Carnival Corp - Travel and Tourism World
Euromonitor International : Global Company Profile
January 2009
Carnival Corp - Travel and Tourism
World
List of Contents and Tables
Strategic Evaluation................................................................................................................................................ 1
SWOT analysis.......................................................................................................................................................... 1
12 Month Highlights ............................................................................................................................................... 2
2007-2008 ................................................................................................................................................................. 3
Prospects .................................................................................................................................................................. 3
Core Businesses ........................................................................................................................................................ 3
Growth Opportunities ............................................................................................................................................... 4
Limited Potential....................................................................................................................................................... 6
Company Strategy .................................................................................................................................................. 6
Strategic Objectives and Challenges......................................................................................................................... 6
Ownership Events ..................................................................................................................................................... 7
Company Structure ................................................................................................................................................ 7
Carnival Corp ........................................................................................................................................................... 7
Summary 1
Carnival Corp: Travel & Tourism Key Facts..................................................................... 7
Production and Distribution ..................................................................................................................................... 8
Brand Assessment ................................................................................................................................................... 8
Brand Strategy .......................................................................................................................................................... 8
Carnival Cruise Lines ............................................................................................................................................... 9
Holland American Line............................................................................................................................................. 9
Costa Cruises SpA..................................................................................................................................................... 9
Cunard Line .............................................................................................................................................................. 9
Seabourn Cruise Line.............................................................................................................................................. 10
Princess Cruises...................................................................................................................................................... 10
Aida......................................................................................................................................................................... 10
P&o Cruises............................................................................................................................................................ 10
Ocean Village ......................................................................................................................................................... 10
P&o Cruises Australia............................................................................................................................................ 11
Iberocruceros.......................................................................................................................................................... 11
Appendices............................................................................................................................................................. 11
Financial Summary................................................................................................................................................. 11
Table 1
Carnival Corp: Financial Summary 2003-2007 ............................................................... 11
Company Background............................................................................................................................................. 11
Summary 2
Carnival Corp: Historical Development .......................................................................... 11
Summary 3
Carnival Corp: Subsidiaries 2007.................................................................................... 14
Summary 4
Carnival Corp: Travel & Tourism Brands 2007 .............................................................. 14
Summary 5
Carnival Corp: Company Locations ................................................................................ 15
Summary 6
Carnival Corp: Websites.................................................................................................. 15
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CARNIVAL CORP
STRATEGIC EVALUATION
SWOT analysis
Strengths
•
World leader – Carnival Corp is the largest cruise operator in the global cruise market and one of the largest
holiday companies in the world. Such strong competitive positioning is key given that its large size allows
for greater bargaining power with suppliers and distributors, as well as a more efficient allocation of costs
across different vessels.
•
Financial strength – Carnival has achieved sustained and strong operating profit margins, which often
surpass those of competitor Royal Caribbean. This affords the business a strong credit rating when
obtaining financing.
•
Robust capacity expansion – shipbuilding is a key element to stimulate further growth and boost capacity.
Therefore, Carnival has aggressively invested in the expansion of its fleet along the years. Currently, a total
of 22 new vessels are scheduled for delivery through 2012 and is set to increase overall capacity by 25%.
•
Varied product portfolio – its cruise brand portfolio, comprising 13 distinct brands, offers a wide range of
holiday products to a broad consumer base.
•
Bargain product – Carnival has the best bargains compared to other travel and tourism industry offers, with
passengers having the opportunity to visit more than one destination and enjoy several amenities at very
competitive prices.
•
Broad regional scope – Carnival is well-positioned in the global cruise market, having consolidated its
presence in North and Latin America, the UK, Germany, Southern Europe and Australia. The company has
also ventured into Asia, with exceptional results achieved by Costa Cruises. In 2007, Carnival increased its
international capacity by more than 20%.
•
Strategic cruise berths – the company has managed to gain increased access to ports around the world and,
even, preferential berthing rights by developing strong relationships with local government offices at key
cruise destinations like the Caribbean, for example.
•
Sustainability – Carnival is committed to minimising the environmental impact of its operations. In addition
to forming a Health, Environmental, Safety and Security Committee in 2006, all of its subsidiaries have
successfully achieved implementation and certification of their environmental management systems to the
ISO 14001 standard.
Weaknesses
•
Soaring fuel costs – despite registering outstanding financial results, fuel costs have constrained margin
expansion to a great extent in 2007/2008. According to experts, fuel cost per available passenger cruise day
rose nearly 55% from the second quarter of 2007, adversely impacting Carnival's cash flow. The lack of a
fuel hedging programme is set to exacerbate future cash flows, particularly if fuel prices post significant
increases in the short term.
•
Seasonality – Carnival's revenues from the sale of passenger tickets are highly seasonal, with demand
peaking during the third quarter, which includes the Northern Hemisphere summer months. This, coupled
with the need to take ships out of service for maintenance, increases the negative impact of seasonal sales.
•
Tax burden – Carnival Corporation & plc operates as a dual listed company (DLC). While Carnival Corp is
incorporated in Panama and traded on the NYSE, Carnival PLC is incorporated in England and Wales and
traded on the LSE. Risks associated with this structure include the uncertainty of its tax status.
Opportunities
•
Favourable demographic trends – an ageing population and a more affluent older generation in North
America and key European markets are likely to support future growth.
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•
Growing demand from young consumers – an increased interest in cruise travel by young consumers
presents an additional boost to future demand. This presents an enormous potential for growth for
companies like Carnival, which have a varied product portfolio.
•
Low market penetration – the fact that only a small percentage of consumers worldwide took a cruise
presents enormous opportunities for growth in the forecast period.
