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

A 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.

Carnival’s impact on the public’s perception of cruising

By Tom Stieghorst

*Insight Since the engine fire on the Carnival Triumph in February, the industry has been closely monitoring the public perception of cruising and whether the industry has come under a cloud.

Did the problems experienced by a single Carnival Cruise Lines ship taint perceptions of the entire cruise experience?

There’s more evidence in Carnival Corp.’s second-quarter financial results that the perception of a problem with cruising has mostly affected Carnival’s flagship product. *TomStieghorst

Carnival said that, excluding Carnival Cruise Lines, bookings for the next three quarters are up, and at higher prices. That means that Princess, Holland America Line, Cunard Line and the rest of the Carnival stable have been more than holding their own since March.

Competitors such as Royal Caribbean International and Norwegian Cruise Line likewise do not appear to be struggling with lower prices, according to Wall Street analysts.

When Carnival Cruise Lines gets thrown into the mix, however, Carnival Corp. bookings are behind last year, and at lower prices. Regrettably for Carnival Corp., and perhaps the industry, if Carnival Cruise Lines isn’t healthy, the conversation about cruising suffers.

It should be noted that two Harris Interactive polls, one in March and a follow-up in May, found that perceptions about quality, trust and intent to purchase for seven cruise brands were down across the board, albeit with Carnival Cruise Lines scoring lowest.

It is hard to square the poll results with the financial results, except to say that the poll is a measure of what people say, and booking data is a measure of what they actually do.

The financial results say that, except for Carnival Cruise Lines, there’s more demand for cruises this year than last. If Carnival Cruise Lines can heal itself, however, the whole industry will undoubtedly benefit.