FREE ESSAY ON CARNIVAL CRUISE

CARNIVAL CRUISE

INTRODUCTION
In 1972 American Travel Services, Inc., along with Ted Arison, bought two ships from the
Canadian Pacific Empress Lines for $6.5 million. These two ships were named the Marti
Gras and the Carnivale. Things did not begin well for this group of investors. On its
first voyage, the Marti Gras ran aground in Miami Harbor. The ship was also slow and used
up very expensive fuel. 
For the next three years, Carnival lost money. During this time, Arison tried to drum up
business by adding such attractions as casinos, discos, nightclubs, and various forms of
activities. Finally, in 1974, American Travel Services was ready to pull out of the joint
venture. So, Ted Arison bought out ATSI for $1 cash. Unfortunately, he also acquired the
$5 million debt that went along with the venture. As luck would have it, however, the
following month after the buyout by Arison, the repaired Marti Gras began showing a
profit. For the remainder of the year, it operated at or above than 100-percent
capacity.
Following this successful year, Mr. Arison along with his son, Micky Arison and Vice
President of Sales Bob Dickinson, began to change the Carnival marketing strategy. They
devised a scheme that went after the first time and young cruisers with a moderately
priced vacation package. This vacation included the cruise and airfare to and from the
port of departure. CarnivalAfs rates were competitive with such vacation packages as that
of Walt Disney World. Also included in the fare was entertainment, meals, and
activities.
During the 1980s, Carnival was able to maintain a growth rate of 30 percent. This figure
was three times that of the industry. In 1987, Carnival conducted a customer profile.
During its study, they found that the average person cruising with Carnival was between
the ages of 25 and 39 and had a household income of $25,000 to $50,000.
In 1988, 1989, and 1990 Carnival experienced vast expansion and change. They acquired 4
cruise ships from the Holland American Line. These ships were used to target the higher
income vacationer. They also began construction of the $250 million Crystal Palace Resort
and Casino located in the Bahamas. Ted Arison in 1990 relinquished his role as chairman
of the board to his son Micky who remains in that position today.
THE CRUISING INDUSTRY
With the vast explosion of the airline industry in the 1960s, the ocean liner was quickly
becoming obsolete. Cruising, which was the exclusive privilege of the rich and famous,
was now being targeted toward the middle class. These luxuries and amenities were now
offered to the middle class. According to Robert Meyers, editor and publisher of Cruise
Travel magazine, the increasing popularity of taking a cruise as a vacation can be traced
to two events. First, televisionAfs Love Boat and the increased participation in the
workforce by women gave families more disposable income.
CARNIVAL TODAY
Carnival is a thriving industry today. It owns four other Cruise lines including Holland
America Line and Windstar Cruises. The parent company, Carnival Corporation owns Costa
Cruise Lines, Seabourn Cruise Line, Airtours, and Weston hotels and resorts. 
Carnival has just introduced two new SuperLiners this year. The first ship is the MS
Elation. This ship can hold 2,040 passengers and is the first ship to sail year round
from Los Angels. The MS Elation was built with all the features of the most popular ship,
the Carnival Destiny. The second ship is the MS Paradise. The most surprising feature of
this ship is the fact that it is entirely smoke free, which makes it the worldAfs first
cruise ship with this distinction. The Paradise will have seven-day cruises that run year
round from Miami. 
There are five new cruise ships that are under construction now. The Carnival Triumph,
the Carnival Victory, and three more which have yet to be named. The MS Carnival Triumph
and MS Carnival Victory are both supposed to be larger than the Carnival Destiny. Triumph
will be released in late 1999, and Victory will be released in the summer of 2000. The
other three will be in the water sometime after 2000. 
Carnival is having no problem dealing with consumer demand for their cruises. Carnival
has twelve operating ships in its fleet. They have nearly one hundred percent occupancy
for all of their cruises. Carnival is currently operating cruises ranging from three to
sixteen days in length to the Bahamas, Caribbean, Mexican Riviera, Alaska, Hawaii, and
the Panama Canal. 
Carnival has implemented some programs that have met with incredible success. This year
Carnival implemented the cruise industryAfs only vacation guarantee. People who might be
hesitant to be on a cruise might try it with this offer. If someone is unsatisfied with
the cruise they will be dropped off at any port of call, flown back to their home free of
cost, and have the unused potion of their cruise refunded. For those that are health
conscious, brand new Nautica Spas are aboard all of CarnivalAfs ships. The dining roomAfs
relaxed environment, with non-formal dress wear is the biggest success on the Carnival
ships. Carnival does place an emphasis keeping the customer happy. 
MANAGEMENT & PHILOSOPHY
Carnival Cruise Lines has set out to accomplish nothing less than a totally new concept
of cruising. There is absolute dedication to the highest level of personal service. This
service is not only the finest afloat but equals to that found in celebrated hotels,
resorts, and restaurants anywhere ashore. Carnival ships are spacious and comfortable.
