Carnival Cruise Lines: Having More Fun

“We are focusing on sharpening our message of how good we are,” said Bob Dickinson, president and CEO of Carnival Cruise Lines. “When people cruise with us, they rate us significantly higher than people who have not cruised with us. We have a gap between reality and perception.

“We were bottom feeders for many years, but in the past few years we have improved. But many people assume we are what we were 25 to 30 years ago.

“Instead, we continue to improve. We have better food, for instance, than either of our direct competitors,” Dickinson added.

“We also have a great reputation for our entertainment and general cruise experience,” he added. For years, Carnival tried to create what Dickinson called the lowest expectations for guests – so they (the passengers) “would be blown away once they came aboard.”

Dickinson also said the drinking age aboard Carnival ships is 21, compared to 18 for beer and wine at its closest competitor. Also, passengers under 21 must have somebody in their cabin 25 years of age or older.

“We have left the rowdy heritage of our beginning,” Dickinson added. “We are more refined. Our product is more sophisticated and appeals to experienced cruisers as well.

“We are the upper end of the contemporary market,” he continued. The line’s ships have also become increasingly sophisticated, he said, going from the Fantasy to the Destiny, Spirit and Conquest class.

 Broad Passenger Base

Meanwhile, with a bigger fleet and more homeports, Carnival’s passenger base is much broader than it used to be. In addition, with cruises in Alaska and now in Europe and with longer cruises, Carnival is also attracting more sophisticated passengers. “On the longer cruises, 80 percent have cruised before,” Dickinson explained. “On the shorter cruises, 60 percent to 70 percent have never cruised before.” Also, the shorter cruises tend to attract more active passengers.

Carnival is attracting more repeaters. “In 2000, only 10 percent of our experienced cruise passengers had cruised with us before, now we are carrying 19 percent repeaters,” Dickinson said.

“That there has been a 90 percent increase in experienced cruisers trying Carnival, to me reaffirms the quality of our current product,” he added.

The product is much, much broader Dickinson said. “In 2004, about three million guests cruised with us – or about 30 percent of all North Americans who cruised.”

And of all the people who are still alive and have cruised before, 45 percent have cruised with Carnival. That means that 55 percent have not, according to Dickinson, who would like to take that low-hanging fruit and convert it to Carnival’s brand and our concept.

While the majority of Carnival’s capacity is still in the Caribbean, the line has grown its homeports from three 15 years ago – Miami, Los Angeles and San Juan – to 19 today. And, in 1982, Carnival only offered seven-day cruises, Dickinson pointed out. Today, Carnival offers three-, four-, five-, six- seven-, eight, 12- and 14-day sailings.

“We have broad psychographics,” he said, continuing on one of his favorite subjects. “We are not a restricted country club. We are egalitarian – more inclusive, just like Las Vegas and Orlando.

“In Las Vegas, for example, you can spend a couple of nights or a week or more.”

Another favorite subject is pricing. “Right now a comparable land vacation costs twice as much as a cruise on Carnival,” Dickinson said who thinks it is ridiculous that a cruise should be half the price of a comparable land vacation. Only 16 percent of the North American population has ever been on a cruise; that is why the market has great difficulty understanding the value of a cruise, he said.

Cruises should be priced at maybe two-thirds or three-fourths the price of a comparable land vacation, according to Dickinson, who noted that cruise pricing would still be at a 25 percent discount. In time, he said, cruises should not be discounted compared to land vacations.

 “We should be priced the same,” Dickinson said. “Cruises will still offer value – we offer more for the same price.

“It will happen that the market will understand how good cruises are and allow us to inch the prices up. Our pricing is where it was in 1999.”



Dickinson said that Carnival is committed to work to strengthen the distribution system. “We have a lot of people here (at Carnival) who have been here a long time and work on a personal level with the distribution system. We listen closely to the customers and to vacation trends. We believe we are in the vacation business and not in the cruise business.”

Among the recent efforts Carnival has made, Dickinson pointed out that Carnival simplified its pricing in 2004 – no longer offering preferential pricing to large producers. Starting this year, Carnival will not allow unauthorized pricing advertised for its cruises.

“We want the little travel agent to be on the same level as the bigger agents and to be able to sell cruises at a fair market value,” Dickinson explained. He also thinks that potential passengers are turned off by too many price deals. Also, on cruises people have time to talk, he said, and compare prices. People do not talk on airplanes, everybody is too scared; and they don’t talk in hotels, afraid that they might be accosted, according to Dickinson.

“We are concerned about travel agents,” Dickinson continued. “Since 1995, agents have been closing their doors every year. Every time that happens is a lost opportunity for someone to buy a cruise. We want to make sure there are lots of travel agents around so the customers have choices. Selling cruises should be about service.”

Most Profitable

Is it fair to say that the Carnival brand has been the financial backbone of Carnival Corporation? “I would not say that is inaccurate,” Dickinson answered.

“We are the world’s most popular cruise line and the most profitable cruise line and we intend to maintain that mantle,” he added.

But is the competition catching up, building bigger ships? “The bottom line is that we carry more people and make more money,” Dickinson answered.

Carnival got a new ship this past Christmas, bringing the fleet to 20, with yet another new ship coming this summer. But then there is a gap in 2006, before the next new ship in 2007.

The last contract between Carnival Corporation and Fincantieri included two ships which have not yet been assigned to a brand. “Let’s say we are in the hunt,” Dickinson said.

The 180,000-ton Pinnacle Project is also in the works. “If Micky (Arison) said it, it will happen,” Dickinson said, “but the earliest (delivery) in 2008, I believe.”

 Meanwhile, Dickinson plans to hold on to Carnival’s older ships, the Holiday and the Celebration, saying that the line has invested heavily in refurbishing these vessels and that they are the perfect size for pathfinder operations.

Does Dickinson have an ideal ship model for the future? “We need to have a variety of ships to handle a variety of passengers in a variety of markets,” he answered. “It is not about one size fits all. Without smaller ships, we could not have done much of what we have. If you recall, we even divided the Tropicale between Tampa and New Orleans.”

At Carnival since 1973, Dickinson sounds as upbeat and enthusiastic as ever as well as combative, taking a few swings at the competition here and there. “We have a lot more new ships coming. We are offering new itineraries, and many new subtleties in food and service. But we do not send out a press release every time we do something. Instead, we surprise the guests onboard,” he said.

At the end of the day, the cruise industry is well positioned to get a bigger share of the vacation market, according to Dickinson. “For now, we are capacity restrained,” he said. “But that is favorable for us. It allows us to grow demand faster than capacity.

“Cruises command only three percent of the vacation market,” he continued. “Yet cruises have higher satisfaction ratings than land vacations!

“If we increased the size of our fleet 10-fold, we still only have 30 percent of the vacation market – and yet have a better product. And there is much more water than land.” – Oivind Mathisen 

Excerpt from the Cruise Industry News Quarterly Magazine: Winter 2004-2005

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