Carnival confirms fleet review and loss of bookings
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Carnival Corporation has confirmed that it in the process of conducting a fleet wide review of Carnival Cruise Line after a number of widely reported technical difficulties led to a decrease in bookings.
The company – which has just published its 2013 first quarter results – reported first quarter profits of US$65 million, a figure which represents a year-on-year increase on 2011’s US$13 million. However, before the results were released it was widely reported that the company’s share price fell 2% last week.
The corporation has admitted that it was hit by the negative press surrounding the technical issues on the Carnival Triumph, which, as was widely reported, lost power at sea. The outage resulted in sanitation problems for guests who were stranded for five days onboard.
Following the incident the company has also had other issues – although far less serious – onboard the Carnival Dream, Elation and Legend, which have also received what the company perceive to be an undue amount of coverage.
In a statement Carnival confirmed the fleet review:
“We are committed to learning from any incident that may occur on one of our vessels to apply lessons learned and prevent future occurrences. We are presently conducting a comprehensive fleet-wide review that encompasses multiple operational areas, systems and training. We have assembled an expert team from across the company, as well as a variety of outside experts to complete the assessment. We expect to make an announcement early next week on the initial steps of our implementation programme based on the results of our review. In the meantime, we are confident that we will continue to provide our guests with a safe, fun and memorable vacation experience and look forward to welcoming them on board.”
Senior members of Carnival’s executive team also hosted a webcast to address any queries that the “investment community” had for the company in “light of recent ship incident events,” according to Howard Frank, Carnival Corporation’s vice chairman and COO.
One question, from anaylist Jaime Katz of Morningstar, asked whether the brand would be changing its marketing methods to comfort consumers and if the company could offer more detail on bookings post-Triumph.
Frank commented that: “I think that from a standpoint of marketing they are making some modifications to their messaging. But I think the issue of safety onboard is less a marketing issue and more of a communications and public relations issue.
“We have advisors who are working with us on putting out the positive messages about the actions we’re going to be taking to strengthen these areas of the ships and enhance safety.
Micky Arison the company’s CEO and chairman added: “Millions of people coming off the ships happy is our best marketing source. Two thirds of those people are repeat passengers and they know how safe and comfortable the product is and we expect them to continue to book. The last few weeks have been a great example of how strong the Carnival Cruise Lines brand is.
He also confirmed that the line experienced a decline in bookings during the week immediately following the Triumph incident.
“We clearly felt an impact at Carnival Cruise Lines [in the wake of Triumph].” However he declined to go into further detail.
“Let me put it this way: it wasn’t anything like we’ve had in the past with September 11 or other issues. It was nothing like that. It didn’t go negative and we didn’t have lots of cancellations. We had a double-digit decline in bookings. It wasn’t huge and it didn’t last very long.
Frank added: “The remarkable thing is the resiliency of this brand. Even with all of this negative media coverage we still booked a lot of business. And we continue to book a lot of business. People understand the value of a Carnival vacation.
“It wasn’t a dramatic decrease. It was very marginal – as it was across our other brands,” he continued. “And, my guess is, that it was felt similarly across the cruise industry too.”
You can listen to Carnival Corporation’s ‘Q1 2013 Earnings Conference Call’ here.