This article first appeared in the Spring/Summer 2015 issue of International Cruise & Ferry Review. To read other articles, you can subscribe to the magazine in printed or digital formats
With Costa Diadema safely and stylishly launched in Venice in December, Michael Thamm started 2015 on a high note. The first weeks of the year have been no less busy, with several announcements of initiatives aimed at strengthening the group of cruise lines for which he is responsible. As CEO of Costa Crociere S.p.A since mid-2012, Thamm has oversight of the AIDA Cruises and Costa Cruises brands. The management structure was boosted by the appointment in February this year of former SVP Hotel Operations & Product Development, Neil Palomba, as president of Costa Crociere in Genoa. Also in January, Thamm’s Asia team was strengthened by the promotion of Buhdy Sin Bok to the role of president of Costa Asia in Shanghai.
Another new development is the establishment of a Marine Operations Center in Hamburg, Germany. The Carnival Maritime facility will serve the Costa Group brands with the support of Lufthansa Technik, allowing the company to apply airline know-how to fleet operations.
These changes underpin an overall business model that has remained very stable over the years. The Costa and AIDA brands under Thamm’s control serve five distinct markets: Italy, Spain, France, Germany and Switzerland/Austria combined. “We are the driving force here in continental Europe, with almost 50% market share for our two brands,” says Thamm. “The Costa brand is dedicated to Germany, France, Spain and of course Italy, where we have our roots – and then the AIDA brand is for the German-speaking countries.”
“Of course, there is always a connection between our market size and development and the economic environment,” says Thamm. “So it’s natural that the German-speaking countries are developing faster than other countries. France is also a very good place for us to be. It’s underpenetrated and growing fast.”
A recognition of the value of place underlies many of the brand’s decisions regarding onboard amenities and attractions. This can be seen on the newest ship in the Costa fleet, as Thamm points out. “Costa Diadema is an ambassador for our repositioned brand, which sails under ‘Italy’s finest flag’. Italy stands for hospitality, passion, style and quality, and these kinds of things are reflected in our onboard offers. We have a huge variety of food and beverage offerings and have implemented a number of things we never had before, like the Italian Aperitivo.”
Despite its success in its home environment, the Costa brand has earned a formidable reputation for pursuing new markets much further afield – specifically in Asia. Costa was one of the early movers in taking cruise to Asia and as a market leader, continues to invest ships and resources in the region. Recently, Costa Victoria was refurbished to suit the needs of this market – and Costa Atlantica undertook the first-ever Chinese world cruise in 2014, a novel experience that went very well, according to Thamm.
“Starting in 2006, Costa was a door opener in China. We have a great history in that country, which is also reflected in very close relationships with the politics, with the government and with the trade. Typically the Chinese market is a short-cruise market (three to five days). The world cruise created a lot of attention and is also for us a great opportunity to further strengthen our brand.”
Back home in Europe, the successful righting and final removal of the Costa Concordia last summer was a significant milestone for Carnival Corporation and for Thamm, who steered Costa through this bleakest period of its history. “This incident has many aspects,” says Thamm. “It happened to us and was caused by one of our employees in a total failure of his duties. It is in our DNA to ensure that this kind of thing will never happen again and to take the appropriate actions.”
Referring to the revised passenger safety guidance issued by the Cruise Lines International Association (CLIA) following the incident, he says: “We have been working closely within CLIA to bring these actions underway but we go beyond that. We have a fleet operations centre where we can monitor all our ships in real time. We are learning from the airline industry and we want to be very close to the ships’ operations, not to interfere with their decisions. We’re not questioning the role of the master but we can support it.”
Costa Cruises has developed a programme of safety training in collaboration with the Italian Coast Guard. “We are the only cruise line flying the Italian flag, so the Italian Coast Guard is our partner,” remarks Thamm. “We have a good relationship so we train our people together and we carry out drills together. There is a very good understanding and they are very capable.”
Thamm does not shy away from taking a stance on the responsibility of the industry in the face of the growing southern Mediterranean phenomenon of desperate migrants stranded at sea. Last September, a gathering of the European Coast Guard Functions Forum was hosted onboard Costa Serena. “We had all of the heads of coast guard organisations onboard and this was the main theme. Italy receives 500 refugees per day, all in small boats, and we have terrible incidents here with thousands of people dying. We as humans cannot accept this, to my mind. We are seafarers and the culture of seafarers is to help people in distress because we could be in the same position one day.”
This commitment to doing the right thing can be seen in the new Costa Foundation, launched during the inauguration of Costa Diadema. This charitable body has pledged to invest €1 million annually in good causes in the region. Thamm says: “The Foundation is an expression of our culture. We are a global company of 22,000 people with customers and crew from all over the world and I believe that in many of our employees is the desire to give. We have opportunities to help by collecting funds. This is a strength and as executives we can also make much more out of this by dedicating resources, not only money.”
Costa’s relationship with its employees was recognised last year, when Costa Luminosa was named Best Italian Cruise Ship for implementation of the International Labour Organization (ILO) 2006 Maritime Labour Convention. “I believe cruise ships in general should be in the forefront of dedicating a good environment for crew, because without happy crew you will not satisfy your customers,” says Thamm. “We have always been very good with our crew and this is manifested in a close relationship with the ILO, which has seen us as pioneering the way for the cruise industry.”
Costa took action to address a developing market segment in 2014 with its decision to adopt ‘slow cruising’ for its NeoCollection ships. “We are very thorough and detailed in market research because I believe that understanding customer needs is simply the key to our business,” says Thamm. “We identified that there is a segment which is not attracted by the intense way of being part of a seven-day cruise here in the Mediterranean. These are people who have more time than others: a bit older, more experienced customers and also with better spending patterns.
“They are interested to be onboard these smaller ships which offer more customised and individualised service. So this was the starting point for the NeoCollection design. The ships sail under the Costa umbrella but it is a totally different segment and it is very much appreciated, also by the travel agents.”
The company’s relationship with travel agents has remained strong through good times and bad, notes Thamm. The choice of a travel agent as Costa Diadema’s godmother underlines the importance of the agency connection to the brand. “Our relationship with travel agencies is and has always been excellent. It is fair to say that after the incident, our loyal customers but also our loyal travel agents helped us to keep the wheel turning. At these difficult moments you get a sense of what a good business relationship means. We give a lot back, I believe – in all areas including training. Our business is travel agency-based and we believe that travel agents create value.”
Environmental concerns have been a priority for the last few years, manifesting in adoption of scrubber technology and other methods of tackling environmental impact. “Sustainability is just an expression for the desire to stay in business – and we have the desire to stay in business in the long term,” says Thamm. “We’ve done a lot on the environmental side of the business – our fuel consumption is far, far lower at the Costa Group than those of our competitors and we are progressing very fast in these fields. We are on the way to equip the fleet with scrubbers which tackle all kinds of emissions: NOx, sulphur and also particulate matter.”
When it comes to the internal systems that underpin the company’s activities, Thamm says he enjoys being part of Carnival Corporation during a time of ramped-up collaboration between the brands. “I believe we are a rising company with great ambitions and good capabilities. We are part of a great network and it gives us strength to be part of this family of great brands. We come together frequently and I always enjoy talking to colleagues from the other brands. There is always something you can learn.
“It brings costs down because you don’t do things twice but I don’t want to see commercial relationships narrowed down to cost; it’s much more the ability to build bridges and to create benefits for each other. The brands are the front ends but we work very closely together.”