Carnival Cruise Lines
1998
Case Analysis
By RU Consulting
Nick Morgan
Laura Pynn
Jenna Ramberg
Brenna O’Regan
James Morrison
Mission Statement
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Carnival Cruise Lines is the largest, most popular, and most
profitable cruise line in the world. The leader in the contemporary
cruise market, Carnival operates 11 "Fun Ships", including the
world's largest, Carnival Destiny. Carnival ships sail to the
Bahamas, the Caribbean, Mexico, the Panama Canal, Alaska, and
Hawaii. The company's customer base is divided up into three
different target audiences. They are: the contemporary segment
which is served by the seven days or shorter cruise and features a
casual ambiance, the premium segment which is served by the
seven-day-and longer market, and the luxury segment which
caters to the experienced cruiser for seven-day-and-longer sailing.
Carnival has the unique ability to provide customers with a wide
range of vacation choices that appeal to any taste, interest,
lifestyle, or budget. With a mission to surpass customer
expectations, Carnival offers leisure travelers vacation experiences
equal or superior to those at the world's most popular travel
destinations. Carnival wants to remain the leader and innovator in
the cruise industry and intends to do this with sophisticated
promotional efforts and to gain loyalty from former cruisers by
refurbishing ships, varying activities and ports of call, and being
innovative in all aspects of ship operations.
History
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In March 1972, Mr. Ted Arison purchased an
aging trans-Atlantic Ocean liner from Canadian
Pacific Empres, refurbished it from bow to stern,
and renamed it the Mardi Gras. This was an illfated journey as it ran aground in Miami Harbor
with 300 invited guests aboard.
1974 Arison bought out AITS, Inc. For $1 cash
and the assumption of $5 million in debt. Which
began the “Fun Ship” theme.
1975 Began turning profits and operating above
100% capacity.
1980’s maintained growth rate of ~30%
1987 Arison sold 20% of his shares in CCL and
generated over $400 million for expansion.
History Cont’d
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1990 Arison relinquished the company over to his son,
Mickey. Who still runs the company today.
1990’s Carnival took delivery of its first 2 Superliners, the
Fantasy and the Ecstasy
1991 Carnival attempted to purchase Premier Cruse Lines
but it was never consummated also took on its 3rd
superliner known as the Sensation, later in the year they
contracted the fourth superliner which was to be named the
Fascination
1993-1995 addition of the Imagination for CCL, and the
Ryndam for Holland America Lines
1997 attempted to buy Celebrity Cruise Lines for $525
million, but was overtaken by the inside ties of Royal
Caribbean to Celebrity.
June of 1997 CCL purchased an Italian cruise company by
the name of Costa for $141 million.
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Largest Vacation Company in the world
Publicly traded since 1987 on both the NYSE and the
London Stock exchange
Carnival is the only company in the world to be included in
both the S&P 500 Index in the United States and the FTSE
100 Index in the United Kingdom.
Headquartered in Miami, Florida, U.S.A. and London,
England
75,000 employees worldwide. Operates a fleet of 81 ships,
and another 20 vessels scheduled for delivery by 2011.
With approximately 144,000 guests and 60,000 crew
members, there are over 200,000 people at sea with
Carnival at any given time.
Global Brands
Industry Competitors
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Major Competitors:
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Other Competitors:
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Celebrity Cruises
Norwegian Cruise Lines
Disney Cruise Lines
Princess Cruises
Royal Caribbean Cruise
Lines
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American Hawaii Cruises
Club Med
Commodore Cruise Line
Cunard Line
Dolphin Cruise Line
Radisson Seven Seas
Cruises
Royal Olympic Cruises
Royal Cruise Line
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Brands Around the World
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The contemporary leader in North
America, Miami-based Carnival
Cruise Lines is the world’s most
popular and profitable cruise line.
Operating 22 “Fun Ships,” Carnival
appeals to a wide range of passengers
by offering affordable, high-quality
vacations and guest-pleasing
innovations, all in a memorable
shipboard environment.
www.carnival.com
Based in Santa Clarita, California,
Princess Cruises is a leader in the
premium market, operating 15 modern
ships renowned for stunning interiors,
design innovations and wide array of
choices in dining, entertainment and
amenities, along with exceptional
customer service. The new Emerald
Princess and Royal Princess join the
fleet in 2007.
www.princesscruises.com
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Seabourn Cruise Line epitomizes
luxury cruising aboard each of its
three all-suite ships targeted primarily
to North America. The Yachts of
Seabourn are lavishly appointed with
virtually one staff member to every
guest.
www.seabourn.com
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Headquartered in Seattle, Windstar
Cruises offers North American
consumers an experience that is “180
Degrees from Ordinary.” It’s 3 sailing
yachts accommodate 148- 312 guests,
offering all ocean view staterooms,
pampering five-star service, and
cuisine by celebrity chef Joachim
Splichal.
www.windstarcruises.com
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Seattle-based Holland America Line
operates a fleet of 13 five-star ships,
including its newest ship, ms
Noordam, which debuted February
2006. Exquisitely appointed ships,
delectable cuisine, and impeccable
service has enabled Holland America
Line to earn its position as a premium
cruise leader.
www.hollandamerica.com
Brands Around the World, cont’d
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Cunard Line features cruising’s only
modern transatlantic ocean liners, Queen
Mary 2 and Queen Elizabeth 2.
