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As Long as He's CEO, Arison Says He Will Support Travel Agents

December 18, 2008 By: David Eisen


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The past half year in the cruise industry has been a doomsday scenario: a perfect storm of skyrocketing fuel prices and an economic recession, which dampened customer demand. So, how can one explain Carnival Corp.'s disclosure Thursday that it actually outdid its prior-year fourth quarter, reporting a net income of $371 million versus last year's total of $358 million? Fair enough—Q4 numbers were inflated by the $31 million sale of Cunard's Queen Elizabeth 2, but still it's good news and an accomplishment for Carnival, whose strong management and smart fiscal decision making (eliminating dividends for one) is guiding it through these unsettled times. Furthermore, Carnival Corp. Chairman and CEO Micky Arison made it clear that travel agents would still be depended upon as the major distribution system.

Carnival said that the consumers are tweaking their cruising patterns, opting for shorter cruises as opposed to longer voyages. "Consumers are trading down for value," said Howard Frank, Carnival Corp. COO, during the company's earnings call Thursday, which plays well, particularly for Carnival Cruise Lines.

It's not all rosy, of course. The feeling throughout the call was one of unknown. "This is different from 9/11 in that we saw a quick bounce back," said Arison. "We saw a little bit of an improvement after the presidential election, but there's been deterioration. This is a pretty unique set of circumstances, where there is an inability for consumers to get credit. People are being taken out of the market because of it."

What isn't any different is Carnival's commitment to the travel agent community, as its main distribution arm. They made that point clear. "The reality is we have have been cost efficient, working diligently to maintain that culture, but we have done it without drastic cuts, such as to travel agent commissions," Arison said. "We need strong distribution systems and need agents selling; the more the merrier. We will support that as long as I am CEO."

Next year, Carnival will need agents to work even harder for bookings, as 2009 is shaping up to be a challenging environment. "As expected, 2009 is shaping up to be a challenging year in the travel industry," Arison said. However, the end of Carnival's fuel supplement and the hope of thawing credit marks, hopefully will spur customer demand.

Looking ahead, finding new markets of growth will be key for Carnival. In 2009, Carnival will have an unprecedented four ships operating in Asia and Australia.

Visit www.carnivalcorp.com.







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