Keynote: Creating moments of magic at Carnival Corporation

This article was first published in the Spring/Summer 2019 issue of International Cruise & Ferry Review. All information was correct at the time of printing, but may since have changed.

Long before Arnold Donald ever entertained thoughts of becoming president and CEO of the world’s largest cruise corporation, he sailed with 50 of his family members on a cruise. From the moment they boarded their ship to the moment they disembarked, the Donald family had an unforgettable experience.

“We had millions of magical moments – one night, my sister was pulled up on stage and ‘out-comedienned’ the comedian and another night, one of my nephews who was a well-known NCAA basketball player was goofing around on the dancefloor and suddenly everyone in the room started copying his moves, which was hilarious,” recalls Donald. “At one point, the whole family started a game of volleyball with the crew members as one of my nephews entertained everyone with an impromptu rap – almost everyone on the ship was watching that match!”

What Donald remembers most is how the cruise strengthened the bonds between his family members.

“Multiple generations of my family, some who had travelled extensively and some who had never left their home state, came together to enjoy unique experiences that they wouldn’t have been able to elsewhere,” he explains. “We were all able to go off and do things that suited our personal tastes, but also come together for meals and onboard activities and shore excursions when we wanted to. We made memories that will last us a lifetime – everyone in my family still regularly talks about the funny things that happened on the cruise and how fortunate we are to have enjoyed such special moments together.”

When he took the helm of Carnival Corporation in July 2013, Donald knew that he had to create similar magical onboard and onshore experiences for the nearly 12.5 million guests who sail with the AIDA Cruises, Carnival Cruise Line, Costa Cruises, Cunard, Holland America Line, P&O Cruises Australia, P&O Cruises UK, Princess Cruises and Seabourn brands each year. With more than 225,000 cruise guests and 100,000 crew members sailing on the corporation’s 106 ships every day, most CEOs would find this task daunting, but Donald has a simple, fail-safe tactic.

“All we have to do is listen – our guests will tell us exactly what they want, how they want it and when they want it,” Donald explains. “We constantly ask guests for real-time feedback on everything from the embarkation process to dining, entertainment and onshore experiences to understand what is working well and what needs to be changed. Each of our nine brands offers a different type of cruise experience – for example Seabourn is centred on high-end luxury, while Carnival Cruise Line is focused on providing family fun – so it’s critical for us to identify what specific factors attract guests to sail with a particular brand. This allows us to develop psychographic customer profiles and ensure we’re offering the experiences that resonate most with them.”

Today’s guests want digital and immersive entertainment, as well as personalised travel experiences that make it feel as though their cruise has been specifically engineered to cater to all their needs and preferences. Consequently, the Princess Cruises brand is rolling out the digital-first Ocean Guest Experience Platform, which comprises the OceanMedallion device (worn or carried by guests), MedallionNet wi-fi at sea with land-like internet speeds, mobile gaming platform PlayOcean and OceanView, the world’s first digital streaming travel channel for land and sea. Other innovations on Princess’ MedallionClass voyages include OceanReady for fast and frictionless embarkation, OceanNow for on-demand food and beverage service throughout the ship, and OceanCompass, which is a wayfinding app that also helps guests locate friends and family anywhere on the ship.

“We’ve already rolled out the MedallionClass experience to Princess Cruises’ Caribbean Princess and Regal Princess and it will be rolled out to Royal Princess, Crown Princess and Sky Princess over the next six months,” says Donald. “Although they’re still not aware of some of Ocean Medallion’s subtler features, Princess’s guests have truly resonated with the instantly obvious benefits, such as touch-free access to staterooms, interactive entertainment, transaction-free payments and expedited embarkation and disembarkation. It’s early days, but we can see that the platform will enhance our ability to offer the highest hospitality standards and truly customise every guest’s individual cruise experience.”

Carnival Corporation’s eight other brands are also aiming to transform the onboard experience with new ships on order. “Carnival Cruise Line, Costa, Cunard, P&O Cruises and Seabourn are all preparing exciting venues and innovations for their new ships,” says Donald. “We’ve got 19 ships debuting between 2019 and 2025, so we have plenty of scope for finding even more impressive ways for exceeding guest expectations.”

Environmental sustainability is also becoming increasingly important to guests who want to travel the world in a more conscious and mindful way. To ensure it meets this demand, Carnival Corporation has established 10 environmental sustainability goals and implemented initiatives to achieve them. Now, more than 70 of its ships have advanced air quality systems to significantly reduce sulphur and diesel particulate emissions, while more than 43% have cold ironing capabilities so they can connect to shore power in ports. The corporation has also joined the Clean Shipping Alliance 2020, launched AIDA’s new AIDAnova, the industry’s first ship powered by LNG at port and at sea, and is nearing completion of its second LNG-powered ship, Costa Smeralda, set to launch later this year. Carnival Corporation has nine additional LNG-powered ships on order, which will be evenly distributed between the AIDA, Carnival, Costa, Princess and P&O Cruises UK fleets, and all expected to be delivered by 2025.

