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Magazine Online    The Authority On African-American Conventions, Incentives, & Leisure Travel
Issue: September/October 2014
Arnold Donald Takes Carnival Corporation to New Heights
By: Solomon J. Herbert
By Solomon & Gloria Herbert


Arnold Donald is not what you might envision when you picture the president and CEO of a multibillion dollar US corporation.  We first encountered Donald when we arrived early for an interview at Carnival's impressive Miami corporate headquarters, waiting patiently in the lobby area for one of his staff to come down and bring us up to his offices.  Donald was just returning from an out of town business trip in time for our meeting, and as we watched, he strode up to the main entrance with two roller bags in tow and proceeded to open the door himself, step inside and work his way towards the bank of elevators around the corner.  We had not met him in person yet, so he didn't know who we were.  But we had seen his photo before and recognized him instantly.

While the elevators were only a few dozen feet away, it took Donald a bit longer than you would think to get there.  Why?  Because the was lobby bustling with people coming and going, and it seemed as though he knew everyone, greeting several employees by name as he moved along, stopping to exchange hugs with another, and pausing on more than one occasion to engage in a little chit chat with still others.  Here was the head of the largest travel and leisure company in the world, carrying his own luggage, opening the door for himself and greeting staff by name.  All this, mind you, without a flying wedge entourage surrounding him to serve as a buffer and keep us ordinary folk at arms length.

It is precisely Donald's affable, gregarious and outgoing nature that has served him so well since assuming the role as president and chief executive officer of Carnival Corporations in July of 2013.  He understands the importance of bringing that human spirit into the workplace environment, and is committed to infusing that same quality into the cruise experience for Carnival's clients.

Donald took the reins at Carnival during a difficult period after the cruise industry and the company itself had suffered a spate of mishaps at sea.  Carnival had become fodder for Jay Leno and other late night comedians, and the press, in their eagerness to bolster ratings, went into a feeding frenzy and blew things way out of proportion.

"The biggest challenge when I first took over was the media," says the New Orleans native who lived in St. Louis.  "We continue to have work to do, but the work is on us.  We had come off some voyage disruptions and had gotten a lot of negative media, and so on my very first day I flew to Miami for an interview."  The interview was scheduled so Donald could go public about his appointment by company founder Micky Aronson as Carnival's new president/CEO.  Aronson, who had served as Carnival's president/CEO and chairman since its inception, had decided the time had come to separate the roles of chairman and CEO.  But things went awry during the interview when an online publication blasted the headline "Micky Aronson booted from Chairman's Role at Carnival" across cyberspace.

"It was all negative, which was not true at all.  Totally not true," says Donald. "So we spent all day with a zillion interviews, before I jump on the plane and fly back to St. Louis.  On the way back they call and say they want to do and interview on CBS This Morning tomorrow morning, assuring me it would be a puff piece."  Donald agreed to the interview, knowing it fell on his shoulders to get the true Carnival story out to the viewing public.

After arriving back in St. Louis after midnight, an exhausted Donald prepared for his CBS interview the next morning at 5:30 am.  After some delays and being taken to the wrong studio, he was finally poised to start the remote interview. "There's no monitor, just a camera and a chair, and some fake set behind me. So I can't see anything. They stick this thing in my ear and then they say "Only two minutes."  Through his earpiece Donald hears an announcer say "CEO Micky Aronson booted and replaced after all these disasters."  Some puff piece, he thinks to himself as he braces for the interview to begin.

So the first question was "'Arnold Donald, the new CEO, what's wrong with Carnival and how are you going to fix it?'  It's like asking when are you going to stop beating your wife?  So I said 'First of all there's a lot right about Carnival,' and I made them laugh, and then it was fun, and it worked out.  But that's what we were facing.  There was so much negativism, they just assumed negative stuff."

According to Donald, all Carnival ships, and those of their competitors for that matter, sail with 60-80 percent of people who have cruised before and are loyal to that brand.  That leaves 20-40 percent of the cabins still to be filled with first time cruisers.  So it's vitally important, he says, not to scare away these new cruisers with negative misinformation before they have a chance to experience a cruse vacation. 

"The new cruisers, they don't know," explains Donald.  "And so when the media puts out negative stuff, it reinforces those negative images held by people who haven't cruised, who then say 'I'm not going to go on a cruise.'" 

