Have you read about Carnival Cruise Line’s latest woes? Of course you saw the bloated corpse of the Costa Concordia floundering like a beached whale off the coast of Italy, you saw the 2,758 stranded cruisers on the Carnival Triumph eating onion sandwiches and using the Lido deck for a latrine, and you saw 4,300 passengers from the Carnival Dream being ferried back to Florida after that ship’s generator failed. But those are the sexy things the news media loves to splash across its pages and screens. Have you seen the numbers? All of this bad news has eroded the company’s profits. Carnival says it expects to post a 2013 profit of $1.45 to $1.65 per share, down from its previous projection of $1.80 to $2.10.
Last Tuesday USA Today reported that Carnival Corp “…lowered its 2013 earnings forecast yesterday afternoon, acknowledging that bad publicity and reduced ticket prices have taken a toll on its bottom line. Several analysts immediately lowered the company’s stock ratings, and share prices dropped overnight.”
And a recent Harris poll of more than 2,000 U.S. travelers showed a 17% drop in their trust in Carnival Cruise Lines. Worse, the trouble isn’t just limited to Carnival’s core brand. Harris found that trust in rival lines including Royal Caribbean, Norwegian and Carnival-owned Holland America also dropped.
So what can Carnival do? Needless to say, the first thing is to stop the bleeding. To fix their problems the company has announced a full operational review and says they will spend close to $700 million to upgrade back-up systems across their entire 101-ship fleet. Cruisers, investors, and rival lines can only hope that that expenditure will stop Carnival’s continued problems. If evenly applied, that enormous expenditure only adds up to about seven million dollars per ship, not very much when you consider the cost and complexity of each vessel.
But even if almost three quarters of a billion dollars fixes the ships, Carnival’s still got a boatload of work to do before the ship hits the fan again. Here are just five of a long list of things I believe the worlds largest cruise line should do immediately to get their image — and their profits — on the road to recovery.
1. Manage Carnival’s Face Time (Part I).
The next time there’s a mishap, Carnival’s president line should immediately take a helicopter out to the stranded ship. He should stand with the captain and announce that he’s there for the duration and will be doing everything he can to see to the cruisers’ safety and comfort. His presence will help show Carnival’s passengers that he’s got skin in the game — his own.
2. Manage Carnival’s Face Time (Part II).
When the Concordia went down in Italy, Carnival chairman Mickey Arison should have been on the first flight to Civitavecchia and set up Carnival Central Command right there. After all, nothing says you care like being there.
3. Manage Carnival’s Face Time (Part III).
While the Triumph was floundering, an iPhone picture of Miami Heat owner Arison sitting court side at that evening’s game went viral. Even though we all know there’s nothing Arison could have done to improve the stranded ship’s situation, someone still should have said, “Yo Mick, why don’t you catch the game at home tonight?”
4. Enhance Connectivity.
In today’s hyper-connected world, being disconnected makes people very nervous. Carnival should install 100 Iridium satellite phones on every ship so that stranded guests could at least let their friends and family know they’re okay. A quick, “Yeah, we’re stuck but we’re fine” conversation would relieve a lot of stress and pressure.
5. Finally, Carnival should change their corporate name.
In addition to the Carnival-branded ships Carnival Cruise Lines owns ten different cruise brands, including Seabourn, Holland America, Cunard, and Princess. But each time a Carnival ship is stricken, consumers have no way of knowing whether the bad news is about a Carnival-flagged vessel or one of the other brands the parent company owns. Carnival should separate the brands so they’re not always painted with the same brush.
Sure, the entire industry will still suffer when there’s an accident. But as we’ve seen, other brands didn’t suffer the loss in consumer confidence that the Carnival-owned ships did.
My suggestion for a new corporate name for the holding company, by the way? Change Carnival to Tarison in honor and memory of Carnival’s late visionary founder Ted Arison.