•
Asia-Pacific potential – experts believe that for the first time in history, the Asia-Pacific region is set to
become an important market, particularly when it comes to China and India. This presents an enormous
opportunity for Carnival, given its growing presence in the region.
•
Highly consolidated industry – the global cruise industry is dominated by what experts call a virtual
duopoly, with Carnival and Royal Caribbean carrying approximately 46% and 24% of all global cruise
passengers. This presents enormous opportunities in terms of economy of scale.
•
Sizeable barriers to entry – because building a new ship is a costly and lengthy process, Carnival, just like
any other major cruise company, operates in a highly concentrated competitive environment which often
deters new entrants. This presents a major opportunity, given the company has time to capitalise on its
potential, without worrying about a race with new competition to add capacity.
•
Strategic alliances – the continued expansion of strategic alliances is likely to bring about numerous
advantages including cost and efficiency benefits, extended business operations and increased access to
fast-growing markets.
Threats
•
Escalating fuel costs – managing high costs is a very complex challenge for Carnival as well as any other
cruise company in the world. Nevertheless, the continuous optimisation of cruise routes, the adoption of
cost-efficient schemes and the ongoing response to environmental changes by Carnival is likely to offset
partially rising fuel costs in the near future.
•
Consumer confidence – the recent economic upheaval which adversely impacted the income level of cruise
travellers coupled with a rising lack of confidence in strong markets like the US, can have a negative impact
on Carnival's operations. In an attempt to minimise the effect of the current crisis, cruise lines are
prioritising local routes that are more accessible to consumers.
•
Fierce competitive environment – increased competition from other cruise ship operators and land-based
holiday alternatives are expected to impact future operations of Carnival Cruises and instigate operational
changes to its current business strategy.
•
Natural disasters – natural disasters such as hurricanes and earthquakes like any adverse weather condition
present a big threat for cruises, given they often result in the alteration of itineraries or even the cancellation
of trips. Natural disasters can also destroy port areas and surrounding cities, making access to popular
destinations such as the Caribbean difficult.
•
The individuation of consumer choice – changing consumer preferences as well as the non-stop search for
unique experiences are expected to impact the future demand for cruises. In attempt to minimise any
adversities, Carnival is expanding its route network and the services provided by each of its cruise brands.
•
Security – security issues and potential acts of terrorism are a threat, with the high-profile status of many
Carnival cruise ships making them potential targets.
•
Overcapacity – whilst short- and medium-term growth for the cruise industry looks positive there is always
the potential of overcapacity which could negatively impact sales in the long term, particularly if demand
weakens.
•
Strict regulations – the impact of any changes in laws/regulations relating to environmental, health, safety,
security, tax and other regulatory regimes under which cruises operate, pose a major threat to rising demand
as they tend to keep tourists from moving freely across different regions.
12 MONTH HIGHLIGHTS
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2007-2008
•
In July 2008, the largest Carnival vessel, the 3,006-passenger SuperLiner, debuted with an inaugural 8-day
Western Europe voyage from Genoa to London (Dover).
•
In order to continue providing consumers with services that are in line with its current investments,
Carnival revamped its entire website in 2008 to include a number of new features such as enhanced
navigation, layout, new visuals, a higher resolution that provides a better platform for multi-media
components and greater compatibility with distinct web browsers.
•
Early in 2008, Carnival launched a new branding campaign to promote "Fun Ship" cruising. The multimillion-dollar campaign introduces a fresh new look built around the phrase "Let the Fun Begin".
•
Carnival Corporation & plc achieved outstanding results in 2007, reporting record net income of US$2.4
billion and revenues of US$13 billion. Higher than expected fuel costs, however, continued impacting
cruise operations during the year and pushed ticket prices up. According to company sources, Carnival paid
an extra US$600 million in 2007 for fuel and the surcharges passengers paid over the year did not even
cover half of those costs.
•
European brands such as Costa Cruises, AIDA, Ocean Village, Cunard Line and P&O Cruises enjoyed
another record year in 2007, absorbing substantial new capacity and driving significant improvement in unit
operating profit. Although operating performance for North American brands like Carnival Cruises,
Princess Cruises, Seabourn Cruise Line and Holland America Line was hampered by strong pricing
pressure in the Caribbean early in 2007, demand for Caribbean cruises strengthened considerably over the
year and is expect to continue doing so in 2008.
•
In 2007, Carnival has continued focusing on robust capacity expansion, bringing the delivery of new
vessels to a total of 22 through 2012. While the Cunard Line announced the purchase of a new 92,000-tonne
liner, Carnival ordered two 71,000-tonne cruise ships for its AIDA Cruises brand and has contracted with
Meyer Werft to increase the size of a previously ordered vessel, set to debut in April 2010. Costa Crociere
has also placed an order for two additional vessels, having a total of five ships on order from Fincantieri, an
Italian shipbuilder.
•
Carnival and Orizona formed a joint venture in September 2007, establishing Iberocruceros, a multi-ship
cruise brand serving the Spanish market which combines the two vessels of Orizonia's existing cruise
operations with a ship from Carnival Corporation.
•
Encouraged by the positive results achieved in Asia, Carnival has decided to increase its presence in the
region with its Costa brand late in 2007. Costa Cruises is set to more than double its capacity in Asia by
positioning a second cruise ship in the region, beginning in March 2009.
PROSPECTS
Core Businesses
•
Carnival Corporation & plc is a global cruise and holiday company, which has consistently achieved
positive results in all of its business segments (cruises, hotel, tour and transportation operations) and
attracted nearly eight million guests annually.
