Big Interview: Carnival head sees cruise demand outgrow capacity

Big Interview: Carnival head sees cruise demand outgrow capacity

Arnold Donald, head of Carnival Corporation, will tell Abta’s Travel Convention next month ‘We couldn’t do it without you’. He spoke to Ian Taylor

Carnival Corporation faces an issue most travel businesses would love to have: according to president and chief executive Arnold Donald, “when people cruise, they want to cruise again”, but “we can’t bring much capacity in”.

The problem is that building the ships to cater for the demand is expensive and takes time.

The cruise industry attracted record passenger numbers last year, while in June, Carnival reported bookings up “for the next three quarters, at prices well ahead of the prior year”.

But the sector cannot grow much faster. Donald said: “We are talking about single-digit figures growth [in passengers].”

He explained that it is hard to increase the number of new-tocruise passengers much, “because people don’t go on a cruise then say ‘I’m done’. When they have cruised, they want to cruise again, and the number of new-to-cruise customers [on ships] generally declines.”

Overall growth in cruise passenger numbers is impressive, outpacing growth in land-based holidays over the 10 years to 2014 and reaching almost 26 million in 2016.

Yet global cruise capacity remains just 2% of hotel capacity.

Donald said: “There are large [cruise] markets under-penetrated everywhere in the world.”

The sector also remains unique in that it relies on agents to sell it and to ensure customers choose the right cruise. Donald said:

“Our ships sail full, but we want the right people on our ships because then we create lifelong advocates.”

He said the rise in bookings and prices was “the result of continuous effort to exceed our guests’ expectations”.

Donald added that to boost demand, “each of our brands does a lot, and at the corporate level we do all kinds of things”.

This includes taking part in TV shows. Four ‘lifestyle’ TV series about Carnival on major US networks attract almost four million viewers a week.

“We also see an increase in interest whenever there is a new ship,” Donald said. “The loyal brand person wants to experience it, but there are also the features on board.”

For example, from the end of this year, Carnival will roll out its Ocean, or One Cruise Experience Access Network, on Princess Cruises ships, allowing passengers to access a range of services from a pendant or wristband.

This will “take the experience to a level of personalisation hitherto unseen”, Donald said.

He is also excited by the interest in cruise among younger customers, after a study by cruise line association Clia found 39% of younger respondents identified a cruise as ‘the best type of holiday’, compared with 14% who opted for a holiday on land and 9% for an all-inclusive holiday.

The Clia study suggested that more than 90% of younger adult cruise passengers would ‘probably’ return for another cruise because, according to Donald, “cruise is all about experiences”.

Donald will speak at Abta’s Travel Convention in Ponta Delgada, the Azores, on October 9-11.

More details at thetravelconvention.com


Donald tips China to be top market in 10 years’ time

China “will be the largest cruise market in the world over time”, but not for at least another 10 years, according to Carnival Corporation president Arnold Donald.

He said China would become the world’s biggest cruise market “like it is the largest market for everything, because of the number of people”, adding “it will be a great market”.

However, he added that for the next five to 10 years, “it will be an important player, but not huge, because we don’t have the ships to send.

“We have large markets everywhere in the world that are under-penetrated and it takes time to build cruise ships.”

Carnival is the market leader in China, with six ships based there – four under the Costa Cruises brand and two under the Princess Cruises brand.

The Majestic Princess, or Sheng Shi Gong Zhu Hao, which began sailings from its home port of Shanghai in July, is the first ship specifically designed for the Chinese cruise market.

Donald said the ship “was built for Chinese guests, with karaoke rooms, mahjong tables, open spaces for communal tea, small gaming rooms for private use, buffet lines organised for Chinese families and the largest retail space at sea”.

More: 

Agents are crucial to Carnival says Arnold Donald

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