With agent reference back in Carnival ads, retailers applaud

Posted on 19 August, 2013 by Spacejunkie2

With agent reference back in Carnival ads, retailers applaud

By Tom Stieghorst

Carnival Cruise Lines’ return to referencing travel agents during a call to action at the end of its TV commercials got a warm reception from several travel agents, although one suggested it was overdue.

“I think that’s fabulous,” said Monica Ambriz of Anytime Anywhere Travel in Antioch, Calif., outside San Francisco. “Anything that gets the word out that travel agents still exist is good.”

Carnival said that beginning this fall it will include a call-to-action feature at the end of its 30-second TV spots. It said the feature will suggest that viewers “contact a travel professional, Carnival.com or 1 (800) Carnival.” It didn’t specify whether the call-to-action will appear as a visual or be spoken in a voiceover.

A longer, 60-second version of the commercial will not feature the call to action, but will end with a simple image and brand logo, Carnival said.

Carnival said it last incorporated a call to action in its TV advertising in 2010.

“We’ve heard loud and clear from travel agents that in order to build business together, we need to do a better job of guiding the millions of consumers we reach through our marketing initiatives to contact a travel agent,” said Joni Rein, Carnival’s vice president of worldwide sales. “We are so excited to introduce this message with our new fall television campaign and hope it will drive visibility to the value of using a travel agent when consumers decide to book a cruise.”

Rein said the inspiration for returning to a call to action came from the line’s travel agent outreach program, Carnival Conversations, launched in early July. It has held agent forums on ships in New York, New Orleans and Port Canaveral, with more scheduled.

Some agents expressed mixed emotions about the TV plug.

“It’s about time!” said Marlys Aballi, owner of Connection to Cruise in Redlands, Calif., who said she feels that Carnival’s website has taken priority over travel agent referrals for too long.

Aballi said she sells quite a bit of Carnival, especially the shorter cruises out of West Coast ports, and she emphasized that Carnival isn’t the only cruise line that has sought to increase direct bookings.

She said Carnival could be doing more to help travel agents. A small example she cited would be to move the white space provided for travel agent contact information from the back of its brochures to the front.

Suggestions like that are what Carnival executives say they had in mind when they launched Carnival Conversations. In addition to the road shows, there were sections for travel agent feedback created on the GoCCL agent website.

Ideas adopted so far by Carnival after the program’s launch include a move to simplify the number of fare categories and promotional codes and reforms to make booking groups on Carnival easier and more rewarding.

Carnival plans a major marketing push this fall to fuel its recovery from a price slump that followed the Carnival Triumph engine fire in February. Agents are being wooed as part of the overall strategy.

Jo-Ann Moss, a Cruise Planners franchisee in West Linn, Ore., outside of Portland, said she’s encouraged by the attention.

“I’ve got some clients who won’t sail on anything but Carnival,” Moss said. “I’m thrilled for their renewed appreciation.”

Proposed bills could raise nearly $1 billion in cruise taxes

Posted on 12 August, 2013 by Spacejunkie2

Proposed bills could raise nearly $1 billion in cruise taxes

By Bill Poling

Acting on his vow to significantly boost taxation of the cruise industry, Sen. Jay Rockefeller (D-W.Va.) has introduced two bills: one to end the cruise lines’ exemption from U.S. income tax and another to impose a 5% excise tax on revenue generated by U.S. cruises.

Together, the two measures could generate hundreds of millions of dollars in tax revenue — possibly close to $1 billion, based on the industry’s 2012 results.

The income tax measure (S.1449) would terminate a cruise industry exemption contained in Section 883 of the Internal Revenue Code.

Jay _ Rockefeller Rockefeller said in a statement that ordinarily the U.S. requires foreign corporations to pay income tax on profits earned in the U.S., but it exempts certain overseas corporations operating foreign-flagged ships.

He said the exemption was designed to avoid multiple taxation, based on the expectation that the affected companies would pay income tax on their international shipping activities in their home countries. In practice, however, he said that doesn’t happen.