“Nobody wants air pollution or oceans filled with trash, so we do our utmost to minimise harmful emissions from our ships and to keep the waters we sail in as pristine as possible,” says Donald. “We’re proud to have met our 2020 emission reduction targets a couple of years ago and we’ve lowered our unit fuel consumption by 28% since 2006. Not only has this decreased our environmental impact, but it has also enabled us to cut operating costs, which keeps our stakeholders happy. We’ll continue tracking our progress towards achieving our sustainability goals as we start to operate our LNG-powered newbuilds to confirm whether it truly is the cleanest way to go. Alongside that, we’ll continue to explore the potential of new technologies and alternative energy sources such as fuel cells and hydrogen.”

Carnival Corporation’s sustainability efforts aren’t just restricted to its ships. It also takes measures to ensure it has a positive impact on the environment of the destinations it visits, as well as the culture and economic prosperity of the local communities who live there.

“First and foremost, we must appreciate that the communities in the ports and destinations we visit have to live there on a daily basis, so we need to do whatever we can to respect them and make their lives as easy as possible,” says Donald. “We speak with locals to understand their concerns, identify what matters most to them and work with them to find ways to benefit their community and our guests. This could involve everything from only being able to call at ports on certain days, to booking excursions with local tour operators or funding a marine environmental protection programme to mitigate our impact. As always, the most important thing is to listen to the locals and honour whatever agreements we make with them.”

Carnival Corporation has also taken its mission to exceed the expectations of cruise guests around the world a step further by embarking on a partnership with China State Shipbuilding Corporation (CSSC) to launch China’s only multi-ship cruise brand. Operating as CSSC Carnival Cruise Shipping Limited, the China-based joint venture will build and operate a fleet of cruise ships designed specifically for the Chinese market.

“International vessels from our Costa and Princess brands have exposed Chinese travellers to the concept of cruise vacations, but the best way to drive the growth of the cruise industry and attract more source passengers is to create a domestic cruise line,” says Donald. “As every other market in the world is underpenetrated and many of the other major shipyards have full order books, the best option is to build vessels in China. Estimates suggest there are more than 140 million outbound tourists in China, so it’s likely that the country could potentially have a cruise sector the same size as the entire global cruise sector today. We’re very excited about being part of this history-making plan that will help China to scale up its domestic cruise market.”

Exceeding guest expectations in all areas of the business would be impossible without Carnival Corporation’s 120,000 passionate and dedicated employees. “The old cliché rings true – Carnival Corporation’s employees really are its greatest asset,” says Donald. “Everyone who works for us makes an important contribution to the success of our business. My job is to empower with the freedom to unleash their creativity and reach their full potential, while ensuring they remain motivated and inspired to deliver the innovation our guests expect.”

Donald’s strategy is to engineer diversity into teams at all levels of the company. “Bringing together employees with different skillsets and family, cultural, educational and work backgrounds and giving them a common objective and work process is a sure-fire way to fuel the kind of innovative thinking that leads to ground-breaking solutions for solving operational challenges and developing first-of-their-kind guest experiences,” he explains.

Currently, Carnival Corporation has more than 120,000 employees of all genders and ethnicities from around 150 countries. Regardless of their background, Donald expects every employee to ensure that the actions they take ultimately contribute to helping the corporation exceed guest expectations.

“From the medicines to the moon landing, every breakthrough that has shaped the modern world was achieved by someone having an idea and using hard work and creativity to make it a reality – and that’s the type of positive attitude and work ethic we want at Carnival Corporation,” remarks Donald. “There are always going to be natural disasters, disease scares, geopolitical tensions, environmental and regulatory challenges and other factors that affect the cruise industry, but we can’t allow these challenges to overcome us. Instead, we must have a ‘no excuses’ approach and proactively develop strategies that will still allow us to deliver exceptional guest experiences and fulfil our promises to shareholders even if these issues arise. This maximises the possibility of success and cements our reputation as a strong, robust and reliable company.”

Planning ahead to overcome adversity is something that Donald is familiar with. It’s a notion that was championed three times a day at his all-male, all-black Catholic high school St. Augustine’s in New Orleans via the mantra: “Gentleman, prepare yourselves. One day you’re going to run the world.”

“When I was growing up, black people were still segregated from white people and we were told that we were inferior, that we couldn’t go to specific places or achieve certain things, but my high school was like an oasis in a desert of negativity,” Donald explains. “My teachers instilled in us that rather than resigning ourselves to believing that we were second-class citizens, we could prove society wrong by having the highest achieving students, the finest musicians, the best athletic and debate teams and so on. They gave us the confidence to believe that if we set goals and worked hard to achieve them, we could prepare ourselves to overcome any number of unfair barriers to be whoever we wanted to be and achieve anything.”

