From the exhibit 1& 2 : In winter 2004, more than 3 million passengers would sail with Carnival Carnival, launch 110.000 ton, 2974 passenger Carnival Valor, the 20th ship. 2005, Carnival Liberty joined the fleet, Carnival’s capacity lead the industry. Buyback, $1 billion stock and 20% quarterly dividen increase to $0,15 /
The Cruise Industry 2004, projected 1970, carried more than 10 million 500.000 passengers guest Dickinson : 300 Dickinson noted, millions person only 16% of the trips/year. We North American carried 3 million market had ever guest cruised
Industry Evolution Mid 1960s, shifted to pleasure cruising The ships carried 1800 to 3800 passengers. 70 brands serving the North American market since 1960s. Carnival Corporation, Royal Carribean International Ltd, Star Cruise dominate nearly 95% of the market. Carnival Corporation became the largest cruise company in the world
Exhibit 3 North American Cruise Capacity & Market Positioning, 2004 Carnival Corporation Ships Double Occupancy Market Share Market Positioning Carnival Cruise Lines 20 44934 23,20% Contemporary Princess 14 28050 14,50% Premium Holland America Line 12 16937 8,80% Premium Costa Cruises 2 4224 2,20% Contemporary Cunard Line 2 4411 2,30% Luxury Womdstar Cruises 3 604 0,30% Destination Yachts of Seabourn 3 624 0,30% Luxury Total: 56 99784 51,60%Royal Caribbean International Royal Caribbean International 19 45570 23,50% Contemporary Celebrity Cruises 10 16116 8,30% Premium Total: 29 61686 31,90% Star Cruises Norwegian Cruise Line 10 17890 9,20% Contemporary Orient Lines 1 845 0,40% Destination Total: 11 18735 9,70%Other CLIA-affiliated brands Crystal Cruises 3 2960 1,50% Luxury Disney Cruises Line 2 1754 0,90% Contemporary MSC Cruise 2 3180 1,60% Contemporary Oceania Cruise 2 1368 0,70% PremiumRadisson Seven Seas Cruises 6 2764 1,40% Luxury Silversea Cruises 4 1356 0,70% Luxury Total 19 13382 6,90% Grand Total 115 193587
Target : - Contemporary (Mass Market) - Premium - Destination (Specialty) - Luxury• Since 1990, more than 130 ships were launched, increase the industry 20%.
Carnival Cruise Line The Carnival Corporation portfolio of 12 cruiselines and 75 ships covered each of the four North America market segment. Carried 60000 passengers. Seabourn, 21000 passenger/year. Ted Arison was launching Carnival in 1972. Carnival “Fun Ships” started because they want everybody had fun. It were designed to include a wide range of activities and options for guests.
Overall Cruiser CustomerAccording Cruise Lines InternationalAssociation (CLIA) : Average cruiser was 50 years old, income $99000/year. 78% already married and sailed with their spouses 54% had taken their first cruise within 5 years and took 2,6 cruises in this period
The Carnival CustomerAccording Cruise Lines InternationalAssociation (CLIA) :The age : 55 (24%), 35 & 55 (40%), 35 oryounger (36%)The Product : Families, singles, honeymooners& multigenerational families.Income cruiser : $65000Carried 55% of married passengerPromotion : TV, newspapers & direct marketing
Distributing The Carnival Product Travel Direct Agents Inbound : The vital external sales but - 1-800-Carnival and also the expensive carnival.com (Commison of 10%) - Only few customer booked online, Outbound : The agent’s commision one - Personal Vacation Planners of the largest individual line (PVPs), is a separate items on a cruise’s profit and division loss statement - Proven to be an effective sales
Delivering the CarnivalExperience Guest typical booking time: ◦ 3-5 months before ◦ Last-minute Information source for guests: ◦ Web ◦ Travel agents
Delivering the CarnivalExperience Carnival didn’t get complete guest information from travel agents Carnival get guest information from the Fun Pass Carnival’s vision is to provide quality service that exceed the expectations of the guests Average cruiser spend $30-$50 per day on board, excluding gratituities E-commerce applications includes precruise online sign-up for shore excursions and spa appointments
Sail & Sign Card Pass to board / debark the ship Sign-up for excursions As a credit card on the board
Carnival’s InformationSystems 275 employees shoreside and 45 shipboard IS managers Accumulated 2 years of individual voyage data Use data for pricing decisions and measure travel agents’ performance On-board applications: ◦ Property Management System (PMS) ◦ Point of Sale (POS) Fun Sales System (FSS)
The Potential Value of CustomerData Loyalty programs: ◦ Redeemable cruise points ◦ Recognition card Fear that loyalty spending may yield low return Consumer Response System (CRS) to track service recovery efforts for complains