•
Although a successful holiday company, cruise transportation remains the core of its business strategy. This
is directly related to Carnival's extensive product portfolio, comprised of leading cruise brands such as
Carnival Cruise Lines, Princess Cruises, Holland America Line and Seabourn Cruise Line in North
America; P&O Cruises, Cunard Line and Ocean Village in the UK; AIDA Cruises in Germany; Costa
Cruises in Europe; and P&O Cruises in Australia.
A global force in cruises
•
Carnival and Royal Caribbean Cruises are the absolute leaders in the cruise market. It is worth noting,
however, that Carnival is clearly ahead of Royal Caribbean Cruises and enjoys sales and profit margins
which are considerably higher. The next biggest competitor is Norwegian Cruise Lines, a relatively smaller
cruise operator with sales of around a fifth of Carnival's.
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•
As of July 2008, Carnival has 22 "Fun Ships" operating routes ranging from three to 18 days in length to
the Bahamas, Caribbean, Mexico, Alaska, Hawaii, New England, Canada, Bermuda, Europe, the Greek
Isles and Latin America.
•
In 2007, Carnival remained ahead of competitors not only because of a strong focus on organic growth but
also and, most importantly, because of aggressive acquisitions, which have enabled the company to
leverage large-scale capital investment designated for a vigorous ship-building programme and expand its
geographic reach so as to maintain its competitive edge.
•
Carnival cruise transportation sales accounted for 97% of revenues in 2007. Its strong financial results have
continuously outperformed the industry in past years, prompting sustained and strong operating profit
margins of 20% or higher during the review period. Passenger numbers also showed robust growth, moving
from 6.8 million in 2005, to nearly eight million in 2007. This has only been possible through an aggressive
fleet expansion strategy, which boosted capacity and pushed the total number of vessels scheduled for
delivery to 22.
Two main regions
•
Despite leading global cruise sales, Carnival focuses on two main regions – North America and Western
Europe. In general, both have consistently contributed to total revenues, becoming key drivers of growth in
past years. It is also noteworthy that those regions present a great opportunity for Carnival to expand core
growth brands and open new markets, which is in line with its growth strategy. In addition to having the
largest and most popular cruise lines, North America is also the most profitable in terms of revenue – a fact
which allows for great flexibility when it comes to product offering and capacity development. Western
Europe is not far behind, showing a strong demand for cruises in recent years.
•
Whilst the company seeks to further develop the cruise industry in North America with a strong focus on
luxury travel and exotic destinations, in Western Europe it focuses on diversity, aiming to provide a melting
pot of ethnic origins, languages and cultures. In other words, Carnival brands in Western Europe are
positioned to offer an insight into the blend of cultures around the Mediterranean.
•
Carnival also has cruise interests in what it classifies as Australia/New Zealand and other regions. Although
Australasia is not a major revenue source for the company, it is a region which has been growing in recent
years and is set to continue doing so as Carnival introduces larger capacity vessels by redeploying existing
ones to those emerging areas.
Fresh new look
•
Marketing appeal plays a crucial role in the cruise market, given the sale of passenger tickets are highly
seasonal. Not surprisingly, Carnival spends large sums of money throughout the year to enhance brand
loyalty and prospect consumers. So far, the company has been very successful, capitalising not only on its
marketing power but also and, most importantly, on its ability to innovate and offer unique cruises to
consumers.
•
Its latest multi-million-dollar campaign, launched in January 2008, introduces a fresh new look built around
the phrase "Let the Fun Begin". The centerpiece of the initiative is a series of new 30-second TV spots
targeting three different core markets – multi-generational travel, families as well as the romance aspect of
cruising - with scenes portraying travellers relaxing in scenic locales and enjoying onboard activities.
•
The TV spots will air on all major broadcast networks, as well as select cable channels such as USA, TNT,
TBS, Food Network, Travel Channel, HGTV and Discovery Channel. In addition to TV spots, the new
campaign also includes print advertising and the distribution of travel agent kits, with postcards, letterhead,
stickers, coasters and items for agents to display in their offices such as welcome and open/close signs.
Growth Opportunities
•
There are several factors favouring the continued expansion of cruises around the world. First, the increased
interest in cruise travel by young consumers. Second, the non-stop growth by an ageing and more affluent
population in North America and Europe. Third, the enormous potential presented by markets such as Latin
America and Asia. And, lastly, the ability to enhance operational activity through strategic alliances.
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Demographic changes
•
Although the majority of consumers opting for cruises are still the older and more mature, young adults
have started playing a significant role in recent years. According to industry sources, this is directly related
to the fact that companies have increasingly catered cruises to young and more active consumers through
distinctive destinations and in-board attractions. Hence, they are growing accustomed to the idea of cruising
and leaving behind the staid image, often related to cruises.
•
Overall, the main objective is to capitalise on emerging consumers' lifestyles, comprised of a generation
that is single, very technology-driven, fashion-conscious, status aware, keen to spend and not afraid of
credit.
•
The strategy goes hand-in-hand with the increased popularity of niche cruises, in which companies charter
cruises for specific consumer groups and feature rock concerts, high-impact gym classes, DJs and so on.
The Mayercraft Carrier Cruise on the Victory with John Mayer, the Simple Man Cruise with Lynyrd
Skynyrd, and the Ships and Dip III Barenaked Ladies Cruise are great examples of popular concert cruises.
Building brand loyal consumers
•
Carnival is continuously developing its family cruise product not only to consolidate its competitive
positioning as a family cruise leader but also and, most importantly, to capitalise on the potential young
travellers present of becoming future cruise passengers. Such a strategy has helped to enhance overall
penetration worldwide and to boost sales revenues in the latter part of the review period.
