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Business Wars

Cruise Ship Wars | Making Waves

Wed Jul 10 2024
Cruise industryCompetitionCarnival Cruise LineNorwegian Cruise LineRoyal Caribbean

Description

The episode explores the competition between cruise companies like Norwegian Cruise Line, Royal Caribbean, and Carnival Cruise Line in the 1970s. It covers the challenges faced by Ted Arison, the founder of Carnival Cruise Line, and his efforts to make Carnival successful. The episode also highlights the strategic changes and leadership at Royal Caribbean and the growth of the cruise industry.

Insights

Cruise industry competition

The podcast 'Business Wars' delves into the competition between cruise companies like Norwegian Cruise Line, Royal Caribbean, and Carnival Cruise Line in the 1970s.

Rebranding as 'the fun ship'

Bob Dickinson suggests rebranding Carnival as 'the fun ship' to differentiate from competitors and attract more passengers.

The Love Boat's impact

The Love Boat TV show premieres in 1976, boosting the popularity of cruises and contributing to a significant increase in cruise passengers.

Strategic changes at Royal Caribbean

Under Richard Fain's leadership, Royal Caribbean makes strategic changes in the 1980s, positioning itself ahead of Carnival.

Crisis and growth at Carnival

Mickey Arison faces a crisis when crew members go on strike, but his response showcases his strength as a leader and leads to further growth for Carnival.

Going public and competition

The decision to take Carnival public puts it in competition with Norwegian Cruise Line for investor money.

Chapters

  1. Competition in the Cruise Industry
  2. Building the Fun Ship
  3. Competition Intensifies
  4. Strategic Changes and Leadership
  5. Crisis and Growth
  6. Going Public and Competition
Summary
Transcript

Competition in the Cruise Industry

00:00 - 08:29

  • Ted Arison, founder of Carnival Cruise Line, faced challenges during the maiden voyage of his ship, the Mardi Gras, including running aground due to a miscommunication between the captain and harbor pilot.
  • Arison's rival, Knut Kloster, sued him for money owed from their previous venture with Norwegian Cruise Line, putting pressure on Arison to make Carnival successful.
  • Carnival Cruise Line's first ship, the Mardi Gras, was old and in poor condition compared to competitors' ships.
  • The podcast 'Business Wars' explores the competition between cruise companies like Norwegian Cruise Line and Royal Caribbean in the 1970s.

Building the Fun Ship

08:01 - 24:08

  • Ted Arison faces financial challenges in purchasing diesel for his ship, Mardi Gras, but manages to scrounge up enough cash with the help of his son and crew.
  • To compete with successful cruise lines like Norwegian Cruise Line and Royal Caribbean, Arison prices Carnival Cruises lower and focuses on cost-cutting measures.
  • Meshulam Rickless intervenes by appointing Bob Dickinson as second-in-command at Carnival to improve marketing strategies.
  • Bob Dickinson suggests rebranding Carnival as 'the fun ship' to differentiate from competitors and attract more passengers.
  • Arison and Dickinson aim to make their cruise ship the 'Fun Ship' by adding more attractions like a full casino.
  • Arison negotiates with Rickless to buy Carnival for a dollar, taking on its debt load, in order to have full control of the company.
  • Carnival turns its first profit in January 1975, leading to profitability for several cruise companies by the mid-1970s.
  • The Love Boat TV show premieres in 1976, boosting the popularity of cruises and serving as product placement for the industry.
  • The Love Boat contributes to a significant increase in cruise passengers from around 500,000 at the start of the 1970s to around 5 million by the end of the 90s.

Competition Intensifies

23:41 - 32:24

  • In 1978, Carnival CEO Ted Arison announces the construction of a new $100 million cruise ship called the Tropicale, despite Carnival not being worth that amount.
  • Knut Kloster of Norwegian Cruise Line considers buying the SS France to have the largest cruise ship in the world and compete with Arison's Carnival.
  • Norwegian Cruise Line buys and refurbishes the SS France into the Norway, which becomes an immediate sensation upon launch in 1980.
  • Royal Caribbean opts to extend the length of its current ships instead of buying new ones, but this strategy does not excite passengers or save much money.
  • Royal Caribbean faces challenges due to internal disagreements among its partners and their requirement for unanimity on board decisions.

Strategic Changes and Leadership

31:58 - 39:58

  • Royal Caribbean faces internal discord among partners Skagen and Wilhelmsen, leading to financial struggles.
  • Jack Seabrook appoints Richard Fain to lead changes at Royal Caribbean, including requiring a reserve fund and changing decision-making processes.
  • Royal Caribbean makes strategic changes in the 1980s under Fain's leadership, positioning itself ahead of Carnival.
  • Carnival faces a crisis in 1981 as crew members go on strike, disrupting passengers' plans for a honeymoon cruise.

Crisis and Growth

39:29 - 48:04

  • Mickey Arison faces a crisis when crew members on Carnival ships go on strike demanding better working conditions and reinstatement of fired employees.
  • The strike leads to negotiations, but it turns out to be a trap set by Mickey Arison with private security forcing the striking workers off the ships and deporting them.
  • Mickey's response to the strike showcases his strength as a leader, leading Carnival to order more massive ships and launch national TV commercials for cruising.
  • To fund their growth, Carnival realizes they need capital and consider strategic moves in 1986.

Going Public and Competition

47:37 - 52:15

  • In 1986, a high-ranking executive suggests taking Carnival public to Ted and Mickey Arison in Miami.
  • Ted is open to the idea, but Mickey is hesitant due to potential changes in business operations.
  • The decision to go public puts Carnival in competition with Norwegian Cruise Line for investor money.
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