They allow guests to establish their own pace as befits their lifestyle. With its service
and performance, Carnival has proven itself to be one of the top Cruise lines in the
world. 
One proposed definition of value is quality at the right price. Carnival believes in this
definition. When the consumer is satisfied with the product that they have purchased then
the consumer feels they have received value. Carnival tries to make it a moderately
priced cruise, worth every penny. CarnivalAfs approach to market competition is if they
can offer superior quality at comparable prices, then the consumer will recognize the
value. 
Guests will find that CarnivalAfs philosophy may be summed up by the phrase Fun Ship.
Carnival recognizes that its customer is independent, intelligent, and wants to have a
cruise that they will completely enjoy. The vacation plan is to offer them numerous
choices with what they want to do with their time, and let them absorb the atmosphere.
Carnival believes in nurturing customer loyalty and providing rewards for past
passengers. 
MISSION STATEMENT
Carnival Cruise Lines is the largest, most popular, and most profitable cruise line in
the world. The leader in the contemporary cruise market, Carnival operates 11 AeFun
ShipsAf, including the worldAfs largest, Carnival Destiny. Carnival ships sail to the
Bahamas, the Caribbean, Mexico, the Panama Canal, Alaska, and Hawaii. The companyAfs
customer base is divided up into three different target audiences. They are: the
contemporary segment which is served by the seven days or shorter cruise and features a
casual ambience, the premium segment which is served by the seven-day-and longer market,
and the luxury segment which caters to the experienced cruiser for seven-day-and-longer
sailing.
Carnival has the unique ability to provide customers with a wide range of vacation
choices that appeal to any taste, interest, lifestyle, or budget. With a mission to
surpass customer expectations, Carnival offers leisure travelers vacation experiences
equal or superior to those at the worldAfs most popular travel destinations.
Carnival wants to remain the leader and innovator in the cruise industry and intends to
do this with sophisticated promotional efforts and to gain loyalty from former cruisers
by refurbishing ships, varying activities and ports of call, and being innovative in all
aspects of ship operations.
CARNIVAL CRUISE LINES INTERNAL MATRIX
INTERNAL MATRIX
STRENGTHS
1. Carnival is known for Carnival Destiny, the largest cruise ship in the world. The
square tonnage is 101,353, which is over 30,000 more than any other ship in Carnival's
fleet. It can hold up to 2,642 passengers with double occupancy.
2. The Fun Oriented Philosophy is there to keep everyone involved. There are various
activities to keep young and old alike entertained. The ship has been designed to cater
to everyone's interests.
3. Not everyone wants to have to dress up to go to dinner on a cruise. The non-formal
dress setting keeps the atmosphere light and happy. People do not feel the need to be
embarrassed, and Carnival has gotten great response to it.
4. There are six new ships under construction for Carnival. These includes Paradise,
scheduled to be released by the end of 1998; the Carnival Triumph, which will be larger
than the Carnival Destiny; The Triumph will be released by early 1999; the Carnival
Victory is scheduled to be released by summer 2000. 
5. Who wants to be on a cruise and sit in their room all day? Carnival ships are fully
equipped to handle the entertainment of all the passengers. With casinos, shopping
centers, weight and exercise rooms, activities, bars, lounges, ballrooms, etc. there is
more than one way to tickle your fancy. 
6. The advertising team for Carnival is doing its job well for it leads it competitors in
advertising and promotion. The Carnival Cruise Line is a common name because of such
advertising and promotion efforts.
7. One thing that is amazing is the fact that Carnival sails at almost 100% capacity
during all of its trips. The ship is almost always full, which means that they are
generating incredible revenues.
WEAKNESSES
1. Carnival has only tapped 10% of the market. 
2. The cruise line is only discounted during the off season. This discourages people to
use Carnival during the busy season because they can not get a reduced rate. 
3. The fact that Carnival is usually at a 100% capacity is good news, but there is always
the risk of overbooking. If this should happen, Carnival would need to pocket out some
money because of unhappy customers. 
4. There are only so many ports of call that Carnival can go to. The ships all have a
specific route that they follow, and some people do not want that specific route. They
want to be able to hit several different ports of call that may not be offered by one
cruise.
CARNIVAL CRUISE LINES EXTERNAL MATRIX
EXTERNAL MATRIX
OPPORTUNITIES
1. Most people want to get away for awhile. They want a unique vacation that they will
remember forever. Instead of having the hassle of trying to drive across the country to
spend a couple of days somewhere, they can take a week off and not have to worry about
anything. Carnival takes care of all their travel worries including airfare, hotel, food,
and entertainment accommodations.
2. The pricing of the Carnival Cruise Line is very moderate compared to other Cruises. It
ranges from $75 to $100 a day, where the competitors range from $75 to over $1000 a day!
