10 Key Takeaways From Arnold Donald’s Cruise360 Keynote

Arnold Donald, president and CEO, Carnival Corporation, talks during Cruise Lines International Association's (CLIA's) annual Cruise360 conference at Port Everglades, FL.(Photo by Susan J Young)

Speaking to an agent audience at Cruise360 on Friday, Arnold Donald, president and CEO, Carnival Corporation, served up 10 top facts that he’s learned since taking the cruise company’s helm five years ago.

He shared those tidbits with hundreds of agents – many attending Cruise360 for the first time – at the conference’s final General Session at the Broward County Convention Center.

#1 -- Affirmation of Cruising

Even years ago when cruising struggled with public misperceptions about what it really was, Donald is adamant that it always was and still is the best vacation value and a great experience.

Today, “we’ve seen nothing but growth in guest numbers, ticket prices and, most importantly, total commission prices and total commission to date,” he emphasized. So the industry's challenge is to increase demand even more -- beyond existing capacity --- and over time, "that will ultimately drive up your commissions.”

He urged the agents to persuade people who have never cruised to try it because once they do so, they’ll be back over and over again.

Competition for the cruise industry comes from land-based vacations, “not each other in the cruise industry,” Donald said, as all the world's cruise capacity is less than 2 percent of global hotel room totals.

#2 -- Every Market Is Under-Penetrated

“Our global penetration is less than 3 percent of the world’s population,” Donald stressed. “We can’t build enough ships…There are large markets everywhere in the world that are under-penetrated.”

But typically industry executives advocate reasonable capacity growth, not runaway expansion, which helps fare integrity and avoids rampant discounting. Donald's perspective?: “Thank goodness we’re constrained by the number of shipyards that can build ships so that puts the cap on how much the industry can grow in a given year."

More than 27 million people will take a cruise this year. “We’re living in the 'Golden Age of Cruising,’” he believes. “These are great times in the cruise industry and, for you, that means a strong pipeline of potential clients as more and more people – grandparents, parents, singles, newlyweds, young families, Millennials and others -- discover cruising.”

Cruise industry ships now sail to all seven continents, and they're home ported worldwide. Guests are from almost every nation, and 300-plus ocean cruise vessels, both big and small, sail to more than 800 ports around the globe. 

Sixteen new ocean ships are scheduled for delivery this year. “New ships are a great conversation starter with your current clients to encourage them to get back to the ocean faster, and with prospective clients, to build a bigger business,” Donald emphasized.  

#3 -- Cruising Is About More Than Just Travel

When the guest is put on the right ship serving their vacation needs, the experience is life-changing and magical, and goes beyond anything land-based vacations can offer, Donald believes. 

“Where else but on a cruise ship can you wake up in the morning -- in your own bed -- to find the outside world has completely changed?" he asked. "The modern cruise ship is your hotel. It’s your four-star dining room. It’s your transportation. It’s your nightly entertainment. And every day onboard, you have front row seats to this amazing world that we live in.”

Guests also can have an almost hypnotic connection to the sea, and they can also become part of a newly formed guest community -- one that "shares a common aspiration for creating lasting memories.” So he encouraged the agents to book multi-generational family groups as "a great way to increase your sales and your earnings.” 

#4  -- Travel Professionals' Critical Role

Travel professionals play a critical role, as "the most important thing we can do is getting the right guest on the right ship for the specific location that guest [desires] to see," stressed Donald. "Every cruise line, even every ship, has a personality.”

He believes the goal for both the industry and agents should be to have all guests returning and raving about the cruise -- delivering both cruisers for life plus positive word-of-mouth advertising. 

“’Returning and raving joyfully’ is a new meaning for R&R," Donald told the audience, and “that’s where you come in," acknowledging that for consumers, particularly new cruisers, it's not that easy to book a cruise as there are so many decisions to be made.  

“You add value by what sits on your shoulders and what you hold in your heart,” he told the agents. “It’s the commitment you have to be the best at what you do and what you’ve chosen to do with your life.” He urged them to stay educated about the brands, destinations and trends.

He also asked agents to explain to potential guests that the Caribbean [after the 2017 hurricane season] is alive, well and open for business.