Epitomizing luxury travel, the Britishbased cruise operator is defined by its
White Star ServiceSM, a special standard
that has served royalty and celebrities for
decades. Queen Victoria joins the Cunard
fleet in December 2007.
www.cunard.com
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Headquartered in Italy, Costa Cruises is
the number one cruise line in Europe and
South America. Cruising for nearly 60
years, the Genoa-based cruise line
operates in the contemporary market
offering state-of-the-art ships with Italian
ambience to an international clientele.
www.costacruise.com
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Based in Rostock, Germany, AIDA is the
best-known brand in the fast-growing
German cruise market, catering to a
young, active clientele through its
distinctive “club ship” concept. AIDAdiva,
the latest addition to the fleet, is the first
in a new generation of ships for this
rapidly expanding contemporary
operator.
www.aida.de
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P&O Cruises Australia pioneered
Australian cruising in 1932, offering
festive seagoing holidays for Australian
and New Zealand passengers aboard its
contemporary fleet. The company will
expand this year with the introduction of
the Pacific Dawn, Australia’s first super
liner.
www.pocruises.com.au
Britain’s leading cruise line, P&O Cruises
combines innovation, professionalism and
unrivalled experience to offer passengers
the most stylish and contemporary
holidays afloat. Ventura, the largest ship
built for the British market, launches in
2008 and another new build is set to
debut in 2010.
www.pocruises.co.uk
Free-spirited and unconventional, Ocean
Village is a far cry from traditional
cruising. Created for 30- to 50somethings who like to explore new
places and try new things, an Ocean
Village holiday is a heady mix of pulseracing action and chilled-out relaxation.
www.oceanvillageholidays.co.uk
Corporate Business Level Strategy
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To explore destination development opportunities
in the Turks & Caicos Islands
Continue ship-building in an attempt to stay
industry leader
Expand ultra-luxury segment of North American
cruise business (tailor to rich)
Double Seaborne capacity (Yacht luxury liner)
“We're perfectly happy to be the Wal-Mart of the
cruise industry.” - Terry Thornton, VP Marketing
Planning
SWOT Analysis
Strengths:
 Global Presence
 Brand Equity
 Strong Consumer
Demand in Europe
 In 2006, all operating
companies achieved
ISO 14001 Standards
 Diverse Staff
 Tons of entertainment
aboard all fun ships
Weaknesses:
 Hurricanes and Other
Bad Weather
 Rising Cost of Fuel
 Less disposable
income available
 Shifts in Currency
Exchange Rates
SWOT Analysis
Opportunities:
 Expand Luxury Liners
 Offer more
destinations
 Expand presence in
China
 Expanding into
Alaskan rail road
market & Motor Coach
market for sightseeing
and tourism
Threats:
 Competition:
Royal Caribbean
Cruise Lines
Star Cruise Lines
 Less patronage on
cruise ships due to
unpredictable
hurricane seasons
Huge Gains
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In 2004, Carnival Cruise Lines turned the highest
profit it has ever had: $1.03 billion, up 40% from
2003
CEO Micky Arison stated the jump was mainly
from the 2003 merger with P&O Princess Cruises
Other contributing factors: Rising prices with
constant demand, factors in the global economy
(specifically, the declining value of the US dollar),
record increases in ship building, and an effort of
cruise lines to create more innovative vessels
Marketing Strategy
They promote the cruise as an alternative
to land based vacations
 The ship is an experience in and of itself
 They use ports of call as an added bonus
to the cruise experience
 In 2005 their new marketing campaign: "A
Million Ways to have Fun!"
Carnival Cruise Campaign
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CCL Today
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2005 Hurricane Season was very detrimental to the
Cruising industry as a whole.
2006 ship fires and equipment failure along with NoroViruses (food born virus) present aboard the ships.
2007 marks the 35th anniversary of Carnival Cruise Lines,
the flagship brand of the company.
2007 is the 20th anniversary since the company went
public. They had 7 ships and $150 million in income.
Today they have $2.408 billion and currently operate 81
ships, totaling more than 144,000 berths with 15 ships
scheduled to be delivered between March 2007 and Spring
2010.
Stock Quotes
CCL: Carnival Cruise Lines Stock Report
 Stock Quote: CCL (NYSE)
Apr 10, 2007 1:59 p.m.
Current Price: $46.25
Change: -0.24/0.5%
Volume: 1,604,600
 Growth over past 5 years:
 Sales: 21.1%
 Income:19.7%
 Dividend Rate: 19.54%
 Dividend Yield: 1.50%
RCL: Royal Caribbean Cruises Ltd.
Recommendations
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Buy stock moderately
Sources
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“Annual Report.” (2006). Carnival Corporation & plc. (2,3,33).
Carnival Scrubs Ship After Virus Sickens Nearly 700 Passengers.
Wall Street Journal. (Eastern Edition). New York, N.Y. November
20, 2006.
Passengers Injured When Cruise Ship Rolls Sharply at Sea. Wall
Street Journal. (Eastern Edition). New York, N.Y. July 19, 2006.
Carnival: CCL Stock Quotes. (2007) Morningstar.com.
http://quote.morningstar.com/Quote/Quote.aspx?ticker=CCL
Royal Caribbean Cruise Ltd. (2007) Morningstar.com.
http://finance.yahoo.com/q?s=RCL
“Cruise Lines Hit High Water Mark with Record Sales.” (2007)
Courier.org. http://www.courier.org/corgcms/content/view/141/2/
Melvin R. Mattson. Marketing Management: Case Analysis by
Teams. McGraw-Hill Companies, Inc. (2005). Pgs. 196-212.
Carnival Cruise Lines Official Website: www.carnival.com