New Ships: Is Bigger Better?

Cruise companies share the same objective: that is to make as much money as possible. Yet, the business models of the two largest companies, Carnival Corporation and Royal Caribbean Cruises, are different.

Royal Caribbean thinks the best course to profits is with bigger ships; Carnival thinks the best course is with big ships, but not as big as its competitor’s.  Carnival has explained its course by saying that bigger ships do not provide the return on investment that it requires.

Said Felicia Kantor Hendrix, senior vice president at Lehman Brothers: “Mickey (Arison) and Richard (Fain) have different ideas for how to approach the industry. Carnival builds as good as it can and then ratches down the costs as much as possible. Royal Caribbean builds the biggest and makes it work. There is no doubt that the Voyager and the Freedom class have helped to grow the industry.” – Oivind Mathisen

Excerpt from the Cruise Industry News Quarterly Magazine: Fall 2006

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