Case Study Of Carnival Corporation

Word Count: 1542

The history of the Carnival Corporation begins in 1972, when Ted Arison set up Carnival Cruise Lines as a subsidiary of the American International Travel Service. The first ship ran aground, but Arison remained steadfast in achieving his vision of a cruise line offering affordable vacation packages to middle-income consumers. By 1977, Carnival had three ships, and ten years later, as the industry leader, the company went public. In the early 1990s, Carnival began to diversify into land-based entertainment, thus changing its name to Carnival Corp. The company is the world's #1 cruise operator with about a third of the market.

Carnival Corporation is comprised of Carnival Cruise Lines; the world's largest cruise line based on passengers carried, Holland America Line, Windstar Cruises and Seabourn Cruise Line. It owns 25 cruise ships serving customers worldwide and has 6 new ships under construction (EXHIBT 1). It basically has three market segments: Contemporary, Premium and Luxury.

Carnival also operates 14 hotels in Alaska and Canada and runs Holland America Westours, which markets sightseeing tours. Carnival has a 29.5% stake in Airtours, one of the UK's largest tour operators, and is bidding for control of cruise line NCL. CEO Micky Arison and family control Carnival.

Carnival was able to increase profits through the acquisition of Holland America Line in 1988 and consequently Carnival expanded its cruise lines to a broader market, however Carnival experienced a loss of $135 million from disposal of the Crystal Palace Resort & Casino in 1991.

The company’s current strategy is to attract more repeat cruisers and new cruisers of different segments by offering different types of packages. Such differences include choice of shorter or longer cruises, a low to moderate price for affordable cruises for middle class, and longer luxury cruises for affluent classes. As part of the company’s plan, Carnival is "going global" through a joint venture with Hyundai Merchant Marine to the Asia market.

Strengths
Carnival’s strategy focused on the "Fun Ship" concept, beginning with the Mardi Gras, which targeted people of all ages. In recent years the driving force behind why a person needs to take a vacation has changed. Today vacationers look to get away from everyday stress, and opt for a stress-relieving cruise.

Carnival is considered the cruise industry’s leader, and in the past few years, Carnival has increased its market share through acquisition and joint venture. In 1988, Carnival acquired Holland America Line to expand its market share in Alaska, Mediterranean, and South Pacific. Holland America Lines (HAL) is an upscale line. It targets the older, more sophisticated cruisers with fewer youth-oriented activities and emphasizes on the beauty of the Alaskan wilderness. Furthermore, the Holland America Westours operates various tours targeting different markets. Similarly, Westmark operates a hotel business, which enables Carnival to participate in another profitable industry. Seabourn, known as the "Rolls Royce" of the industry, targets the luxury market. In terms of targeting international cruisers, Carnival has purchased 29.5% equity interest in Airtours to enter into the European and Canadian markets. Also, Carnival entered into the Asian market through a 50-50 joint venture with Hyundai Merchant Marine, one of the world’s leading marine shipping companies with knowledge of Asian Market, in order to expand its market worldwide.

Carnival and its cruise companies together operate 25 ships in the Caribbean, Alaska, and other worldwide destinations. Combined, Carnival Cruise Lines and Holland America have six new ships slated for delivery over the next three years.

Weaknesses
In the late 1980s, Carnival built the Crystal Palace Resort and Casino situated in Bahamas. During the 1990 fiscal year, the company incurred a $25.5 million loss for the operation of

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