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Carnival: We’re Decreasing Our Direct Business

June 19, 2008 By: David Eisen


Amid Carnival Corp.'s second quarter earnings call on Thursday, chairman and CEO, Micky Arison, stated that the company would rely even more heavily on travel agents and cut down its direct business practices for Carnival Cruise Lines.

"Since Bob Dickinson retired, two Carnival senior sales and marketing executives, who were clearly most aggressive in growing Carnival Cruise Lines’ direct business, left the company," Arison said. "Since then Gerry [Cahill] and his team have reevaluated that program and the fact is they have significantly reduced the business from that program. The result is, and will be for the time being, less direct business. We are very pleased with that kind of mid-course correction.

"I think it’s very important to state that the travel agency distribution system has been an effective and efficient distribution system for this company for 35 years, and it got us to where we are. So we clearly believe that we need to continue to support them [travel agents] and they have shown this year they can give us the yield improvements we need to overcome at least partially the higher fuel costs. Despite the fact that I would expect to have a little less direct business next year, particularly at Carnival Cruise Lines, the effect of that would be higher yields."

Jeff Kivet, chairman and CEO of Cruise Value Center in East Brunswick, NJ, was excited over the proposed prospect. "He [Arison] is a straight shooter; he talks the talk and walks the walk," Kivet said. "If he said it, you can take it to the bank. It's a great idea."

Meanwhile, Carnival Corp. earned $390 million in net profit in the second quarter, which was exactly the same profit it made at the same time last year.

Despite rising fuel costs and a tough economic climate, Carnival remained optimistic. "Despite the current difficult economic environment, our booking trends continue to be solid," Arison said. "Consumers continue to plan leisure travel but appear more cost conscious placing greater emphasis on finding more economical options. A cruise vacation is an attractive alternative for those seeking the most value for their vacation dollar."


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