•
Not surprisingly, in February 2008, Carnival introduced a new onboard programme called "Circle C" aimed
at 12- 14 year-olds and featuring high-tech spaces with game boys and arcade games as well as numerous
activities led by very energetic hosts.
•
"Circle C" facilities are available on Carnival Legend, Carnival Pride, Carnival Victory and Carnival Valor
with Carnival Imagination, Carnival Inspiration, Carnival Liberty, Carnival Fantasy, Carnival Paradise and
Carnival Glory.
•
In addition to "Circle C" activities, Carnival offers a wide variety of "fun" alternatives. 2-11 year-old
children, for example, can enjoy the popular "Camp Carnival", which continues to evolve with new 1,600
sq ft (150 sq m) play areas on "Fantasy-class" ships and new programming fleetwide. For older kids,
Carnival has introduced the "Club O2" teen programme featuring teen dance clubs, just for teens shore
excursions, and more.
•
Carnival WaterWorks is a brand new aqua park featuring a 300ft long twister water slide, dual-lane racing
slides and water spray apparatus, which was introduced as part of the "Evolutions of Fun" programme on
select ships.
Value creation
•
In addition to catering to a more diverse demographic mix, Carnival has also focused on expanding
itineraries to include more ports of call and convenient embarkation ports.
•
The introduction of innovative onboard amenities and facilities, including cell phone access, internet cafés
and wireless fidelity (Wi-fi) zones, rock-climbing walls, bowling alleys, surfing pools, multiroom villas,
multiple themed restaurants and expansive spas, health and fitness facilities was another key aspect to boost
overall growth.
•
The newest "Fun Ships" are a great example of this, offering a diversity of dining, entertainment and
activity options such as lounges and bars, swimming pools, water slides, health and fitness centres, internet
cafés with Wi-Fi access, and even a Seaside Theatre, with a 270 sq ft (25 sq m) LED screen showing films,
concerts and other programming. Cell phone services are available as well.
•
"Fun Ships" also offer a variety of accommodations that include a wide selection of balcony staterooms and
suites. All feature the exclusive Carnival Comfort Bed sleep system with plush mattresses, luxurious duvets
and high-quality linen and pillows.
Health and wellness focus
•
As consumers worldwide become increasingly health-conscious, travel and tourism businesses have
introduced a wide variety of services aimed at capitalising on this growing trend. With cruises it is no
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different. Therefore, in 2008, Carnival introduced the"Cloud 9 Spa", a two-level 21,000 sq ft (1,950 sq m)
health and wellness centre, at Carnival Splendor. Only guests who book the Cloud 9 staterooms and suites
have exclusive access to amenities and privileges including unlimited admission to the spa and its facilities,
priority spa appointments and complimentary fitness classes.
•
The new spa features innovations such as a thalassotherapy pool, an elaborate thermal suite and 17 private
treatment rooms, including two VIP facilities for couples. Adjacent to the facility are 68 spa staterooms and
suites accessible by a private elevator. "Cloud 9 Spa" also has a full gymnasium, spacious workout facilities
and a full-service beauty salon.
•
In order to provide passengers with a complete health package, Carnival also offers health dining options,
including a salad bar as well as gourmet-style selections that are lower in calories, fat, cholesterol and
sodium.
Emerging markets
•
At the same time Western Europe presents enormous opportunity for growth due to strong cruise demand,
China leads the way as long-standing government travel restrictions have been relaxed and more Chinese
have the ability to travel abroad. It is also worth noting that as the Chinese economy matures and its middle
class expands, the number of travellers willing and able to go on cruises is expected to grow.
•
Encouraged by the positive results achieved in Asia since 2007, Carnival decided to increase its presence in
the region with its Costa brand late in 2007. Costa Cruises is set to more than double its capacity in Asia by
positioning a second cruise ship in the region, beginning in March 2009.
•
In 2009, Carnival Splendor is set to operate its first-ever Latin American cruise from January through
March. It is expected to visit historic destinations in Brazil, Argentina, Uruguay, Ecuador, Chile and Peru.
Strategic alliances
•
Carnival and Orizona formed a joint venture in September 2007, establishing Iberocruceros, a multi-ship
cruise brand serving the Spanish market which combines the two vessels of Orizonia's existing cruise
operations with a ship from Carnival Corporation.
•
According to company sources, Spain is a region primed for expansion and presents huge potential as it is
one of the fastest-growing areas of the European holiday industry.
Limited Potential
•
Because of its ever-growing global presence, Carnival operates in accordance with a wide variety of
international as well as regional laws, ordinances and regulations. Therefore, any major changes in those
may entail large expenses for compliance.
•
A timely implementation of ship-building programmes is vital to develop the company's brands and
continue achieving strong financial results.
•
Despite having a large portfolio of vessels, Carnival still lags behind Royal Caribbean Cruises in terms of
per ship capacity, meaning the number of port destinations is relatively important to maintaining overall
growth.
COMPANY STRATEGY
Strategic Objectives and Challenges
•
Carnival Corporation's growth strategy is focused on expanding core growth brands and opening new
markets, mainly in North America and Europe. Therefore, the company has actively reorganised its brand
portfolio, be it through the acquisition or divestiture of brands. A good example of this relates to the
retirement of QE2, in October 2008, when it made its final visit to NewYork before going to Dubai.
•
To accommodate further growth, the company has also increasingly focused on robust capacity expansion,
bringing the delivery of new vessels to 22 through 2012. While the Cunard Line announced the purchase of
a new 92,000-tonne liner, Carnival ordered two 71,000-tonne cruise ships for its AIDA Cruises brand and
has contracted with Meyer Werft to increase the size of a previously ordered vessel, set to debut in April
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2010. Costa Crociere also placed an order for two additional vessels, having a total of five ships on order
from Fincantieri, an Italian shipbuilder.