Donald is now instilling a similar sense of ambition in his own employees to ensure they deliver on the company’s primary objective of exceeding guest expectations. He travels all over the world meeting as many of his 120,000 employees as possible.

“I listen to our employees to understand their concerns and aspirations, learn what motivates and excites them, and hear their suggestions for improving business processes and delivering better guest experiences,” notes Donald. “When we give employees the opportunity to share their experiences and input their ideas and act on this feedback, it reassures them that we recognise and appreciate their contribution to the business. Plus, it makes people feel more engaged and motivated to help us achieve our corporate goals – and that’s when the magic happens.”

Recently, Donald organised a meeting for 300 employees who work at all levels across the corporation’s brands around the world and enlisted the help of renowned speakers to highlight new trends and innovations that could potentially be harnessed to transform the cruise experience. “It was very satisfying to hear these employees saying that the session had inspired them and that they were excited to share everything they had learned with their colleagues,” comments Donald. “We’ve made a video of the meeting available to all employees so everyone can benefit from the experience.”

Witnessing the spirited energy and shared passion of these 300 employees as they went back to their teams to implement their ideas is one of Donald’s proudest moments in the five years he has spent at the helm of Carnival Corporation.

“It showed me that we really do have enthusiastic and hard-working employees who support one another and collaborate to ensure they are constantly creating new and exciting experiences that will help us to meet our goal of exceeding guest expectations,” he says. “There’s nothing more rewarding than watching our brands come together to flex their collective muscle and successfully build on Carnival Corporation’s long and impressive legacy.”

The experience reminded Donald of another proud moment when he first assumed the role of president and CEO. He brought together 70 executives from across the brands and challenged them to envision what success would look like for them, their brand and the overall corporation in five years’ time.

“We asked them to collaborate to develop business goals and suggestions as to how they could achieve these targets, before asking them to anonymously choose the best ideas via a live voting system,” says Donald. “I’d already done the same exercise with the brand leaders and it was a pivotal moment for the company when I saw that these 70 employees had all voted the same way we did. It showed that everyone in the company was aligned on our philosophy of exceeding expectations, which meant that we were well on our way to success.”

Five years into the role and Donald’s passion for diversity, listening and putting people first is certainly paying dividends. Despite a “significant drag” from fuel and currency, the corporation achieved record full-year earnings in 2018, generating US$18.9 billion in revenue – US$1.4 billion higher than the previous record in 2017. Last year was also the most profitable year in the corporation’s history, with full-year adjusted net income reaching US$3 billion, up from US$2.8 billion the previous year. More importantly, the corporation achieved more than double-digit return on invested capital in line with the target Donald established five years ago.

“Since 2013, our corporate earnings have more than doubled, our share prices have gone well and we’ve now hit the double-digit return target – and it’s all thanks to the hard work of our employees and travel agent partners,” says Donald. “We’re well positioned for further financial growth in 2019 and we’ll continue to drive shareholder returns as we execute along a path toward growing earnings and return on invested capital over time.”

Despite the company’s success, Donald is not one to rest on his laurels. “This winter, we welcomed Holland America Line’s Nieuw Statendam and Costa Cruises’ Costa Venezia to the fleet, and later this year, Carnival Panorama, Costa Smeralda and Sky Princess will bring similar ground-breaking innovations to Carnival Cruise Line, Costa Cruises and Princess Cruises,” says Donald. “Meanwhile, our brands will continue to roll out new onboard enhancements to make the guest experience better than ever. Plus, we’ll continue working with our partners on our new terminals in Barcelona, Tenerife, the Canary Islands, Dubai and The Bahamas.”

As usual, Donald expects that his employees will continue to impress and inspire him throughout 2019 and beyond. “I’m proud to have more than 120,000 passionate employees who are dedicated to creating and delivering exceptional experiences that surprise and delight all of our guests,” says Donald. “It’s truly an honour to work with them as they create once-in-a-lifetime experiences – both on our ships and in the 700 destinations we visit worldwide – that will help our guests to create life-long memories. I love watching them as they enjoy their vacations, tick goals off their bucket lists, immerse themselves in new cultures, develop stronger bonds with their travel companions and form new friendships with fellow guests. Similarly, it’s a privilege to interact with locals in the beautiful places we visit and find ways that our business can help to elevate their quality of life.

“I fully appreciate how lucky and privileged I am to have the best job in the world, so I’ll do everything I can to continue to earn the right to be at the helm of Carnival Corporation – and of course have a tremendous amount of fun while doing so!”

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