Carnival Cruise Lines Threats

Carnival Cruise Lines

- What specific steps has Carnival Cruise Lines taken to benefit from global social changes?

While before sea travel for pleasure was an opportunity available only to the very rich, during the th century, cruises increasingly became a form of accessible leisure travel to the less wealthy. In fact, they enabled people to take their families on vacation, have a reliable place to stay, and offered entertainment even between ports. By operating under flags of convenience, cruises like Carnival could sail in international waters, and also take advantage of lower taxes and lax labor laws in desirable areas of the world to cruise. Operating as a Panamanian company also enables the company to benefit from that nation’s lower tax rates yet still benefit from being listed on the New York Stock Exchange (NYSE).

Despite global economic downturns, Carnival has been able to flourish, since many people seeking vacations consider cruises more affordable than traveling to a nation by air, and it also offers the ease and convenience of not needing to book multiple aspects of a trip. Additionally, online convenience enables more people to learn about different cruises and to book them relatively easily. Even recruiting is far easier than ever before, since people can learn about job opportunities online. Technology has also facilitated contactless interactions onboard to easily access different amenities on the ship (Garay, 2022). Finally, the cruise industry has also implemented smaller cruises, to offer more niche, environmentally-friendly experiences to cater to high-end customers (Garay, 2022). The industry has diversified its economic segments, and also, by offering cruises in such a wide variety of areas, it can potentially mitigate economic and political impacts upon itineraries, given that when one region is affected, it can focus is attentions on other regions. The ability to offer niche cruises focusing on specific age, gender, economic, social, or other interests enables the industry to likewise engage in risk management when one core customer segment is impacted by changes versus another.

1-6 What threats exist for the future performance of the cruise-line industry and, specifically, of Carnival Cruise Lines? If you were in charge of Carnival, how would you (a) try to prevent these threats from becoming reality, and (b) deal with them if they were realized?

Despite Carnival’s ability to benefit from some positive economic and technological changes, there are also a number of considerable threats to the overall growth of the cruise industry. Rising oil prices, for example, can impact the ability of cruise lines such as Carnival to offer low-cost fares, and inflation in general can impact the overall health of the industry and its ability to offer low-cost fares and amenities, while still keeping quality standards high. There has also been increasing criticism of the fossil fuel use of cruise ships, and the exploitation and low pay of foreign national workers onboard (Garay, 2022). Political threats such as terrorism were on the minds of some cruise-goers for many years, and now there is a fear of being stranded in ports due to coronavirus quarantines.

On the other hand, as noted by Garay (2022), the cruise industry has also been able to advertise aspects of the experience which are safer than conventional air travel, including testing of passengers and employees, and sanitization of all surfaces within. But Carnival also recently decided to do away with such mandatory restrictions regarding testing, and even relaxing exemption procedures for unvaccinated passengers suggesting an attempt to return to normal, even while there still is a threat of infection from new variants (Carnival, 2022). However, if I were in charge of Carnival, I would not have relaxed such restrictions, and instead tried to capitalize upon the greater safety and security offered by cruising. At minimum, in the future, offering cruises which advertise required vaccination and testing could be a potential sell to more cautious cruise-goers. Finally, offering cruises with advertised environmentally-friendly protocols could attract travelers who have been leery of cruises due to the environmental impact. Cruises in colder weather locations (to offset heat fatigue due to global warming) could be another way to capitalize upon the global environmental changes.