Tag Archives: CCL

Gaining perspective with a look back at RCCL, Carnival Corp.

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Gaining perspective with a look back at RCCL, Carnival Corp.

By Tom Stieghorst
*InsightLooking back 10 years at the two biggest cruise companies is one way to gauge how far the industry has progressed and gain some perspective on the problems of the day.

In 2003, the problems included terrorism, war, flu and the SARS respiratory virus. “A perfect storm,” Royal Caribbean Cruises Ltd. Chairman Richard Fain called it in his annual letter to shareholders that year.

On the shipbuilding front, RCCL made its first new order in 3½ years, for an “Ultra Voyager” class ship that would evolve into the Freedom of the Seas. The letter mentioned short cruises from Los Angeles had been restored, and a brand-new terminal in New Jersey called Cape Liberty was inaugurated.*TomStieghorst

Celebrity Cruises had launched a marketing campaign with the theme of ordinary people being treated like celebrities, the Serenade and Mariner of the Seas were added to the fleet and RCCL’s joint venture with First Choice Holidays, Island Cruises, had just turned profitable.

RCCL was hoping to regain the investment ratings on its debt that it had lost after the 9/11 terror attacks.

Flash-forward to 2013. Terrorism, war, flu and SARS, while not vanquished, were not hot-button issues. In his letter to shareholders, Fain says RCCL ordered no new ships for 2017 to keep capacity growth modest.

Royal isn’t sailing from Los Angeles anymore, but its Cape Liberty terminal in New York Harbor is more important than ever. Royal built six ships after Serenade and Mariner, with a seventh, Quantum of the Seas, due in November.

RCCL’s stake in Island Cruises was sold to Germany’s TUI, which is a 50-50 partner with RCCL in TUI Cruises. And the company is still trying to earn back its investment grade rating.

For Carnival Corp., 2003 was the year it finalized its landmark merger with P&O Princess Cruises. It was preparing to take delivery of seven ships in a nine-month stretch, including Cunard Line’s Queen Mary 2.

“I have never, in my 35 years in this business, been more excited and enthusiastic about the future of our company,” Carnival Corp. Chairman and CEO Micky Arison wrote.

Ten years later, the mood is less ebullient. Arison’s letter in the annual report is a bit retrospective; it notes his retirement as CEO of the company he has steered for three decades and salutes Carnival veterans Howard Frank and Pier Luigi Foschi, who also stepped down from executive roles in 2013, leaving the company’s day-to-day direction in the hands of a relative newcomer, Arnold Donald.

Arison’s letter says Donald brought “a fresh perspective and a new energy to our company. … His skills are ideally suited to lead the next stage of Carnival Corp. and PLC.”

Carnival CEO Steps Down and Carnivals Recovery Period.

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Arison steps down as CEO of Carnival Corp.; remains chairman

By Tom Stieghorst
Arnold Donald will take over from Micky Arison as CEO of Carnival Corp.Micky Arison will give up the job as CEO of Carnival Corp., but remain chairman of the cruise company his father founded 40 years ago.

Carnival said Arnold Donald, a board member for the past 12 years, will become CEO effective July 3.

“I have been discussing this with the board for sometime now and feel the timing is right to align our company with corporate governance best practices and turn over the reins after 34 years as CEO,” Arison said. “Arnold is an exceptional professional with extensive experience in organizational leadership who will bring a fresh perspective to the company.”

Arnold has been an senior executive at Monsanto Corp., and founded and led Merisant, a company whose products include tabletop sweetener brands Equal and Canderel.

He also is former president and CEO of the Executive Leadership Council, a professional network and leadership forum for African-American executives of Fortune 500 companies.

Carnival Corp.’s Frank talks recovery period for Carnival brand

By Tom Stieghorst
Howard FrankA full recovery at the Carnival Cruise Lines (CCL) brand will take two to three years, Carnival Corp. Vice Chairman Howard Frank said in a call with Wall Street analysts.

In discussing Q2 results, Frank presented an analysis of yields both including CCL and excluding CCL, the way Carnival had previously done for Costa Cruises after the Costa Concordia accident. In answering a later question, however, Frank said the two were different situations and markets.

He said the two- to three-year full recovery period was based on consultants who looked at two negative events outside the cruise industry as models. “Their view is that although we’re a very different industry, it’s likely we will follow the same pattern.”

The impact of the Carnival Triumph and subsequent incidents tied to CCL ships will reduce Carnival Corp.’s 2013 results by about $388 million, Frank said, including $124 million for canceled sailings, $210 million in lower revenue yields, and about $54 million in vessel enhancements and extra marketing.

Frank said the extra marketing would come in three areas: funds directed at travel agents, including cooperative advertising; social media; and possibly more TV ads. In the fall, Carnival will look at marketing for particular brands, he said.

Frank explicitly thanked travel agents during the call. “Many of our travel agent partners have been very supportive during this challenging period, and for that we are very grateful,” he said.

For close-in bookings, Carnival losing pricing battle

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For close-in bookings, Carnival losing pricing battle

By Tom Stieghorst
In a new report, Jeffries International analyst Ian Rennardson says cruise pricing slipped in March, with the most dramatic decline at Carnival Corp.

For cruises in the next three months, prices are 2.1% lower than at this time last year, with increases at Royal Caribbean Cruises Ltd. (up 7.7%) and Norwegian Cruise Line (up 7.1%) more than offset by a drop at Carnival Corp. (down 8.9%).

The outlook is more positive for cruises booked four to 12 months out, with prices trailing last year by 1.4% in March, compared with 2.1% in February. For cruises booked four to 12 months out, Carnival pricing in March was down 0.7%, RCCL down 3.3% and Norwegian up 4.7%.

The report is based on a Cruise Market Watch database that tracks 190 ships and 9,000 annual cruises.

Rennardson said the March results are disappointing for Carnival.

“We are becoming more concerned that pricing for CCL over the next 12 months remains well below our 0% forecast as we estimate that 30%-50% of the all-important Q3 capacity has been sold at this point,” the report said.

“We are now lapping the easy pricing comparisons, and there is less and less time to make up the shortfall — pricing needs to turn sharply positive, and soon, if estimates are to be met.”