Overcapacity and natural disasters pose major concerns
•
It is worth noting, however, that whilst short- and medium-term growth for the cruise industry looks
positive there is always the potential of overcapacity, which could impact negatively sales in the long term.
•
The future availability of attractive port destinations is also expected to squeeze revenue growth. The larger
capacity offered by new ships, however, should allow for a greater degree of flexibility.
•
Unusual weather patterns or natural disasters, such as hurricanes and earthquakes, will continue to be a
threat as the company has little control over them. In order to avoid dealing with disrupted itineraries and
damaged ships, Carnival will heavily rely on strong contingency plans so as to minimise potential revenue
losses.
•
A potential decline in leisure travel prompted by the recent economic crisis could also have a negative
impact on cruise sales.
Ownership Events
•
Although a highly concentrated market, strategic alliances are a key element in the midst of such a fierce
competitive environment, bringing about numerous advantages to cruise companies like cost and efficiency
benefits, extended business operations and increased access to fast-growing markets.
•
This concept is very clear at Carnival. Hence, in September 2007, the company signed a joint venture with
Orizona, establishing Iberocruceros, a multi-ship cruise brand serving the Spanish market which combines
the two vessels of Orizonia's existing cruise operations with a ship from Carnival Corporation.
•
In 2008, Carnival has partnered with Scrapblog Inc to provide travellers with a unique way to create and
share holiday memories digitally through the addition of digital pictures, videos and audio to a customisable
themed multimedia scrapbook. Carnival is the only cruise line to provide this online feature to guests. Five
different themed scrapblogs are available, each patterned after Carnival's most popular destinations: the
Caribbean, Bahamas, Mexico, Alaska and Europe.
COMPANY STRUCTURE
Carnival Corp
•
Carnival Corporation is the largest cruise operator, with a near 60% market share in the global cruise
market, and one of the largest holiday companies in the world. It currently operates 82 ships totalling
154,000 lower berths with 22 new ships scheduled to be delivered through 2012.
•
Its brand portfolio comprises 13 distinct brands, which offer a wide range of products to a broad consumer
base around the world.
•
Carnival is well-positioned in the global cruise market, having consolidated its presence in North and Latin
America, the UK, Germany, Southern Europe and Australia. Since 2006, the company has also ventured
into Asia, with exceptional results achieved by Costa Cruises.
Summary 1
Carnival Corp: Travel & Tourism Key Facts
Company name & status:
Carnival Corp
Headquarters:
USA
Sector involvement (2007):
Travel retail, Cruise, Tour Operators, Travel
Accommodation
Region involvement (2007):
Western Europe, Eastern Europe, Latin America,
Australasia, Middle East and Africa and North America
Source:
Euromonitor International from company reports
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Production and Distribution
•
The limited number of port destinations given the growing consumer demand became a major concern for
leading cruise companies like Carnival. This explains why Carnival has been particularly active in planning
for upgraded and larger capacity vessels.
•
In July 2008, the largest Carnival vessel, the 3,006-passenger SuperLiner, debuted with an inaugural 8-day
Western Europe voyage from Genoa to London (Dover). It represents a new class of vessel and offers
innovative facilities and features like the luxurious health and fitness facility "Cloud 9 Spa". Additionally, it
includes a two-deck-high children's play area along with a water park, and a mid-ship pool. The new vessel
also features Carnival's Seaside Theatre, a 270 sq ft (25 sq m) LED screen showing films, concerts and
other programming.
•
Although Carnival has the largest portfolio of vessels, rival Royal Caribbean Cruises has on average larger
per ship capacity, which means that the number of port destinations is slightly less important. However,
although Royal Caribbean Cruises may be leading the way in a new generation of super ships the fact
remains that Carnival retains the largest fleet of cruise liners in the industry of a substantial passenger
capacity.
•
Furthermore, cruise sales have benefited from the positive attitude of consumers towards cruises. The
increasingly affluent older generation in the US and Europe is also boosting the popularity of cruises, with
all-inclusive cruises also being highly regarded by younger consumers.
•
As of 2008, travel agents were still responsible for selling most cruise packages. This is explained by the
fact that consumers rely on expert advice to select the cruise that best suite their travelling needs.
High-tech appeal
•
In order to continue providing consumers with services that are in line with its current investments,
Carnival revamped its entire website in 2008 to include a number of new features such as enhanced
navigation, layout, new visuals, a higher resolution that provides a better platform for multi-media
components and greater compatibility with distinct web browsers.
•
The next generation of carnival.com showcases videos and virtual tours, along with upgraded images and
content of all 22 "Fun Ships". Also included are upgrades to special sections focusing on various aspects of
the Carnival holiday experience such as dining, spa, youth programmes, destinations and shore excursions.
Additionally, the new site has a Gifts and Services section that allows visitors to purchase a variety of items
that can be delivered to guests' staterooms prior to their cruise, as well as a section where first-time cruisers
and visitors can sign up for Carnival news and information via e-mail and/or RSS feeds. In an attempt to
enhance end-user support, the website also has a more detailed FAQ section, an enhanced site search engine
and live feeds featuring Carnival news headlines on virtually every page.
•
Aside from revamping its website, Carnival has invested on innovative approaches such as the launch of
multimedia scrapbooks and benefited from the unexpected popularity of blogs like the "John Heald
Bloggers Cruise", developed by a senior cruise director early in 2008.
