Case Study of Carnival Corporation

The history of the Carnival Corporation begins in 1972, when Ted Arison set up Carnival Cruise Lines as a subsidiary of the American International Travel Service. The first ship ran aground, but Arison remained steadfast in achieving his vision of a cruise line offering affordable vacation packages to middle-income consumers. By 1977, Carnival had three ships, and ten years later, as the industry leader, the company went public. In the early 1990s, Carnival began to diversify into land-based entertainment, thus changing its name to Carnival Corp. The company is the world's #1 cruise operator with about a third of the market.

Carnival Corporation is comprised of Carnival Cruise Lines; the world's largest cruise line based on passengers carried, Holland America Line, Windstar Cruises and Seabourn Cruise Line. It owns 25 cruise ships serving customers worldwide and has 6 new ships under construction (EXHIBT 1). It basically has three market segments: Contemporary, Premium and Luxury.

Carnival also operates 14 hotels in Alaska and Canada and runs Holland America Westours, which markets sightseeing tours. Carnival has a 29.5% stake in Airtours, one of the UK's largest tour operators, and is bidding for control of cruise line NCL. CEO Micky Arison and family control Carnival.

Carnival was able to increase profits through the acquisition of Holland America Line in 1988 and consequently Carnival expanded its cruise lines to a broader market, however Carnival experienced a loss of $135 million from disposal of the Crystal Palace Resort & Casino in 1991.

The company's current strategy is to attract more repeat cruisers and new cruisers of different segments by offering different types of packages. Such differences include choice of shorter or longer cruises, a low to moderate price for affordable cruises for middle class, and longer luxury cruises for affluent classes. As part of the company's plan, Carnival is "going global" through a joint venture with