Partial Organizational Chart (from exhibit 5) Bob Dickinson President and CEO Brendan Paul Vicki Freed Natko NincevicRoberta Jacoby Corrigan Myles Cyr Zacharsky Senior VP Senior VPSenior VP Corp Senior VP VP & Chief Senior VP Marketing&Sal Hotel Training Cruise Information Officer Finance es Operations Operations Dwayne Onboard Onboard Hotel Warner Captains, Directors VP Strategic Pursars Automation BrendaEdie Bornstein Maurice Terry Thornton Christine Arnholt Yester VP Business Zarmati VP Marketing VP Marketing VP RevenueDevelopment VP Sales Planning Services Management Shannon Balliet- Diana Rodriguez- Mike Hunssinger Velazquez Antorcha Manager Revenue Director Database and Manager Revenue Enhancement Internet Marketing Enhancement
Carnival Corporation and PLCCruise Brands(from exhibit 6) North America Double Occupancy Amount Europe United Kingdom Australia Germany
Typical Activities Available on aCarnival Cruise(from exhibit 7) Photo Gallery The Web Internet Travelog Cafe Formalities Funship Airbrushed Shore Excursions Tattoos Shops on Board Spa Carnival Shogun Club Gym Casino Theatre Park West Art Music and Dancing Auction Activities Schedule Carnival Golf.com
Principal Shipboard SoftwareSystems(from exhibit 8) Shipboard Property Management System (SPMS) Fun Ship Sales (FSS) Silverware Iverson Ocean Player Club Concession Systems Consumer Response System (CRS) Interactive Television Crew Personal System (CPS) Crew Pay Gratuity (CPG) Fun Time Info SHIPsql VingCard Door Lock
Financial Analysis (from exhibit 4)Summary of Balance Sheets (millions of US$) 2004 2003Current Assets 643 610Total Assets 27,635 24,491Current Liabilities 5,034 3,310Total Liabilities 11,876 10,698Total Equity 15,760 13,793Total Equity and Liabilities 27,636 24,491Summary of Income Statements (millions of US$) 2004 2003 2002 2001 2000Revenue 9,729 6,718 4,383 4,549 3,779Gross Profit 5,483 3,838 2,619 2,661 1,720EBIT 2,168 1,391 1,038 1,001 991Summary of Statement of Cash flows (millions of US$)NAT 2004 1,854 2003 1,194 2002 1,016 926 965CF from Operating activity 3,216 1,933 1,469CF from Investing activity -3,089 -2,433 -2,061CF from Financing activity -79 826 -198
Financial Analysis (from exhibit 4)Ratio Analysis 2004 2003 2002 2001 2000 CommentCurrent Ratio 0.127731 0.18429 OKTotal Asset turnover 0.351981 0.274305 GoodDebt to Total Asset ratio 0.429745 0.436814 OKDebt to Equity ratio 0.753553 0.775611 OKGross Income Margin 0.563573 0.571301 0.597536 0.584964 0.455147 OKOperation Income Margin 0.222839 0.207056 0.236824 0.220048 0.262239 OKNet Income Margin 0.190564 0.177731 0.231805 0.203561 0.255359 OKEPS 2.31 1.66 1.76 1.82 1.61 GoodDPS 0.53 0.44 0.42 0.42 0.42 GoodROE 0.11764 0.086566 GoodROA 0.067089 0.048753 Good
SWOT AnalysisStrengths• Carnival is the largest cruise line in the world• Higher market share than its competitors• It is the most popular choice among customers who think of a cruise vacation• 98% guest satisfaction rating• Carnival has acquired several companies in different market segments of the cruise industry• Has a good relationship with many travel agents• Offer many interesting facilities and entertainment programs on board• E-commerce application and Sail & Sign card to facilitate the guests
SWOT AnalysisWeaknesses• Customer loyalty was low• Relied heavily on travel agents• Aggresive direct marketing could affect relationship with travel agents• Less effort to create customer’s loyalty• Didn’t have enough consumer data
SWOT AnalysisOpportunities• The cruise industry appeals to a broad range of demographic groups• Large untapped market of people that have not cruised of 84%• Many of the potential passengers have expressed interest in taking a cruise as a vacation alternative• Strong annual growth• Offer more destinations• Expand to other countries like Asia
SWOT AnalysisThreats• There are threats from diseases like SARS and other epidemic health concerns in areas where the company does business• Hurricane and bad weather• Seasonal demand• Changes in Government regulations (in areas of ports, customs, labor, immigration, gambling, security etc)could impact the company’s financial position negatively• Tight competition
Recommendation The customer data could be used to enhance the customers experience by doing the following: Based on age and marital status of customers, special suitable activities can be offered, like excursions and spa services for couple For repeat guests, offer special discount on their favorite drinks from the previous visit Customer feedback from Customer Response System can be useful to make the necessary adjustments to the quality of service, and to retain the customer Offer a birthday or anniversary package, with special discount or special gift Create a seasonal themed cruise vacation like Haloween, Valentine, Christmas, etc Create a special embarkation line for repeat guests Send informational or promotional e-mail based on the guests’ travel pattern, preferences, and on-board purchases Add new on-board facility and entertainment to attract more guest
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