•
Originally introduced as part of a website for Carnival Freedom's inaugural European season, the "John
Heald Bloggers Cruise" became one of the most popular travel-related blogs on the internet, consistently
ranking in the top 25 of the 1.6 million blogs of WordPress, a leading blog-hosting service. The blog
features commentary on daily shipboard life.
•
Lastly, Carnival continued developing its FunShipIsland.com as well as CarnivalConnections.com websites
for consumers to have a more in-depth look into cruises or to simply help them to plan and manage future
cruise trips.
BRAND ASSESSMENT
Brand Strategy
•
Carnival's brand strategy is based on the offer of a wide range of products, ranging from the most simple to
the most luxurious, which appeal to a customer base, which is broadly varied in terms of cultures, languages
and leisure-time preferences.
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World
Its brand portfolio comprises 13 distinct brands, which offer a wide range of products to a broad consumer
base around the world. European brands such as Costa Cruises, AIDA, Ocean Village, Cunard Line and
P&O Cruises enjoyed another record year in 2007 absorbing substantial new capacity and driving
significant improvement in unit operating profit. Although operating performance for North American
brands like Carnival Cruises, Princess Cruises, Seabourn Cruise Line and Holland America Line was
hampered by strong pricing pressure in the Caribbean early in 2007, the demand for Caribbean cruises
strengthened considerably over the year and is expected to continue doing so in 2008.
Carnival Cruise Lines
•
Carnival Cruise Lines is the flagship of the company, offering destinations such as the Bahamas, Canada,
the Caribbean, the Mexican Riviera, New England, the Panama Canal, Alaska and Hawaii. The majority of
cruises have a duration ranging from three to seven days.
•
The brand operates 22 "Fun Ships" with the primary market being North America. It targets a wide
consumer base through the offer of more affordable and high-quality holiday options.
•
Early in 2007, Carnival Cruises's performance was hampered by strong pricing pressure in the Caribbean.
Nevertheless, demand for Caribbean cruises strengthened considerably over the year and is expect to
continue doing so in 2008.
•
Carnival Cruise Lines spends large sums of money throughout the year to enhance brand loyalty and
prospect consumers as passenger tickets are highly seasonal. So far, the company has been very successful,
capitalising not only on its marketing power but also and, most importantly, on its ability to innovate and
offer unique cruises to consumers. Its latest multi-million-dollar campaign, launched in January 2008,
introduced a fresh new look built around the phrase "Let the Fun Begin".
Holland American Line
•
Holland American Line is a premium cruise leader, which offers 280 possible port destinations, including
Alaska, the Caribbean, the Panama Canal, Mexico, Latin America, Hawaii, Canada, New England and
Europe.
•
The brand operates 13 5-star ships, with the primary market being North America. It targets more affluent
consumers through the offer of exclusive and impeccable services.
•
Early in 2007, Holland American Line's performance was hampered by strong pricing pressure in the
Caribbean. But because it catered to more affluent passengers, the brand was able to justify higher prices by
offering exclusive premium services like yoga classes, spa treatments, or even personal enrichment
activities.
Costa Cruises SpA
•
Costa Cruises is the number one cruise line in Europe and Latin America. It targets foreign consumers
through state-of-the-art vessels.
•
In 2007, Costa Cruises carried over 1,100,000 passengers, which is seen as a record for the European cruise
industry, and thus enjoyed another record year, absorbing substantial new capacity and driving significant
improvement in unit operating profit.
•
Costa Cruises has a total of 14 ships in service and three on order, each with its own distinctive
characteristics and unique style: Costa Pacifica, Costa Luminosa, Costa Serena, Costa Concordia, Costa
Magica, Costa Fortuna, Costa Mediterranea, Costa Atlantica, Costa Victoria, Costa Europa, Costa
Romantica, Costa Classica, Costa Allegra and Costa Marina.By 2012, its fleet is expected to reach 17
vessels, with a total capacity for approximately 46,400 passengers.
•
As of August 2008, its main cruise destinations included the Mediterranean, Canada, the US, Northern
Europe, the Atlantic Ocean, the Canary Islands, the Norwegian Fjords, the Baltic Sea, the Caribbean, South
America, the United Arab Emirates, the Far East and the Indian Ocean.
Cunard Line
•
The Cunard Line comprises premium transatlantic cruises on famous boats catering for American and
English travellers. It operates the internationally recognised QE2 cruise ship.
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•
The brand operates two vessels – Queen Mary 2 and Queen Victoria - with the primary market being North
America and the UK. It targets affluent consumers through a special standard which has served royalty and
celebrities for decades - the White Star Service.
•
In October 2008, Queen Elizabeth 2 made its final visit to New York before going to Dubai, where it is set
to become a 5-star floating hotel.
•
The Cunard Line brand enjoyed another record year in 2007, absorbing substantial new capacity and
driving significant improvement in unit operating profit.
Seabourn Cruise Line
•
The Seabourn Cruise Line features luxury cruises around the world with all-suite ships and almost as many
staff as travellers.
•
The brand operates three vessels, with the primary market being North America.
•
Early in 2007, Seabourn Cruise Line's performance was hampered by strong pricing pressure in the
Caribbean. Nevertheless, the demand for Caribbean cruises strengthened considerably over the year and is
expect to continue doing so in 2008.
Princess Cruises
•
Princess Cruises endeavours to offer more resort-like experiences through a wide array of choices in dining,
entertainment and amenities. In addition, the brand offers around 200 port destinations globally, including
Alaska, the Caribbean, Europe, the Panama Canal, the Mexican Riviera, the South Pacific, Latin America,
Hawaii, Asia and Canada/New England.
•
The brand operates 14 vessels, with the primary market being North America.
