Carnival Cruises is one of the largest cruise lines in the world by just about any metric.
With a significant 30% chunk of the global cruise market each year, Carnival Cruises welcomes over 12 million passengers on board its 100 ships and 100,000 employees.
The company, founded by Ted Arison in 1972, has its headquarters in Miami, Florida, and is listed on the New York Stock Exchange (NYSE: CCL).
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What Do Carnival Cruises Do?
Carnival Cruises operates a fleet of ships offering customers a range of cruise experiences.
The core business functions include providing guests various food, entertainment, and accommodation options. The company offers itineraries to various destinations, including the Caribbean, Europe, Alaska, and others.
This cruise line has been a market leader for over a decade because it offers professional customer service to its visitors.
Carnival Cruises (CCL) has a unique corporate culture where the passenger is king. Customers routinely praise the variety of experiences and destinations offered by Carnival Cruises and the onboard food and entertainment.
In 2017, Carnival Cruises announced plans to expand into the Chinese market and launch a new brand specifically for Chinese customers. This expansion represents a significant opportunity for the company to grow its business in the world’s largest travel market.
How Do Carnival Cruises Work?
Carnival Cruises operates a reservation system whereby customers can book cruises online or through travel agents. Onboard, guests can participate in activities like dining, entertainment, relaxing, and merely enjoying the sea air. What would a cruise be without exploring the various destinations on the itinerary? To that end, optional shore excursions are offered.
The company has a loyalty program whereby guests can earn rewards for repeat travel.
In addition, Carnival Cruises also offers travel insurance, airfare, and other travel-related services to its customers.
How Carnival Cruises Makes Money
Carnival Cruises make money from ticket sales, onboard spending and excursions, their loyalty program, and the sale of additional travel-related services such as insurance.
Carnival Cruises generates revenue from ticket sales for its cruises. In line with the company’s strategy of increasing sales, it has engaged the services of tour operators and wholesalers to promote the allure of the cruise culture. Discounting is a practice that all cruise lines exercise, and Carnival is no exception. Setting sail without filling every room, from staterooms to windowless cabins, is not profitable.
Onboard spending and excursions
Whether in the cheapest cabin to the most expensive stateroom, every guest will spend money on board, whether it be sampling the gastronomic delights of the ship’s dedicated restaurants to the head-to-toe pampering of a shipboard spa experience. Drinks are not part of the ticket package, and catering to this thirst is a huge revenue generator for Carnival Cruises. Who in their right mind would not take the opportunity to explore the exotic destinations on the itinerary? Again these are not part of the ticket cost, and cruisers will have to dig into their pockets to go on guided tours of the cities.
Carnival Cruises earns revenue through its loyalty program, as members are incentivized to continue to travel with the company.
The cruise line also fills its coffers by selling travel-related services like airfare and travel insurance. In addition, it invested in the hotel industry and has 15 hotels worldwide offering approximately 3500 guests accommodation at the start and end of every cruise.
What generates most of Carnival Cruises' revenue?
The most profitable part of the Carnival Cruises business is ticket sales, which generate the largest revenue source for the company. Onboard Spending is also a significant source of revenue, as guests are incentivized to spend money on food, drinks, and other experiences during their cruise.
Future growth engine
Carnival Cruises will continue to grow its business by expanding its fleet, offering new destinations and experiences, and investing in technology to enhance the customer experience. The company may also expand its loyalty program, offering more rewards and incentives for repeat travelers.
- Competition. Carnival Cruises faces unrelenting competition from other cruise lines and tourist destinations, which could impact its ability to attract and retain customers.
- Economic uncertainty. The global economy can impact the demand for travel and tourism, which could negatively impact Carnival Cruises’ revenue.
- Health and safety concerns. The COVID-19 pandemic raised concerns about health and safety aboard cruise ships, which could impact the demand for Carnival Cruises’ services, especially should another pandemic occur.
- Rough seas. Sailing the deep blue seas is never without risk. And even with an army of engineers onboard, things can and do still break. In 2013, the Carnival Cruise ship Triumph experienced a malfunction, causing the ship to be stranded in the Gulf of Mexico for several days. At the time, the incident received widespread media attention and prompted discussions about the safety and reliability of cruise ships.
- Royal Caribbean. One of Carnival Cruises’ biggest competitors, offering a similar range of cruise experiences.
- Norwegian Cruise Line. Another major player in the cruise industry, offering customers a range of destinations and experiences.
- MSC Cruises. A leading cruise line offering a range of destinations and experiences, including themed cruises.
- Disney Cruise Line. A cruise line specializing in family-friendly experiences, offering a range of destinations and onboard activities.
- Princess Cruises. A premium cruise line offering a range of destinations and experiences, including scenic cruises and cultural tours.an army of engineers is