Gerry Cahill, president and chief executive officer of Carnival Cruise Lines (CCL), is excited about the arrival of newbuilding Carnival Breeze as well as Fun Ship 2.0 being rolled out across the fleet.
“Carnival Breeze brings us up to 24 ships,” he says. “But most of our guests will be going on the 23 ships we have now, not the new one coming in. So the focus has to be on what you do with the ships you have.”
And that is where Fun Ship 2.0 comes in as CCL addresses its existing hardware and tailors it to today’s consumers. “I believe the consumer is becoming more demanding all over the world,” he says. “They have higher expectations and have travelled more than in the past.”
The primary focus is adding features that consumers are going to want over the next five to ten years, Cahill explains. And to show what direction the company is heading in, he draws attention to Carnival Magic’s arrival last year and the new offerings on board, for example the RedFrog Pub, Cherry on Top, the WaterWorks aqua park, Cucina del Capitano, and SportSquare. “These are all meant to be experiences that we can brand and create a unique environment on board for our guests,” he says.
The debut of Carnival Magic was the first step, and will be followed up with changes to the existing fleet. Carnival came up with the Fun Ship 2.0 concept, which includes changes to bars and lounges, food outlets and entertainment, all aimed at meeting consumer demand over the coming years.
When Carnival Breeze joins the fleet in June she will have the base of Carnival Magic and most of the Fun Ship 2.0 features. The company also took on Partner Ship Design as the architect for the first time which, according to Cahill, will give the ship a different look and feel to the prior ships while not losing the Joe Farcus element. “Breeze will have a tropical feel to her, which makes sense as she is mostly in the sun,” he says, stressing that the ship is designed to be more contemporary while still being fun.
Carnival will continue to add ships, but not at the same pace. Cahill says: “The industry in North America is quite a different place than it was 15 years ago. It is not going to add new ships at the same rate as in the nineties or even the early part of this century.”
Turning to the US economy, he says that, while the ups and downs of 2011 certainly confused everyone, most of the economic data coming out in the last couple of months of the year was positive. “For me, the creation of jobs is the single biggest thing that drives the economy, and for CCL, it drives our guests,” he says, adding that this creates a more positive outlook on the future. “Consumer trends are going up. CCL is a good value proposition.” But he recognises there have been false starts before.
Although Carnival carries more passengers than any other cruise line – almost four and a half million expected in 2012 – Cahill says he doesn’t focus on this aspect. “Carrying more guests is not important to me,” he stresses. “What is most important is that when guests come on a Carnival ship we live up to delivering fun experiences at the best value. I want to be the best, not the biggest.”
Cahill’s biggest contribution to CCL since taking over at the helm in 2007 is in the team he has assembled to cater to the internet revolution. “Fifteen years ago carnival.com was not even a figment of our imagination,” he recalls. “Social media didn’t exist five years ago but now it is a vital part of our marketing campaigns.” The website is now the primary channel for people wanting information on CCL: it received more than 90 million visitors in 2011.
Like every other cruise line – and indeed every company in the shipping industry – Carnival is focused on fuel costs. The rise in the oil price has, says Cahill, forced the industry’s hand. “We have a huge focus on minimising how much fuel we use. We want to keep costs down as fuel costs are astronomical, but we also want to consume less fuel so there are less emissions.”
This can be done to some extent by investing in technology and also by making itinerary changes. But there is a limit. “We cannot send all the ships to the closest ports,” Cahill says. “We have to balance the demand for where the guests want to go with how much fuel is consumed.”
The forthcoming implementation of the North American emissions control area will drive fuel costs up further and Cahill suspects this will mean changing itineraries. “There will be winners and losers so far as homeport and transit ports are concerned,” he says. “Our preference is to keep as much variety in our itineraries as possible but we have to balance that with the economics.”
Indeed, Carnival has already moved ships out of homeports San Diego and Mobile. “It all comes down to a combination of what the guests are willing to pay and the fuel costs in getting there,” Cahill says. “The ports that are going to struggle are those where guests don’t want to pay high ticket prices and there are expensive fuel costs in getting there. The whole fuel issue is putting tremendous stress on cruise lines and reducing profitability.” Cruise lines, he says, are having to deal with both environmental and economic concerns and seeking ways to reduce consumption. “Every brand is doing that and by more each year,” he says.
But he believes that these problems will not stop the worldwide growth of cruising. “I firmly believe that cruising will go worldwide as economies develop. A significant middle class is what you need for cruising.”
Where CCL is concerned, Cahill says: “CCL will remain primarily focused on North America. We are not going to become a completely international brand. We will be selective on the markets we are entering. Common language makes it easier.”
In this respect Australia and Europe are now on the company’s radar. “We are working very hard in both areas to see if we can make a success,” he says. The company is placing a ship, Carnival Spirit, in Australia for the first time in October this year due to finding its brand popular with Australians.
As far as Europe is concerned, CCL had been surprised by the number of Europeans who joined Carnival Magic in the Mediterranean last year following a gap of four years without the company ‘even trying’. This year, Carnival Breeze will begin service in Europe. Prior to this the company had a handful of sailings on Carnival Legend in 2002 and a more extensive programme on Carnival Freedom in 2007, Carnival Liberty in 2008 and Carnival Magic last year.
When asked about South America as a possible market, Cahill says he believes the CCL product would work very well there but that it isn’t at the top of his list. With regard to Asia, while Asians do fly to the US to join a Carnival ship, he says the company would need to deploy a ship in the region in order to increase sourcing. “We have chosen not to place a ship there right now,” he says, pointing out that parent company Carnival Corporation has ten brands in the group, focusing on different markets.
This is an abridged version of an article that appeared in the Autumn/ Winter 2011 edition of International Cruise & Ferry Review. You can subscribe to the magazine in printed or digital formats.