•
Early in 2007, Princess Cruises's performance was hampered by strong pricing pressure in the Caribbean.
Nevertheless, the demand for Caribbean cruises strengthened considerably over the year and is expect to
continue doing so in 2008.
Aida
•
AIDA is a German brand offering cruises to the Mediterranean, the Baltic, the Norwegian Fjords, the
Canary Islands and the Caribbean.
•
The brand operates four vessels, with the primary market being Germany. It targets young consumers
through its distinctive "club ship" concept.
•
This European brand enjoyed another record year in 2007, absorbing substantial new capacity and driving
significant improvement in unit operating profit.
P&o Cruises
•
P&O Cruises is the largest cruise operator in the UK, offering cruises to the Mediterranean, the Baltic, the
Norwegian Fjords, the Caribbean, the Atlantic Islands and around the world trips. It targets traditional
British consumers through the offer of stylish holiday options.
•
The brand operates five vessels, with the primary market being the UK. Ventura, the largest ship built for
the British market, will be launched in 2008 and another new vessel is set to debut in 2010. This is likely to
continue driving future growth in unit operating profit in the short term.
Ocean Village
•
A UK cruise brand providing holidays for younger consumers who like to explore new places and try new
things. The brand offers cruises to the Mediterranean in the summer and the Caribbean in the winter.
•
The brand operates one vessel, with the primary market being the UK.
•
This European brand enjoyed another record year in 2007, absorbing substantial new capacity and driving
significant improvement in unit operating profit.
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P&o Cruises Australia
•
P&O Cruises Australia is an Australian cruise brand offering cruises to New Caledonia, Vanuatu and Fiji
from the ports of Sydney, Brisbane and Auckland. It targets Australian and New Zealand passengers
through the offer of festive seagoing holidays.
•
The brand operates two vessels – Pacific Dawn and Pacific Sun - with the primary market being Australia
and New Zealand.
Iberocruceros
•
A multi-ship cruise brand serving the Spanish market which combines the two vessels of Orizonia's existing
cruise operations with a ship from Carnival Corporation.
•
It targets Spanish consumers through the offer of affordable, no-frills, lay-by-the-pool and fun cruise
holidays.
•
By 2009, Iberocruceros is expected to have a new addition to its current fleet: Grand Holiday. The new
vessel is being introduced to capitalise on the non-stop growth registered by the Spanish cruise industry
between 2007 and 2008.
APPENDICES
Financial Summary
Table 1
Carnival Corp: Financial Summary 2003-2007
US$ million
Net sales
% growth
Operating profit
% growth
Net profit
% growth
Operating margin (%)
Net margin (%)
Shareholders' equity
Long-term debt
Debt/equity ratio (%)
Earnings per share (US$)
Number of employees
Net profit per employee
Capital expenditure
Capital expenditure/
sales (%)
Advertising expenditure
Advertising expenditure/
sales (%)
Source:
Note:
2003
2004
2005
2006
2007
6,718
54.7
1,383
32.7
1,203
1.3
20.6
17.9
13,793
6,918
50.2
1.66
65,000
18,369
2,516
37.5
9,727
44.8
2,173
57.1
1,809
50.3
22.3
18.6
15,760
6,291
39.9
2.25
70,000
26,486
3,586
36.9
11,094
14.1
2,639
21.5
2,253
24.5
23.8
20.3
16,883
5,727
33.9
2.80
71,000
31,788
1,977
17.8
11,839
6.7
2,613
-1.0
2,279
1.2
22.1
19.2
18,210
6,355
34.9
2.85
75,000
30,387
2,480
20.9
13,033
10.0
2,725
4.2
2,408
5.6
19,963
6,313
3.04
81,000
-
334
5.0
464
4.8
455
4.1
464
3.9
-
Euromonitor International from company reports
Year end November
Company Background
Summary 2
Carnival Corp: Historical Development
Year
Topic
Description
2008
Fleet Expansion
Carnival receives its largest vessel.
The 3,006 passenger SuperLiner
debuts in July with an inaugural 8-
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day Western Europe voyage from
Genoa to London (Dover).
2008
Strategic Partnership
Scrapblog Inc and Carnival sign an
agreement to provide travellers
with a unique way to create and
share holiday memories digitally.
2008
Route Expansion
Carnival expands Alaska Shore
Excursions with a number of new
tours.
2008
Technology
Carnival revamps its website to
enhance overall users' experience.
2008
Route Expansion
Carnival announces the addition of
a new 7-day eastern Caribbean
itinerary for 2009 and 2010.
2008
New Product Development
Carnival enhances its "Fun Pass"
online pre-cruise registration
system.
2008
New Product Development
Carnival introduces a new "Circle
C" programme aimed at 12-14 year
olds.
2008
Port Development
Carnival Destiny announces six
new ports of call on Southern
Caribbean cruises from San Juan,
including: St. Kitts, Antigua, St.
Lucia, Barbados, Dominica and St.
Thomas/St. John. In November,
Carnival Victory will offer yearround 7-day Southern Caribbean
voyages from San Juan.
2008
New Branding Campaign
Carnival launches a new branding
campaign to promote "Fun Ship"
cruising.
2007
New Product Development
Carnival enhances its Evolutions of
Fun programme. The programme
encompasses a US$250 million
extensive ship refurbishment for
eight Fantasy-class vessels.
2007
Fleet Expansion
Carnival orders two 71,000-tonne
cruise ships for its AIDA Cruises
brand and has contracted with
Meyer Werft to increase the size of
a previously ordered vessel, set to
debut in April 2010.
2007
Regional Expansion
Costa Cruises is set to increase its
presence in Asia by positioning a
second cruise ship in the region,
beginning in March 2009.
