Carnival offers a boatload of fun. The company is the world's #1 cruise operator, boasting 10 leading cruise lines and about 100 ships with a total passenger capacity of more than 215,000. Carnival operates in North America primarily through its Princess Cruise Line, Holland America, and Seabourn luxury cruise brand, as well as its flagship Carnival Cruise Lines unit. Brands such as AIDA, P&O Cruises, Iberocruceros, and Costa Cruises offer services to passengers in Europe, and the Cunard Line runs luxury trans-Atlantic liners. Carnival operates as a dual-listed company with UK-based Carnival plc, forming a single enterprise under a unified executive team.
Carnival's largest market is North America, which represents more than 50% of sales. Other major markets include Europe (33%) and Australia and Asia (combined, 14%).
Carnival maintains its top position in the industry by leveraging its cruise lines to penetrate a number of different markets. Carnival Cruises, a leading brand in the US, and Princess both target families, retirees, and other upper middle class customers with competitively priced cruise packages. Its popular destinations include the Caribbean, the Mexican Riviera, and Alaska. P&O Cruises chases after a similar target customer in the UK with trips to the Mediterranean and Scandinavia. (P&O also operates out of Australia and New Zealand.)
Holland America is known for its scenic getaways in New England, Canada, and along the Pacific coast. The company offers trips within the Asian market through its Costa Cruises. The line serves cruise-goers with Chinese-style food, mah-jongg tables in its casino, and luxury brands in its retail shops.
While Carnival has been known as the Fun Ship, the cruiser also attracts those looking for a fine ship. Carnival's Seabourn brand operates luxury cruises to upscale travelers and caters to them with fine food, personalized service, and exotic destinations worldwide. Similarly, its Swan Hellenic premium brand sails throughout Europe and Asia. Of course, luxury is the name of the game for Cunard, which provides a variety of cruises in addition to its liner services.
Sales and Marketing
The company sells its cruises mainly through travel agents and tour operators that serve its guests in their local regions. The cruise brands also offer past guest recognition programs that reward repeat guests with special incentives such as reduced fares, gifts, onboard activity discounts, complimentary laundry and internet services, expedited ship embarkation, and disembarkation and special onboard activities.
All its cruise brands have their own consumer websites that provide access to information about their products and services to users and enable their guests to quickly and easily book cruises and other products and services online. The company also employs vacation planners who support its sales initiatives by offering our guests one-on-one cruise planning expertise and other services.
After posting record revenues of $15.9 billion in 2014, Carnival saw its revenues decline by 1% to $15.7 billion in 2015. The marginal decrease was fueled by decreased sales from its EAA cruise brands as a result of unfavorable foreign currency translations.
Carnival's net income surged 42% from $1.2 billion in 2014 to $1.8 billion in 2015 mainly due to a decrease in fuel costs. In addition, its operating cash flow in 2015 spiked by 33% compared to 2014, primarily due to favorable changes in accrued and other liabilities and the beneficial timing of customer deposits.
Fueled by optimism for the future, the company in 2016 had a total of 17 cruise ships scheduled to be delivered between 2016 and 2020. Some of these ships will replace existing capacity as less efficient ships exit its fleet. Since 2006, it has removed 17 ships from its fleet and will remove one more ship in 2016.
To fill its expanding inventory of passenger berths, Carnival continues to spend heavily on marketing its cruises, especially to consumers who have never taken to the high seas. While it relies on the traditional mediums, such as television and magazines, Carnival has been shifting its efforts from print media to online and social media, utilizing Facebook, YouTube, Twitter, Flickr, and Podcasts. Its goal is to engage in two-way conversations with consumers and create brand fans. Also, the company has expanded its number of home ports to put cruising possibilities closer to customers.
The cruise firm's strategy is to grow in China due to its large and growing middle-class population and expansion of its international tourism. In 2015 Carnival formed a strategic joint venture by partnering with state-owned China State Shipbuilding Company and China Investment Corporation to launch a new cruise brand in the Chinese vacation region.