#5 -- Sustainability Is Key to a Bright Future

“To have a bright future, sustainability is key,” Donald stressed. “It’s in our best interests to have the highest standards for safety, environmental standing and everything that happens on our ships, but also in the waters that we sail.”

Issues or problems ultimately affect everyone, so he said the industry communicates, coordinates and collaborates across all brands. 

In another vein, “we have a saying, [which is], ‘happy crew, happy guests,’” said Donald. He believes it's important to extend that concept to the local destinations: "There’s another saying, ‘happy locals, happy guests.’”

Acknowledging that 27 million people sailing every year on hundreds of ships across the globe do have an impact on local communities and destinations, Donald said, "We do understand that our future is based on ensuring our freedom to operate and we aim to be the model for sustainable tourism partnerships throughout the world."

For example, the industry is working with partners in manufacturing and shipbuilding to constantly improve technology and systems. The goal is to lessen the industry's environmental impact and "in fact, to have a positive impact," he said.  

Besides working with supply chain partners to source responsibly, Carnival Corporation also has a business partner code of conduct and ethics. It covers everything from human rights to anti-corruption, safe working conditions and environmental standards.

With tour operator partners, Donald said the goal is to ensure high safety standards for guests and crew, as well as to preserve the environment and promote animal welfare practices: "We promote an appreciation of marine conservation and bio-diversity by connecting our guests and crew to the marine environment while they’re at sea, but also on the local beaches while diving or snorkeling."

Carnival Corporation has partnered with the Nature Conservancy since 2014, sponsoring their Mapping Ocean Wealth Initiative. But “sustainability is not just linked to the natural environment,” according to Donald. “It also includes labor practices, social issues and economics -- ensuring the communities we visit and the places we go benefit in a positive way."

Agents listened intently as Donald explained that the cruise industry helps create small and large businesses worldwide. “Cruising brings jobs and it brings hope in a lot of isolated places where employment opportunities are scarce," he noted, citing a construction worker building a local road, an artist in a craft market, a chef opening a small restaurant, and a taxi driver transporting guests. 

“Cruise tourism contributes to sustainable development of ports, the local community and the people who live in those communities,” he told the audience. Plus, the lines offer safe, stable employment to crew members working on ships, who support both themselves and families back home; they often have limited earnings opportunities due to economic or social situations in their home countries.

“There are a lot of misperceptions in the general public around the perceived negative impacts of cruising, so please, please be sure you have all the facts," Donald urged the travel agents, noting that both CLIA and individual lines have information to help agents advocate on these points.

#6 -- Inclusion & Diversity

“Inclusion and diversity need to be fundamental behaviors for all of us,” Donald said, stating that for communities to thrive, the businesses in that community must thrive. He explained that when a major company goes out of business, it can impact everything from that community's schools to parks and recreation, for example.   

“In order for businesses to thrive sustainably over time, they need to innovate," he said. "At its core, innovation is diversity of thinking." 

Bottom line for Donald?: "A diverse group aligned on a common goal with a work process that fosters true inclusion, equal respect, equal voice and an equal opportunity for each team member will outperform a homogeneous group every time."  

Carnival Corporation's brand portfolio reflects diversity with three brand leaders who are women and, at Holland America Line, Orlando Ashford as the first African-American president of a Carnival Corporation brand. “And for the leaders of the other six brands, we have two Brits, a German, an Italian, an Australian and, of course, there’s me,” he said.

“I’ve spent my life trying to be a loud voice for diversity – true diversity of thinking – but diversity only works when all voices are heard equally," he believes. 

“Diversity is also a good thing as you build your client base,” he said, bringing robust applause from the audience. He urged agents to look for a demographic in their client base or a psychographic segment that's been overlooked, such as alumni groups or Millennials, to name a few.

#7 -- Innovation & the Human Spirit

Innovation is not about technology, but rather about how technology enables greater personal interaction and unleashes the human spirit. Case in point? 

Donald recently learned in listening to a UPS executive that the delivery company is evaluating such innovative technology as drone deliveries and robots, but also that a recent survey of UPS' customers revealed that what they most liked about the company was their own personal UPS driver.

The lesson? "It’s all about the human spirit, it’s all about people, it’s not about technology," said Donald. "Technology needs to enhance our human connections, not detract from them. That without a doubt is the essence of cruising – human spirit – and we need to create human connections in unique ways, maybe even unexpected ways…that will enhance the guest experience."