2007
Fuel Supplement to North
American Cruises
In view of escalating fuel prices,
Carnival announces the
implementation of a fuel
supplement of US$5 per person
per day.
2007
Fleet Expansion
Costa Crociere places an order for
two new vessels. It now has five
ships on order from Fincantieri, an
Italian shipbuilder. New ConcordiaClass Ships will bring Costa's fleet
to 17 by 2012.
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Carnival Corp - Travel and Tourism
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2007
Fleet Expansion
Cunard Line announces that it has
ordered a new 92,000-tonne liner,
to be named Queen Elizabeth,
scheduled to enter service in
autumn 2010.
2007
Joint Venture
Carnival and Orizona form a joint
venture and launch Iberocruceros.
The new joint venture combines
the two vessels of Orizonia's
existing cruise operations with a
ship from Carnival Corp.
2007
Port Infrastructure Agreement
Carnival finalises an agreement
with the government of St. Maarten
and the Port of St. Maarten to
provide funding to support the
construction of a new 2-berth
cruise ship pier on the island of St.
Maarten. The new docking facility,
combined with the island's existing
4-berth pier, will make St. Maarten
one of the largest cruise ports in
the Caribbean, with six dedicated
cruise berths.
2007
Brand Divestiture
In February, Carnival signs a
definitive agreement to sell its
Windstar Cruises brand to
Ambassadors International.
2006
Brand Restructuring
Carnival decides to cease
operation of UK's Swan Hellenic
and transfer its one ship to the
Princess Cruises brand as it does
not fit future business plans.
2006
Vessels in service
New vessels in service include
Crown Princess, Noordam and
Costa Concordia.
2005
Investment
Carnival Corporation announces
US$8 billion ship-building
programme set to deliver a new
fleet of ships over the next four
years.
2004
New launches
Launch of QM2 by the Cunard Line
division, the world's largest cruise
liner with a capacity of over 2,600
passengers.
2003
New launches
P&O launches new UK cruise
brand Ocean Village.
2003
Acquisition/ merger
Following approval from P&O
board and Carnival and P&O
shareholders, the two companies
merge.
2003
Divestment
Sale of German river cruise brand
Arosa.
2001
Divestment
Carnival sells stake in Airtours.
2001
Merger
Carnival makes pre-conditional
offer to acquire P&O Princess
Cruises, following announcement
of a proposed merger between
P&O and Royal Caribbean Cruises,
which would have threatened
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Carnival's position.
2000
Acquisition
Carnival acquires the remaining
50% stake in Costa Crociere.
2000
Demerger
P&O Princess Cruises formed by
demerger of the cruise business of
The Peninsular and Oriental Steam
Navigation Company.
1999
Acquisition
Carnival acquires remaining
interest in Cunard Line Ltd.
1998
Acquisition
Carnival acquires majority 68%
stake in Cunard Line Ltd.
1997
Joint venture
Airtours and Carnival jointly acquire
Costa Crociere, an Italian cruise
line.
1996
Acquisition
Carnival purchases 29.5% stake in
UK tour operator Airtours (now
MyTravel).
1995
Acquisition
Carnival acquires 50% stake in
Seabourn Cruise Line Ltd.
1979
Carnival builds first cruise ship.
1974
Source:
Foundation
Carnival founded in Panama.
Euromonitor International
Summary 3
Carnival Corp: Subsidiaries 2007
Company
Country
Costa Cruises SpA
Italy
AIDA
Germany
P&O Cruises
United Kingdom
Cunard Line
United Kingdom
Ocean Village
United Kingdom
Iberocruceros
Spain
Carnival Cruise Lines
USA
Princess Cruises
USA
Holland America Line
USA
Seabourn Cruise Line
USA
Holland America Tours
USA
Princess Tours
Canada
P&O Cruises Australia
Australia
Source:
Euromonitor International
Summary 4
Carnival Corp: Travel & Tourism Brands 2007
Brand Name
Sector and subsector(s)
Costa Cruises SpA
Cruise
AIDA
Cruise
P&O Cruises
Cruise
Cunard Line
Cruise
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Ocean Village
Cruise
Carnival Cruise Lines
Cruise
Princess Cruises
Cruise
Holland America Line
Cruise
Seabourn Cruise Line
Cruise
Holland America Tours
Travel Retail
Princess Tours
Travel Retail
P&O Cruises Australia
Cruise
Iberocruceros
Cruise
Source:
Euromonitor International
Summary 5
Carnival Corp: Company Locations
Location
Country
Activity
North America
USA
Corporate Headquarters
Europe
United Kingdom
Registered Office
Europe
Germany
Cruise
Europe
Italy
Cruise
Australasia
Australia
Cruise
Europe
France
Cruise
Europe
Spain
Cruise
Source:
Euromonitor International
Summary 6
Carnival Corp: Websites
Name
Country
Website address
Main corporate website
USA
www.carnivalcorp.com;
www.carnivalPlc.com
Carnival Cruise Lines
USA
www.carnival.com
Princess Cruises
USA
www.princesscruises.com
Princess Tours
USA
www.princesslodges.com
Holland America Line
USA
www.hollandamerica.com
Seabourn Cruise Line
USA
www.seabourn.com
P&O Cruises
United Kingdom
www.pocruises.com
Cunard Line
United Kingdom
www.cunard.com
Ocean Village
United Kingdom
www.oceanvillageholidays.co.uk
Costa Cruises SpA
Italy
www.costacruises.com
AIDA
Germany
www.aida.de
Australia
www.pocruises.com.au
P&O Cruises Australia
Source:
Euromonitor International
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