His bill would stipulate that international cruises that embark or disembark passengers at U.S. ports are “connected with the conduct of a trade or business within the United States” and therefore subject to income tax.

The provision would apply to ships with berths for 250 or more passengers. It would not apply to ferries, to ships operated by the federal or state governments, to cruises on inland waterways or that operate between U.S. ports with no foreign ports of call.

Although U.S. corporate tax rates vary considerably, depending on various factors, the average effective U.S. corporate tax rate is approximately 13%, according to a Government Accountability Office report based on 2010 data.

The big three cruise companies reported net income of nearly $1.9 billion in 2012, most of which was exempt from federal income tax. Not all of it would have been taxable under Rockefeller’s bill, but a 13% tax rate, if applied to the entire amount, would have created a tax liability on the order of $245 million.

The proposed excise tax could generate even more revenue.

Under Rockefeller’s second bill (S.1450), a 5% levy would apply to “gross receipts derived from cruises,” presumably including passenger fares, onboard sales, tour receipts and other cruise-related revenue.

The tax would apply to 100% of gross receipts when “a majority of the passengers on any covered passenger cruise embark or disembark in the United States.” If less than a majority embark or disembark in the U.S., then the tax would apply to 50% of the gross receipts attributable to that cruise.

As with the income tax, this excise would not apply to ferries, government vessels, ships with fewer than 250 berths, cruises in inland waterways or those that operate solely between U.S. ports.

According to their annual reports, Carnival Corp., Royal Caribbean Cruises Ltd. and Norwegian Cruise Line Holdings generated total revenue of more than $25 billion in 2012. If just half that amount had been subject to the 5% excise tax, the tab would have been $625 million.

The cruise industry “strongly opposes” both bills, according to a statement by CLIA Public Affairs Director David Peikin. He said the measures would make the U.S. “a very unfavorable jurisdiction for cruise lines to operate relative to neighboring countries.”

The CLIA statement continued, “Currently, U.S. tax law is generally in line with other countries which are seeking to attract and retain the very substantial jobs and economic activity generated by the international cruise line industry. S. 1449 and S. 1450 would … [place] the U.S. at a severe competitive disadvantage.”

CLIA also noted that “the cruise industry is a significant contributor to the U.S. economy, providing $42 billion in economic benefits in 2012, including more than $17 billion in wages to American workers.”

A statement issued by the Commerce Committee, which Rockefeller chairs, said the plan for an excise tax “would require cruise lines to begin paying tax levels that most other transportation industries already pay. The tax payments help cover costs of building and maintaining the nation’s infrastructure.” The statement said the tax would be “similar to the passenger taxes in the aviation industry.”

Under Rockefeller’s legislation, money generated by the cruise excise tax would go into a proposed “intermodal transportation infrastructure trust fund,” which would be used to finance infrastructure projects across all transportation modes, including aviation, highways, rail, transit and petroleum pipelines as well as maritime and port and waterway infrastructure projects.

The bill does not specify that funds from any particular mode would be invested in that sector, as is currently the case with aviation taxes.

Rockefeller’s two bills were introduced just as Congress was beginning its August recess. As of last week, they had no cosponsors and no companion bills in the House. They were referred to the Senate Finance Committee, of which Rockefeller is a member.

New Carnival CEO: ‘I’m listening’

Posted on 6 August, 2013 by Spacejunkie2

New Carnival CEO: ‘I’m listening’

By Tom Stieghorst

An eclectic board

The choice of a relative unknown Carnival Corp. director, Arnold Donald, to become CEO has cast a spotlight on the 11 members of the board, which has grown substantially more international and influential as Carnival evolved from a small, family-owned enterprise into the world’s largest cruise operator.

Carnival Corp.’s new CEO, Arnold Donald, is hoping to convince travel agents that he appreciates their efforts.

“We think a lot about travel agents,” Donald said in an interview with Travel Weekly from his St. Louis home. “They are very important to our success. One of three cruisers cruises with one of our lines. That certainly would not have been possible without the deep support of travel agents across this country.”