Donald readily admits that some cruisers may get seasick, or even contract the dreaded norovirus.  But this is a very rare occurrence, and contrary to popular belief, he says, the norovirus is not a cruise disease.  According to Donald, only .007 % of cruisers got the norovirus, while on land, 6% of the US population has contracted the disease. Noroviruses are the most common cause of gastroenteritis in the United States with an estimated 19 to 21 million cases each year, according to the CDC. That means roughly one in every 15 Americans will get norovirus annually, though only 56,000 to 71,000 go to the hospital for treatment. "So if you don't want the norovirus, go on a cruise ship," Donald says  "They occur way less on a cruise, but you would think you'd get it on cruse ships because of the media.  That's our fault.  That's not the media's fault, because we're not providing the right information.  And we're not providing it the right way," he adds.

While Donald describes the cruise industry as young - it's only been around 25-30 years - and relatively small, he makes it very clear that Carnival, which boasts 10 different cruise ship brands, is unquestionably the largest player.  Being the largest, he concedes, offers many great opportunities.

"In a year or two we will have 80+ million passenger cruise days in a year.  That's 80 million days of people going to places, touching places.  So yes, there's an economic multiplier in all that, but it can be way bigger than that.  And how we go about our work, how we develop ports, how we engage the local communities, the local people, whether its domestically like in Baltimore and New Orleans, or whether it's in places like the Dominican Republic or Haiti, or whether it's in Vietnam or China, the impact that we can have on the everyday quality of life for people who have never set foot on a cruise ship in their entire life is huge.  And so there are opportunities everywhere."

Likewise, being the largest also brings with it some unique challenges, he insists.  "If we build a new ship, that's one ship out of 100-ship fleet.  So we'll grow 1%.  If we build two new ships, we'll grow 2%.  We can't build 10 ships in a year because they're not enough shipyards to build them.  So we can't grow by just building ships.  We also sail full.  We have a little bit of occupancy on some of the brands.  But in the main, we sail full.  So we can't put more people on the ship either."

So what's Donald's strategy for growing revenue? More onboard spending and pre- and post-cruise spending is the way to go, he argues.  Higher ticket prices also drive increased revenue.  "We are the greatest vacation value there is by far," claims Arnold.  "So we have lots of room to price up and still be the greatest vacation value there is."   

Put into perspective, with 80 million passenger cruise days a year, a dollar a day more added onto the cruse ticket price translates into $80 million plus.  Ten dollars a day more is $800 million to the bottom line.  "That's more than the other cruise companies make," says Donald.  "So for us it's all about creating demand in order to get the ticket price up.  And that's why the media is so important," he emphasizes.

Donald also explains that by more coordination and cooperation between Carnival's brands, they can leverage their collective buying power for huge savings.  "There's a tremendous opportunity on the efficiency side, and a humongous one on the revenue side, for coordinating and collaborating as long as the brands communicate across the 10 brands.   So there're big opportunities for best practices." 

Every brand, for example, has its own revenue model and management model.  Just by examining those 10 models together, each of them will see something the other brand is doing better than they're doing, Donald explains.  "And if they adopt it across all of them, then we just raised a buck, two bucks, three bucks, five bucks, 10 bucks a day on just ticket prices without anything changing.  No change in demand, no change in anything, other than profits," he says.  Onboard revenue spend, like identifying the best way to do photos or the best way to present entertainment can allow Carnival to adopt best practices across all brands.

When asked why there was a perception that African-Americans don't cruise, despite significant evidence to the contrary, Donald had this to say.  "First of all I didn't know that was the perception. I find it quite surprising that that would be the case.  I started cruising in the '70s, and when I went on cruses I saw other people that looked like me.  So I have never had that impression at all. When Carnival started out, they always had really good participation from the African-American community.  So it definitely continues to be a target for us.  We want everybody on cruises, and that includes African-Americans, as well as their conferences and family reunions."

Donald, who had served as a director of Carnival Corporation since 2001, and as a director of Carnival PLC since 2003, admits he had no idea what he was getting into when first approached about taking over as president and CEO.  "It's way better than I imagined it would be.  First of all the people in our business and in our company - I knew they were committed, I knew they were passionate, I knew all that.  But not at the level that I experience every day.  I could be on a ship with a cabin steward, or I could be with one of the brand CEOs, and the level of passion and commitment, total dedication and enthusiasm is just amazing. It is a blast.  It is a total hoot.  If you can't have fun in the business of making fun, you need your head examined," he promises.

CARNIVAL CORPORATION & PLC BRANDS

  • Carnival
  • Princess
  • Holland America
  • Seabourn
  • Cunard
  • AIDA
  • Costa
  • P&O CruisesP&O Cruises Australia
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