“The real world of business models”
Cruise line industry
Carnival Cruise Lines
Royal Caribbean Cruises
With the development of the global transportation network, world becomes more and more smaller. Not only does the airline industry become popular, but also the cruise industry is given more attention. Comparing with airline industry, cruise line can bring a lot of fun, such as a disco, casino, movie theater, and nightclubs. The most interesting thing is to have a wedding party which is unique and unforgettable. Instead of a long and boring trip, cruise industry can offer a perfect one with full of fun. Nowadays, there are a lot cruise companies around the world and Carnival Corporation, Princess Cruises and Royal Caribbean International are the most famous. Next the development of those companies will be discussed in order to find how they are operated and what kinds of changes they are done.
1. The development of Carnival Corporation
Carnival Corporation is the first cruise operator in the world, boasting about dozen cruise lines and about 100 ships with a total passenger capacity of more than 190,000. This company was founded in 1972 by Ted Arison and his former schoolmate Meshulam Riklis. At the time, the first ship of Carnival purchased was Mardi Gras( previous name Empress of Canada). Although its future voyage went better and better, Arison had to think about cutting the cost of each run, like reducing fuel consumption by reducing the speed and the frequency of stops it made as a result of the company’s debt which was more than 5 million dollars. If this was true, the passenger would have to spend more time on the trip, so Arison added other value-added services entertainment feature, including nightclubs, disco and so on. In fact this was a revolution for the whole cruise industry to make the trip fun. Accordingly, Mardi Gras was called “Fun ship”. This was the part of early development of Carnival. Next part includes the growth and expansion from 1970 to 1980. With the help of the hit television series The Love Boat, the cruise industry was revitalized. At that time, Arison bought another 2 ships: the Carnival bought in 1975; the Festivale bought in 1977. In 1978, he also booked the fourth ship, the Tropicale. As the result of expansion, Carnival had three ships running one week cruises From Florida to Caribbean. In the beginning of 1980s, Arison ordered three more ships so that Carnival owned the largest cruise line fleet with seven ships in the world. Around 1980-1990, it had a significant change from strategic view. In order to fill all these ships, Carnival made use of different kinds of promotion methods. Firstly, Carnival took advantage of aggressive marketing and advertising strategies. Its marketing channel was “Fun Ship” advertising campaign in 1984 through talk shows and the largest network television. Secondly, Carnival tried to gain the support from travel agents which could have recommended Carnival cruises as the first choice to the customers. Thirdly, Carnival offered cheaper, shorter trips to attract younger, more middle-class customers compared with previous customer segments. Carnival tried best to run at full capacity. In addition, Carnival paid attention to strategic acquisitions. Carnival was not only buying the cruise shipping business (Holland America Line, 1988) but also the companies (Windstar Sail Cruises and Holland America Westours) that included hotels. “During the year following the acquisition, Carnival carried 579,000 passengers, generating $600 million in revenues and earning profits of $196 million.” After that, it was another period for Carnival 1990-2000. There was no much significant change since the last period. In 1991, Carnival ordered a 300 million dollar ship Sensation and a 315 million dollars ship Fascination. The largest passenger ship Carnival Destiny which was at 101,000 tons and had room for 2,640...
References: Cruise Industry Overview and Statistics, 2010 (http://www.f-cca.com/downloads/2010-overview-book_Cruise-Industry-Overview-and-Statistics.pdf)
Customeraffairs.com: Royal Caribbean Cruise Lines
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