Donald said the first two weeks on the job since starting July 3 have been about an opportunity he’ll only get once.

“I’ve been listening,” he said.

His listening tour includes one-on-one sessions with Carnival Corp. board members, with the brand presidents and with department heads at Carnival headquarters. He also met with the board in New York the week of July 15.

Donald said he will be doing deep research into the company’s individual brands in the near future, followed by annual financial forecasting and budgeting exercises beginning in October.
ArnoldDonald
A relative unknown in cruise circles, Donald’s elevation to CEO comes after 12 years on the company’s board, where he took an active interest in the workings of Carnival Corp. brands.

Donald, who had never held a management job at a cruise line prior to becoming CEO, said he was surprised to be offered the job.

“It wasn’t on my radar screen and wasn’t something I was thinking about at all,” he said.

When Carnival Corp. Chairman Micky Arison came to him with the idea, Donald said he had to think about it. At the time, he was serving on several boards and was involved in some private equity ventures.

“I was busy, but I wasn’t a hands-on operator,” Donald said. “I had a lot of freedom.”

Still, jobs like CEO of Carnival Corp. don’t come along every day. A company with $29 billion in market value and close to 90,000 employees, Carnival has had only two CEOs in its 41-year history, and both shared the Arison name.

Donald decided there were two questions he had to answer before committing to take the position. The first was whether he really wanted to do it. The second was whether he felt he was suited to it — whether, in effect, he was the right man for the job.

Only when he concluded he could answer yes to both questions, Donald said, did he accept the offer.

Donald, 59, was born in New Orleans, the son of a carpenter. He turned down several top schools, including the U.S. Military Academy, to attend Carleton College in Minnesota, where he graduated with a degree in economics.

While short on cruise management experience, Donald had a 20-year career at Monsanto Corp., where he ran several divisions. Then he presided over a spin-off of Monsanto’s artificial sweetener business. It was while in that job that he joined Carnival’s board in 2001, shortly before the company’s acquisition of P&O Princess Cruises.

Donald said his board tenure has given him a basic feel for the industry.

“I have developed a working-level understanding of the industry, not an operational level,” he said.

But Donald said he has one bit of experience that gives him something in common with 10 million other people each year: “I have been a guest.”

Donald said his wife is an avid cruiser, and he had cruised on several ships even before joining the Carnival board.

One particularly memorable voyage was a Caribbean cruise about 15 years ago with more than 50 members of his extended family. Donald said the cruise deeply impressed them.

“None of them had ever been out of their home city before,” he recalled, adding that family members are still talking about it; he said the next family reunion is in the planning stages.

“That was a fantastic bonding experience,” he said.

When it comes to filling the gaps in his cruise expertise, Donald said he has two of the best mentors possible.

“Micky has built one of the great brands in the leisure business,” Donald said. “He is totally available to me. Micky is there, and he is chairman. [Carnival Corp. COO] Howard Frank has been around the industry for 25 years. So I have a very strong team.”
Donald said his salary as CEO has not yet been finalized. One complicating factor is that Donald is chairman of the compensation committee of Carnival’s board. Arison’s 2013 salary as chairman and CEO is $906,400, with a bonus of $1.5 million plus stock awards and other noncash items.

It isn’t clear yet how Arison’s compensation will be affected by the division of his roles as chairman and CEO.

Now that he’s in the new job, Donald is sizing up opportunities for Carnival. He initially mentioned raising returns on capital, expanding globally and consistently delivering a joyful vacation at a great value.

“We have opportunities all over the place,” Donald said. They range from something as simple as creating more demand to exploiting new concepts such as the transformation of the Carnival Destiny into the Carnival Sunshine.

With travel agents, Donald acknowledged that the brands “have some work to do” to rebuild credibility.

He said if there’s one key, it is to continually exceed guest expectations. Donald said he’s eager to make that happen. “I’m very excited,” he said.