At ASTA, Carnival Corp. CEO Talks Commissions, Cuba and Hurricane Harvey

By Ruthanne Terrero Aug 29, 2017 11:28am

Arnold Donald, the CEO of Carnival Corporation, was on hand at the ASTA Global Convention in San Diego on Monday where he provided candid answers during an on-stage interview conducted by journalist Peter Greenberg, who also serves as the travel news reporter for CBS.

The two immediately tackled the topic of Hurricane Harvey, which was pummeling the Houston area at the time. Donald, who grew up in New Orleans, spoke with empathy of the destruction that was taking place, noted that as a child, he and his family had spent 30 days in a shelter following a storm that hit his home town.

Donald told the ASTA audience that Carnival on Monday morning was relocating ships around the Gulf Coast, from Galveston to New Orleans.

“Our priority, number one, is to keep everybody safe,” said Arnold. “And then number two, to exceed their expectations to have a great time. So there are a whole lot of people on our ships right now, who're having a really good time. They're really enjoying themselves, and that's what our job is.” Those who were relocated to New Orleans were given the chance to disembark and enjoy some of the city’s major attractions, such as the World War II Museum, he said.

Running a Large Portfolio of Brands

When Greenberg asked Donald which lessons he was able to apply from listening to the travel agent community since he’d taken on his CEO role at Carnival Corporation in 2013, Donald promptly replied that it was getting all of the brands to communicate their shared learning with each other. Carnival Corporation’s portfolio includes Carnival Cruise Line, Fathom, Holland America Line, Princess Cruises and Seabourn in North America; P&O Cruises and Cunard in Southampton, England; AIDA Cruises in Rostock, Germany; Costa Cruises in Genoa, Italy; and P&O Cruises in Sydney, Australia.

“Each brand is responsible for their own brand,” Arnold said. “…But the learning's happened really fast, and it happens every day. We’ve done everything from changing menus and beverage offerings to how we package excursions and how we communicate about excursions.” He added that when Carnival Corporation wants to try something new, it will experiment on one or two ships to get live feedback from guests.

Innovation is Key

Arnold is all about exceeding guest expectations, and the key to doing that is being innovative, he said.

“Any business that doesn't innovate over with time gets passed by. So we searched the world for who's the best in the world in innovating, and exceeding guest expectations.”

That search ended in finding John Padgett, who had developed the FastPass wristband at Disney. Arnold promptly hired him in the new role of “Chief Experience and Innovation Officer,” created an innovation center at the company for him and “turned him loose.”

Wearable Medallion on Ships

What has resulted from Padgett’s appointment is the Ocean Medallion, announced earlier this year by Donald during a keynote speech at CES, the Consumer Electronics Show.

The medallion is being rolled out on Princess Cruises first; it’s a small disk that the guest receives before sailing that they can wear during their voyage. It stores information provided by the guest and also “learns” more about that person as they cruise, all of which which means the crew can provide more customized services along the way.

“An example will be, you're in our bar. You walk into the bar, they know your name, they know the last drink you had. They say ‘would you like another Tom Collins or whatever the last drink was that you had,’” Arnold told Greenberg, adding that if that guest leaves the bar to go outside to, say, see a whale in the ocean, the crew member will be able to find that guest and deliver the drink to them.

Arnold emphasized that the guest does not need to use the medallion; it’s all meant to be about choice, and that’s what innovation is all about.

“If you give people what they want, how they want it and when they want it, you will be successful. And that's what we do,” said Arnold.

On the Topic of Cuba

Greenberg asked Donald if he felt the ability for travelers to visit Cuba would be impacted in the wake of recent comments made by Donald Trump.

“I'd say right now, there’s no impact,” said Donald. “We'll have to see what happens with the Executive Order he put out and what the specific execution becomes. Obviously we'd try to weigh in on that, but we'll have to wait and see. Right now, we still can go and our plans are to continue to go. And eventually, whenever the Cuban government is ready, they will open up the other ports and develop them, and Cuba will become a great Caribbean destination.”

Arnold anticipates that as other cruise lines add Cuba to their plans, they will create fresh itineraries for travelers who have already sailed to the Caribbean, giving them a reason to go back.

Ship Size

Greenberg asked Arnold at what point cruise ships will get “too large,” and in some cases, will only be able to dock in a limited number of ports with berths large enough to accommodate them.

“To me, personally, the ships get too big when you lose touch with the sea,” was his reply. “I like ships where you still feel like you're cruising. But having said that, everything changes. If the berths that are too small, they get bigger and they accommodate the ships.”

He believes that there will continue to be very large ships on the market, and very small ones, to accommodate the wide range of consumer preferences.

“Everybody likes what they like, and people like different things at different times,” said Arnold.

Booking Direct

The subject of consumers booking online was also a topic of discussion. Arnold said that cruises are experiential and therefore it’s difficult to simply go online and book something that’s suitable for your personal tastes.

“I think the most powerful way for someone to get the most out of their cruise today, and it's going to be that way for the foreseeable future, is to talk to a professional who really knows and understands [the market]. The reason we believe this is very straightforward. If we exceed our guests' expectations, it's not just about them coming back. They’ll tell everybody they know about how great the cruise was. If they don't [enjoy it], when somebody asks them how their cruise was and they only say, 'It was okay,' that doesn’t make anyone who has cruised want to cruise.”

Arnold said that not everyone is a good fit for every cruise line. “Every brand is different and you guys know that,” he said to the audience of agents at ASTA. “It’s important for us to have customers speak to a professional.”

Helping Agents Build a Business

On the topic of travel agent commissions, Arnold said that they vary from brand to brand within the Carnival portfolio. “The most important thing is we know you’ve got to make a living and so our intention is to create a partnership where you grow and you build your business as we grow,” he told the audience of travel agents.

“We also know that we need you and that we need you to be fully engaged. Our job is to share enough information to make you the most powerful promoter of cruising there can possibly be, and to do that you've got to make a nickel.”

For that reason, Arnold said it’s not so much about commissions, it’s more about providing travel agents with a product to sell that will keep customers coming back to them again and again.

“It's really about you building a business and having repeat customers. You can make a commission from somebody once, but if they don't have a great experience, you're done,” he told the audience.

“And so what's way more important is building that lifelong customer. When you do that, then you build a business that's sustainable, and that’s going to reward you over time."