“When I get letters from happy guests, it’s almost always about the human connections that made their cruise special,” Donald said. Yes, he said, he also hears in a different kind of letter if the guest’s bags didn’t show up in the stateroom on time or the Wi-FI wasn’t working.

But he calls those things "a given," and says they're processes that must work well onboard. In contrast, Donald describes innovation as a situation when the guests -- without even realizing it -- become part of the community onboard: "They feel connected in ways that make them not want to leave and when they’re gone they just can’t wait to come back." 

That's why Carnival Corporation has developed its Ocean Medallion platform, now being trialed on Princess Cruises; it offers higher touch aspects and greater personalization. Other Carnival brands also are tapping into technology "to enhance the human connection.”

Long-term benefits for lines and agents include the acquisition of the kind of information needed to “bring the guest back...sooner and willing to pay more...being happy to pay more," said Donald.

#8 -- Fulfilling People’s Dreams

Last year when Oprah Winfrey went on Holland America Line to Alaska, she talked about how everyone wanted to go on her "Favorite Things" show, when she’d give the audience all of her favorite things.

“I don’t know if you remember, but one year she actually gave everybody a car,” Donald said, “so at this point, if you look under your seat...”

The audience clapped and laughed as Donald added, “Okay I was just kidding.”

Getting back to Oprah, though, he noted that after the Favorite Things show, many people didn’t even remember all the stuff they got, but they did remember the experience of being there at the show. 

“So we all know, it’s about the experience, it’s not about stuff,” Donald said. For example, after an Alaska cruise, guests will remember the cool breeze on their face when they cruised close to a glacier, the look on their child’s face when a whale swam near the ship or the sweet taste of fresh crab at the all-you-can-eat crab dinner in Ketchikan.

#9 -- We Can’t Just Be a Cruise Company

During his time at Carnival Corp., Donald has learned it's more than just heading up a cruise company. It's about his higher responsibility to 120,000-plus employees, more than 12 million guests and millions of people everywhere in the world that the company's operation touches.

"In these days of political uncertainly I believe travel is the anecdote to ignorance,” he said, eliciting raucous clapping and “yeahs” from the crowd. “The more people discover what they share in common and they learn to appreciate, they learn to respect, and they even learn to celebrate their differences instead of fearing them."

Donald continued: “In these days of broken trade agreements, restricting borders and increasing lack of diplomacy, it’s the simple traveler who becomes the ambassador.”

He noted that the industry's ships take millions of those ambassadors everywhere -- from Mexico to  Russia, the Middle East to China, Africa to the United States and beyond. 

“We want our ships to be great corporate citizens that are always welcome in the more than 700 ports that we at Carnival call on – bringing hope, bringing prosperity and bringing goodwill wherever we sail,” he said.

“And when our guests – loving, connected families and friends – travel together, they show the rest of the world that we all share common values and common dreams,” Donald emphasized. “And we become real human and breathing human beings, not flat images on the nightly news or disconnected words on social media.

“I used to think we performed a service by helping our guests see the world, but I believe strongly that it’s just as important that the world gets to know our guests," said Donald, who also told the agents: "Never forget the role you play in delivering travel and these higher benefits to the world.”

#10 – We’re in the Business of Fun

Donald's top 10 points learned on the job ended on a playful note. “I learned that we’re in the business of ‘fun,’" he stressed. "That’s what we do, and we need to keep fun at the core of what we do.”

For some cruisers, fun is active – riding a water slide, hiking a glacier, zip lining through the jungle. For others, fun is having champagne and caviar, listening to jazz with fellow jazz lovers and new friends met onboard, or simply listening to the grandkids describe their day’s activities during a family dinner in the main dining room.  

That verbage soon transitioned into a dance party on stage and throughout the General Session hall, as dancers, executives including Donald and Cindy D’Aoust, CLIA’s president and CEO (who recently became an ACC) and agents in the audience rocked, gyrated and swayed to energetic music.

In his closing remarks, Donald thanked the trade audience “for what you do each and every day to support this great industry" and said "hopefully the industry is helping to support you." In closing, he urged agents to also keep the work in perspective, but also to have fun.

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