3. It is truly a company that can take care of all of a traveler's needs. Carnival
Corporation owns five cruises, a chain of hotels, an airline, and a bus line. Travelers
can be flown from where they live, have a bus deliver them to the cruise, and be able
stay in a hotel all through Carnival. 
4. Ever since the popularity of the movie Titanic, people have gone wild wanting to take
a Trans-Atlantic Cruise. If Carnival can cash in on this, they could make a tidy profit.
5. The idea behind Carnival is the Fun Ship philosophy. They want people of all ages
enjoy their cruise. They have everything from Nautilus workout rooms, to indoor and
outdoor pools, casinos, shopping centers, exciting ports of call, etc. From the youngest
child to the oldest person, there is something for everyone on Carnival Cruise Lines.
THREATS
1. There are various competitors in the market of cruise lines. With so many to choose
from, it is not always easy to be able to decide what is best for the dollar. This is
where Carnival needs to differentiate itself from all the rest.
2. There are so many other vacation spots that require less planning. For example people
could go to the beach, take a bus tour across the country, go to Disney World, etc.
People usually regard cruises for the rich, or for those people who do not want to take
the time to plan their vacation out.
3. There is only a limited target audience that Carnival can reach due to its cost. For
$75 a day and higher, there is only a certain portion of the population that would
consider a cruise.
4. When serious mishaps occur, it could spell disaster for a cruise line. It has yet to
be determined the extent the fire aboard Ecstasy has had on business.
IE MATRIX
IFE Total Weighted Score = 2.91
Strong Average Weak
3.0 to 4.0 2.0 to 2.99 1.0 to 1.99
I II III
IV V VI
VII VIII IX
Cell I = Grow and Build
Cell II = Grow and Build
Cell III = Hold and Maintain
Cell IV = Grow and Build
Cell V = Hold and Maintain **
Cell VI = Harvest or Divest
Cell VII = Hold and Maintain
Cell VIII = Harvest or Divest
Cell IX = Harvest or Divest
TOWS Matrix
Strengths -S
1. Largest cruise ship in the world. 
2. Fun oriented philosophy. 
3. Non-formal setting. 
4. 5 new ships to be launched by 2002. 
5. Casinos, shopping, entertainment on board. 
6. Leads competition in advertising and promotion 
7. Ships sail at 100% capacity. Weaknesses - W
1. Only 10% of the market has been tapped. 
2. Only discount during off-seasons. 
3. Risk of over capacity.
4. Ports of call
limited.
Opportunities - O
1. Unique Vacation which is rising in popularity. 
2. Moderately priced compared to competition. 
3. One stop shop for vacations. 
4. Trans-Atlantic Cruise. 
5. Something for Everyone. SO -Strategies
1. Largest cruise ship in the world provides something for everyone (S1, S5, O5) 
2. Use Advertising and promotion to promote a new Trans-Atlantic Cruise (S6, O4) WO -
Strategies
1. Channel rising popularity of the cruise vacation to tap more of the market segment
(W1, O1) 
2. Use Trans-Atlantic cruise idea to provide more ports of call (W4, O4)
Threats - T
1. Numerous competitors 
2. Other vacationsLimited target audience due to cost. 
3. 1995 fire aboard the Ecstasy ST -Strategies
1. Use advertising and promotion to eliminate customers' fears (S6, T4) WT - Strategies
1. Fire aboard Ecstasy will cause a drop in capacity (W3, T4) 
2. Discount during the cruising season (W2, T3)
GRAND MATRIX ANALYSIS
Carnival Cruise Lines is positioned in Quadrant I which means it is in an excellent
strategic position. Firms in this quadrant should continue their concentration on market
penetration and market development. In CarnivalAfs case, they should try to tap into the
90% of the untouched market. Firms in Quadrant I can afford to explore external
opportunities aggressively. This means forward, backward and horizontal integration
strategies are all possibilities. Carnival should try horizontally integrating some of
the smaller companies that are competing for the market.
Carnival Cruise Financial Ratios
INCOME STATEMENT DATA
CARNIVAL CRUISE LINES RECOMENDED STRATEGIC PLAN
Three Strategies Used:
Market Penetration
Horizontal Integration
Concentric Diversification
MARKET PENETRATION
Carnival Cruise Lines should seek a market penetration strategy. With this strategy,
Carnival can use one of its major strengths. It can use its advertising and promotion
strength and try to tap into more of the potential market. 
HORIZONTAL INTEGRATION
Carnival Cruise Lines should seek a horizontal integration strategy. By seeking ownership
or increased control over competitors, Carnival could gain an even greater market share.
With Carnival being so strong in the market, they can afford the minor risk of buying out
competitors.
CONCENTRIC DIVERSIFICATION
Carnival Cruise Lines should seek a concentric diversification strategy. Carnival should
consider getting more involved in the airline and motel business either by buying out
such chains or by getting involved through a joint venture.