Big Interview: Arnold Donald, CEO of Carnival Corporation

Big Interview: Arnold Donald, CEO of Carnival Corporation

Ahead of his appearance at this week’s Clia Conference, the cruise giant chief reveals why agents are critical to the sector. Hollie-Rae Merrick reports

With 10 brands, more than 100 ships and 14 more on order, Carnival Corporation’s president and chief executive is a busy man.

Arnold Donald took the helm in July 2013 but has been a director of the cruise giant since 2001.

You’d be forgiven for thinking that the man in charge of the biggest cruise company in the world might not be that in touch with the intricacies of the UK cruise market, but you’d be wrong. Whether it’s changes to the structure of the UK sales team or commission, Donald knows it all.

P&O and Cunard

The restructure of the UK sales teams for P&O Cruises and Cunard has been the biggest at Carnival UK for a decade. It was designed to increase support for agents and in turn raise the average fare price. The operator also hopes it will result in more focus on Cunard.

“Differences between the lines matter greatly to our guests so it’s important that it is reflected,” says Donald. “The move that [Carnival UK chief executive] David Noyes has made [in bringing in a boss for both Cunard and P&O Cruises] is part of the tweaks he’s been making to the organisation.

“We need to effectively support all of our brands and if that means we need more focus on it, then we’ll do just that.”

Unable to speak about current performance because of Carnival being in a financial closed period, Donald reflected instead on the group’s first-quarter results in March, which showed net profits had almost doubled to $301 million year on year.

The P&O brand has gained and lost a ship over the past 18 months. The line saw a 30% jump in capacity when it launched Britannia last year, but in recent weeks it lost its smallest ship, Adonia, which has been switched to the new Fathom brand.

Pricing and capacity

The line’s UK team says its main focus is now on raising prices. However, Donald hints that new capacity could be on the horizon.

“We see great growth prospects for P&O Cruises. Britannia is performing spectacularly well.

“We have plans over time for additional capacity. There are no time frames on this.”

Carnival Corporation this year launches four ships, two of which – Carnival Vista and Koningsdam – began sailing last month. The latter marks Holland America Line’s first new ship since 2010, and Donald admits it was “long overdue”.

Carnival Vista also provides a defining year for Carnival Cruise Line, marking the brand’s return to Europe, having pulled out in 2014.

Describing Carnival Cruise Line as a “powerhouse in the Caribbean and Australia”, Donald says its business for European cruises have been a hit too, selling well in the UK as well as the US.

While there will be no European deployment in 2017, the brand intends to return in 2018 when its next new ship launches. And the new-builds are unlikely to stop, with Donald “very happy” to have options secured to build more.

China and Cuba are currently Carnival’s focus. The group has shown clear intent to grow China as a source market, but Cuba has been a more recent interest, with Adonia being the first US-owned cruise ship to sail from Miami to Cuba in 50 years. “We are always looking at new and emerging markets, but China and Cuba are where it’s at right now,” he says.

Fathom boss Tara Russell previously told Travel Weekly she wanted a fleet of ships, but Donald was quick to say it was too early to be “mapping the universe”.

It is not currently sold in the UK, but Donald insists it will happen.Agents’ role

Travel has faced its fair share of challenges in the past 12 months, whether its health scares such as the Zika virus or terrorism threats and attacks. And Donald believes it’s the role of the cruise line and of travel agents to entice the public to want to travel.

“The challenges for the industry are always there – there is always a situation. The challenge is to convey how fundamentally safe a cruise holiday is. That’s our task, but agents play a vital role and they can allay any concerns.”

Competitor cruise companies have admitted that the recent terrorist attacks have put Americans off coming to the Mediterranean. And while Donald agrees, he was quick to downplay the impact on his 10 brands.

“These situations have an immediate reaction, but soon afterwards it returns to normal,” he says. “In the most recent bout of things going on in the world, the US in general has been impacted when they think about going to Europe, but for us, we haven’t seen a dramatic impact on bookings.”

Commission rates

Commission has been a big topic for UK agents when it comes to Carnival Corporation ever since P&O Cruises and Cunard cut commission to 5% in 2012. Asked whether the brands had moved past this or whether commission was still a bone of contention, Donald believes the brands have made “great strides” in strengthening relationships.

While in the past he’s been keen to reiterate that agents should put customer service ahead of earning potential (Travel Weekly, March 12), Donald realises commission will always be a key topic, adding: “It’s how they make their money, after all.

“We’ve done some things around commission in the past, but in terms of a travel partner’s affinity to our brands, we’re working well together. We have made great strides on the relationships we have with the trade.”

Another challenge this year will be trying to win over agents with the Costa Cruises brand. The line cut out the trade in December, 
only to perform a U-turn within days, claiming it was never the intention in the first place.

Donald insists the message at the time had “got lost in translation”. He says UK agents can still book Costa if they want to, but admits the line has no real ambitions to drive growth in the UK.

“Is the UK a big focus for Costa? It’s not, let’s be honest. It never was. We don’t expect volumes and volumes from the UK.”

Today (May 19), Donald is due to address more than 400 agents at the 10th annual Clia Conference in Southampton.

“The trade is so critical to our business and the industry overall,” he says.

Donald believes a big challenge is ensuring the trade has the right tools and information to “grow their cruise business”, “express what cruise is about to customers”, and “articulate the distinctions between different brands”.

Travel Weekly is trade media partner for the 
Clia Conference 
in Southampton 
on May 18-20

Comments

This is a community-moderated forum.
All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.
By posting your comments you agree to accept our Terms & Conditions.

More in Cruise