Carnival dining changes slow to gel

Posted on 24 June, 2014 by Spacejunkie2

By Tom Stieghorst

ABOARD CARNIVAL FREEDOM — Carnival Cruise Lines’ implementation of a new main dining room program is taking longer than anticipated, said the line’s chief marketing officer, Jim Berra.

After a news conference, Berra said Carnival has been tweaking the features of American Table and American Feast, the dining room concepts it developed with the input of Union Square Hospitality Group.

Four of Carnival’s 24 ships have been piloting the concept. Berra said Carnival wants to make sure it has the bugs worked out before the changes expand to the rest of the fleet. There is currently no ship being targeted for expansion of the program, he said.

Carnival has been doing what Berra termed “A/B testing” of variations on ships with similar itineraries. One discovery is that the idea of sharing common appetizers at a table isn’t playing as well at sea as it does in land restaurants. It works best during “Anytime Dining,” when guests are generally eating with people they know, but less well when dining with strangers, Berra said.

He said the upgraded bread and water service has been well received, as has the “Port of Call” items on the menu, which are matched to the port the ship is visiting on the day of the meal.

American Table is the everyday complimentary dining in Carnival’s main dining room on the Carnival Glory, Liberty, Inspiration and Imagination.

American Feast is a more elegant, celebratory version that is offered twice during each voyage.

Both feature redesigned menus, a new style of service and cuisine with an emphasis on American origins.

Carnival Corp. CEO: Competitors’ newbuilds may hurt pricing

Posted on 9 June, 2014 by Spacejunkie2

By Tom Stieghorst

MSC Cruises’ order book of four big new ships is an example of a trend that could spell trouble for an industry struggling to raise prices, Carnival Corp. CEO Arnold Donald said.

“We’ll have to see how it all plays out,” Donald said in a recent teleconference with reporters. “In an ideal world, you wish it wasn’t happening.”

Arnold Donald Donald was not singling out MSC’s expansion for criticism, but he happened to be making his comments on the day the line ordered two 4,170-passenger ships. That came on the heels of an order for two 4,500-passenger ships, part of a plan to double MSC’s capacity by 2022.

Asked how prices can rise if Carnival Corp. restrains its own brands’ capacity growth while other lines don’t, Donald said he was confident that Carnival’s strategy was sound. It includes incremental growth in onboard revenue and ticket prices spread over 78 million passenger days, coupled with shrinking expenses by employing best practices culled from its 10 brands.

But, he said, if any competitor resorts to “super-aggressive pricing” to fill its ships, “then it can become a problem for the industry.”

Donald said travelers come to view the industry’s lowest prices as a gauge of how much they should pay for any cruise.

“People say, ‘I’m not going to go on that ship, but cruises only cost this much, and I don’t want to pay more than that because I don’t want to get ripped off.'”

On the other hand, he said, the upside of new capacity is more attention being paid to cruise products.

“It just allows them the opportunity to put cruise front and center, to help all of us close on [those] new to cruise,” he said.

MSC Cruises USA President Rick Sasso said that the real pricing stress this year has been in the Caribbean and that MSC wasn’t the initiator of the fare discounting there.

“It should not be a surprise to anybody that we’ve been successful and we’re going to continue to invest in our brand,” he said.

Carnival CEO downplays MSC growth but sees pricing risk

Posted on 24 May, 2014 by Spacejunkie2

Donald – Impact of MSC newbuilds depends on how they’re positioned

Addressing how the big MSC newbuilds may reshape the competitive climate, given they are headed to ‘the most sought-after warm weather destinations in the Mediterranean, South America and Caribbean,’ Carnival chief Arnold Donald first downplayed the impact then conceded there may be risk for pricing.

‘It’s four ships. We have 102. In the scheme of things, you’re looking at a tiny percent impact, depending how they’re positioned in the market,’ the Carnival Corp. & plc CEO said Thursday, shortly after MSC’s orderbook went from two to four big ships, all above 150,000gt.

MSC ordered today at Carnival’s traditional builder of choice—Fincantieri—and broke the news just as Donald headed into the second informal media call of his tenure as CEO.

After his initial remarks, Donald was pressed on the potential impact to the Caribbean business of large capacity increases. And how can pricing go up for Carnival if it constrains capacity growth but competitors don’t?

Cruising’s major players have reported lower net yields in the industry’s most important region this year. Recently Norwegian Cruise Line CEO Kevin Sheehan singled out MSC Divinaas a big factor in the softer Caribbean rates.

The Caribbean issues weren’t due to one new ship, Donald told reporters, adding: ‘It was a 20% increase in a market that’s highly saturated anyway’ and coming during a period of recovery from incidents.

Yet Donald allowed there is the ‘risk of a psychological impact’ on customers. If they see very low pricing they may think ‘cruises only cost so much and I’m not going to pay more.’

Also, the Carnival chief said MSC, or any single brand that adds new ships, risks ‘cannibalizing’ its existing vessels.

‘On a positive note,’ he added, ‘I’m sure they will be nice ships’ and newbuilds create ‘energy and excitement.’

As for Carnival’s strategy to raise pricing, the company is looking at best practices of all the brands for ways to push up on-board and ticket revenue. Given its scale, if Carnival can do so by even a small amount, ‘we will generate extraordinary returns,’ Donald said.

At the same time the company will leverage its scale to cut costs. As an example, Carnival is the fifth largest purchaser of airline travel in the world yet ‘we never behaved like that. We behaved like 10 brands.’

The greater focus, though, is on revenue. ‘Best practices across brands will lift us a dollar, 2 dollars or 3 dollars. An extra few dollars on cruise tickets means a lot with 78m cruise days,’ Donald said.

These efforts are needed to get back to double-digit returns, ‘where we should be.’