Smiling children wave. A happy couple dances by the pool. Family members play miniature golf with a view of the ocean, and a man asks a woman to be his wife. There are sunsets, kisses and giant ships serving as backgrounds for vacation snapshots.
“We never forget the moments that matter,” a woman’s voice says. “We hang them on our walls. We share them with everyone we know and hold on to them forever.”
Carnival Cruise Lines is hoping those moments, provided by past guests, matter more than the images that dominated cable news after fire turned a four-night Western Caribbean trip into the infamous “Poop Cruise” aboard the Carnival Triumph in February.
The $25 million advertising campaign was announced just a week after a new guarantee that promises passengers 110 percent of their money back plus transportation home if they are unhappy with the first day of their cruise. Those two initiatives followed Carnival’s launch this summer of a new travel agent outreach program and, in the spring, the announcement of a $300 million investment in fire safety and reliability upgrades.
“They’re all bits and pieces of the puzzle to get the message out to consumers we take the events that occurred very seriously; we’re taking the steps needed to fix those issues,” said Gerry Cahill, president and CEO of Carnival Cruise Lines.
Taken together, the steps signal that Carnival is very much in rebuilding mode. And while executives say polls show that attitudes are improving toward the Fun Ship brand faster than anticipated, all indications are the recovery will continue for some time.
Parent company Carnival Corp., with headquarters in Doral, Fla., saw its stock price plummet last week after revealing that the financial outlook is still gloomy. The world’s largest cruise ship company owns nine brands in addition to Carnival Cruise Lines, including Princess Cruises, Holland America Line, Costa Cruises, Cunard and Seabourn.
In a quarterly earnings release, the company said profits dropped 30 percent compared to a year earlier. And due largely to weak demand and pricing from the namesake brand, yields — revenue per berth per day — aren’t expected to show positive growth until the second half of 2014.
When demand drops, cruise lines typically cut prices to spur demand, ensuring that ships sail with every cabin full. But in a call with analysts last week, Carnival Corp. executives said the company has recently adopted a strategy on some itineraries to avoid slashing fares, even if occupancy drops.
“It’s not great when you have falling prices sometimes because you end up in situations where people just wait and wait and wait to book,” Cahill said in an interview. He said so far, the decision seems to have led to some pricing stability. “It gives people more confidence to go ahead and book. It’s not something you’re going to do on a grand scale.”
In addition to a sinking stock price, the financial news last week generated a fresh wave of negative headlines and warnings from analysts.
“We cannot ignore that trends at the Carnival brand are the weakest in the industry and that will take time to fix,” Harry Curtis, senior leisure analyst at Nomura Equity Research, wrote in a note to investors.
Arnold Donald, who replaced Micky Arison as Carnival Corp. president and CEO in July after Arison stepped down from the role, said he sees the brand as being in the middle of an evolution.
“I think there’s a lot of positive things about Carnival, the brand. It’s still doing great despite the negative noise that happened for a short period of time,” Donald said. “To me, it’s a learning. When those perceptions are very positive, we’ll still need those learnings because we have to continuously improve.”
In April, the company said it would invest $300 million to add more fire safety systems, increase emergency backup power capabilities and reroute cabling, if needed, to improve operating redundancies.
Mark Jackson, the cruise line’s vice president of technical operations, said the company is tripling the number of smoke and flame detectors in engine rooms, adding more water mist flooding systems and putting an emergency backup generator on each ship to make sure that passengers would stay comfortable if a ship loses power.
“No. 1, we never want to lose power,” Donald said. “No. 2, if we lose power, we never want our guests to be uncomfortable.”
Some systems are being installed while ships are in dry dock for routine maintenance, so all of the enhancements won’t be completed for another couple of years. But all 24 ships in the fleet will have at least a temporary emergency backup generator installed by the end of this year.
Jackson, who was hired in December but started the job in March, said that while no one was hurt in the Triumph fire, Carnival knows passengers were “extremely inconvenienced.”
“The company is making a huge investment to make sure that it never happens again,” he said. “And we’re putting redundancy upon redundancy upon redundancy to make sure that never happens.”