is president and CEO of Carnival Cruise Lines, and Kirk Lanterman is chairman and CEO of Holland America Line (HAL) and Windstar Cruises.

Ratcliffe, Foschi, Dickinson and Lanterman, who also carry the title of executive directors, report to Carnival Chairman and CEO Arison and vice chairman Howard Frank.

The new and larger Carnival Corporation has stronger financial capabilities and ability to grow the different brands, according to Arison, who said: “Our breadth of management teams and employees globally is a huge strength. We are now a truly global company with very good resources and understanding of what is happening nearly everywhere – whether in the U.K., Germany, Italy, Argentina, or Asia.

“We have product, knowledge, and distribution in all the key markets – except for Asia, which we will eventually address. As we go forward, we will study which of our brands will work there. Asia is targeted for the near future.”

Integrating New Brands

The brands which were previously competing such as Princess and HAL in Alaska, P&O and Cunard in the U.K., and Costa and AIDA in Germany, are now bringing a lot to each other instead, according to Arison.

“We have working groups in every company looking for best practices to be shared,” he said.

“Don’t be shocked to see Princess passengers on HAL coaches in Alaska,” he added, noting that Ratcliffe and Lanterman were now working together on their Alaska strategies. Meanwhile, the sales and marketing of P&O and Cunard are being coordinated in the U.K., and AIDA and Costa are no longer competing in Germany. “We all share the same target: maximum profitability for each brand,” Arison added.

The biggest challenge he is facing is dealing with the spike of newbuildings for both Carnival and Princess in 2003 and 2004, while also integrating P&O Princess Cruises.

“Everybody has a lot on their plates,” Arison admitted. “The good thing is, we have high a level of cooperation and excellent reactions from all the management teams.

“2003 has been a challenging year, and 2004 and will be a challenging year, but also very rewarding. I don’t expect any surprises – just a lot of work.”

When interviewed by Cruise Industry News, Arison said that the second set of sea trials for the QM2 had just been completed, and that he had also been in discussions with P&O’s Dingle about the virus outbreak on the Aurora. The week before, HAL appointed its new president, Stein Kruse. The following week, Arison would be on his way to the delivery of the Costa Fortuna, after which he would deal with the sale of the A’Rosa river boats.

With record ship deliveries in 2003 and 2004, the pace slows down in 2005, 2006 and 2007, with four ships slated to be delivered. In addition, Arison said: “We are working on sister ships and prototype projects for the various brands. We intend to continue to grow the AIDA and Costa brands and to build very large ships for Carnival and Princess.

“We have a lot of forward planning and projects underway, although the timing is not always clear. It depends on market conditions and the euro-dollar relationship.

“I would not be surprised if we continue to build two to three ships a year,” Arison said.

Broad Focus

Other tasks require Arison’s attention, too. While Carnival is already operating a port facility in Cozumel, a new project in Cancun came to a halt recently because of local politics. The project is still alive while Carnival and its Mexican partner are dealing with the local political issues.

Port infrastructure development is a long process wherever it is – whether in Mexico or in New York, according to Arison, who said he hoped to get a better port facility in New York.

Arison was also critical of the Caribbean Tourism Organization (CTO), which he said consisted of people paid to promote tourism and should not use their position to promote taxes for certain segments of the travel industry. Instead, they should work to lower taxes for the hotel industry, and find incentives for investments to boost tourism (on their respective islands.), using the building of the Atlantis resort in the Bahamas as an example of what incentives can accomplish.

Referring to a proposal to demand higher taxes of cruise ships at the CTO’s recent annual meeting, Arison said Carnival has contracts in place with the ports that stipulates what the charges are. The companies pay what they contracted to pay, and pay their taxes. But they (the CTO) cannot just decide to charge new taxes, Arison pointed out.

It’s About People

“I always try to empower people,” Arison said, when asked about his management style. “It is important to have people who are committed and dedicated to what they are doing.

“I do my job and let them go and do theirs; but I am there to support them and help them.

“I delegate a lot and try not to micromanage, but I do look for results. If I get results, I give them all the space in the world,” Arison continued.

“Business is about people. If you have good people, let them do their job. Put incentives in place. Have them focus on growth and creating shareholder value.

“I have basically been in cruising my entire life. My father started the company. I eat, drink, and sleep this. I do not know anything else. I can wake up in the middle of the night with ideas and call people,” Arison added.

Financial Performance

While Carnival is recognized as the most profitable leisure company in the world, Arison had this to say to analysts:

“They should recognize that we have been through a difficult period since 9/11, plus SARS, a virus, and a war. If things become relatively quiet in the future, we are well positioned to benefit. Our balance sheet is strong, and we have global reach.”

Looking back on how Carnival started relatively modestly in 1973, and today is the largest cruise company in the world, Arison said:

“We started with the best brand with the broadest demographics and built from there. I grew up here and so did many of our people. I love this business.”

He went on to say that Carnival now has the best portfolio of brands, and that future growth would be based on building the brands and growing organically.

Arison sees strength in all the markets – North America will continue to grow, but from a bigger base, so the rate of growth may be slower than Europe’s, but the absolute numbers will be more. North America will be the largest cruise market for a long time. Asia will be important five to 10 years from now, according to Arison.

Aboard

The ship has always been the destination at Carnival Cruise Lines, Arison said, noting how Bob Dickinson (Carnival president) used to refer to the ports as the green stamps. Arison said that many repeat passengers prefer to stay onboard during port days and have the ship and all its services to themselves.

“The reason for our success is that we meet and exceed the expectations of our guests every day; we create dreams for them every day,” Arison said. “There is no better value.”

It is also about people, about crewmembers, about waiters who remember your name when they serve you, according to Arison, who added: “Tonight we are serving 115,000 passengers on our ships – 114,999 will enjoy excellent dinners and excellent shows.” — Oivind Mathisen

Excerpt from the Cruise Industry News Quarterly Magazine: Winter 2003-2004