Editorial: Scale

MSC Seaside Prototype RenderingAs the industry is looking for new ways to drive revenue and earnings, scale has become a buzz word.

Both Carnival Corporation and Royal Caribbean Cruises are focused on leveraging their scale, which not only means benefiting from the sheer volume of their operations, in purchasing, for example, but also benefiting from their human talent, with thousands of employees.

Carnival owns 10 cruise brands with more than 100 ships operating around the world, and that by itself would seem to be a logistical challenge, so it makes sense that the company is now concentrating on better pooling its resources or, as they say: “cooperating, collaborating and communicating.”

Some subtle changes have already taken place as the company has gone from having its brands operating independently to organizing them into groups, with Holland America Line overseeing Princess, Seabourn and P&O Australia; the Costa Group, including AIDA Cruises and Iberocruceros; and Carnival UK with P&O and Cunard. Only the Carnival brand continues to stand by itself.

Royal Caribbean joined suit this past spring when Adam Goldstein was named president and COO of Royal Caribbean Cruises and stepped down from his position as president and CEO of the Royal Caribbean International brand. In his new role, he has been tasked with ensuring that the different brands pursue best practices and that the insights learned within individual brands are applied to the entire company’s benefit. As well as working on strategic direction.

Goldstein’s portfolio includes human resources, information technology, supply chain and more.

The focus on scale also illustrates that it is easier said than done to operate a number of brands successfully on a global level.

As these companies are virtually living organisms adjusting to their environment, it will be interesting to watch as they continue to evolve their business models to drive revenue and earnings.

Bon Voyage

Angela Reale Mathisen & Oivind Mathisen

Excerpt from Cruise Industry News Quarterly Magazine: Summer 2014

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