Arnold Donald, president and chief executive of the biggest cruise operator in the world, tells Lucy Huxley that shipyard constraints can restrain sector’s growth to a sustainable rate
The boss of Carnival Corporation does not believe Brexit poses a threat to the group’s UK business and is confident the cruise sector as a whole can grow in a measured and sustainable way.
Arnold Donald says he feels positive about UK forward business despite Brexit looming.
“That’s partly because P&O Cruises is priced in pounds sterling, which is an advantage as people know what it’s going to cost them – that’s for onboard activities as well as the ticket price,” he says. “They don’t have to worry about exchange rates.
“But I am also confident as people are starting to realise that cruising is better value than a land-based holiday. We’re not recession-proof, but I would say we are recession-friendly. When people think things are dicey or uncertain, they still seek great leisure experiences that are great value, and cruising offers these.”
New ships
Donald says the lack of capacity at cruise shipyards is “good for the industry” as it leads to more-measured growth for the sector.
P&O Cruises is due to launch Iona in 2020, to be followed by a sister Iona-class vessel in 2022.
Donald does not see a need for P&O to change dramatically to attract new-to-cruise customers.
Responding to comments from UK bosses that the brand would need to transform from a cruise line into more of a ‘holiday company’ to fill the two ships it has on order, Donald says: “We think there’s plenty of latent demand. Cruise is still relatively small and there’s a lot more people that fit the demograph of our customers than we have cabins.
“What we have at P&O resonates with our guests, 98% of whom are British. We have to stay true to that, and if we honour that to the fullest, that is all we will need to do [to fill the new ships].
“I don’t see a huge change in the way we redefine how people interact with the brand – as long as we always exceed expectations, I am confident.”
But P&O Cruises senior vice president Paul Ludlow has referred to his ambition for the company to become “Britain’s number one holiday choice” taking cruising into the wider holiday market.
Ludlow said: “To reach the vast pool of those people who have not yet cruised, P&O Cruises has a high profile marketing campaign both above and below the line which includes putting the brand in unexpected places and reaching out to this extended target audience.
“The recent premiere of the new magic & illusion show Astonishing from ITV’s Stephen Mulhern and performer Jonathan Wilkes is just one example of this. The new ship Iona will also have the space and flexibility to offer new guest experiences and attract a new to cruise audience.”
Donald dismisses suggestions there is a trend towards all-inclusive cruising. He believes it is “not the way to go”, saying: “It caters for certain types of people, but there is a significant number of customers who don’t like it, so there’s no mega-trend for it.”
Technology
Asked about the delayed rollout of Carnival Corporation’s Ocean Medallion wearable technology, Donald admits: “It made sense to slow the pace down. It’s not just an app. It’s a holistic initiative and an ambitious idea, and needs to be repeatable and scalable. We didn’t want to go all out and then not be able to deliver a brilliant experience for our guests.
“We identified a few hiccups but no showstoppers. We need it to be right for the crew and the guests, so that it meets the objective of making the guest feel like they had the best experience ever.”
He defends all the media attention and publicity Carnival courted for the new technology at the beginning of the year, adding: “The fanfare made sense. It was hugely positive for cruise and got us into all manner of new tech publications.”
Fully-functioning Ocean Medallion technology is due to be rolled out on Princess Cruises this autumn, according to Donald.
Luxury
Donald believes enhancing the luxury market is about “putting people power on smaller ships to give guests amazing service”. Speaking just weeks after the launch of Seabourn Ovation, which followed Seabourn Encore, he says the sector is a “niche market”.
“We don’t see this as a massive market and are not going to be adding more small luxury ships, or bigger luxury ships, as it just doesn’t make sense. We will continue to grow with what we have got.”
Donald adds that Carnival is always looking for opportunities to create a new private island, and says the business is exploring options in Asia and Europe.
“There’s almost no need in Europe as there are so many places to go, but where destinations are more geographically dispersed, we are looking at where there is a need for us to create our own port of call,” he says.
New entrants
Donald says he is unfazed by the launch of new cruise operators.
“There has been a lot of promotion for Virgin Voyages – they first announced it in 2015 and the ship doesn’t launch until 2020,” he says. “But the Virgin brand has a certain panache and anything that promotes cruise is good. It will be a different shade of product to what we offer, and that’s good.”
“I’m not worried. Even if Virgin has a second and third ship [Virgin has three ships on order], we have 105 across our fleet. It’s fine. It’s a big world. I’m not sure that luxury is the position they are seeking for these ships – I think they will be too big – but we will see.”
Asked about rumours that MSC Cruises may be building four luxury vessels, Donald says: “They may well build some smaller, yacht-like ships, but all the cabins in the world currently represent 2% of the number of hotel rooms, so there is room for everyone.”
And he says he is impressed by the way the industry has promoted itself to attract more new-to-cruise customers.
“Demand has to be created. It doesn’t come on its own,” he adds. “It’s great to see that cruise lines are much more sophisticated nowadays than ‘buy one get one free’.”
Sustainable tourism
On the subject of sustainable tourism, Donald says it has come of age.
“It’s the order of the day now. It’s all about guest experience and customers want to see places they have read about; there are marine environments that need to be protected. It’s got to the point where if tourism isn’t sustainable, it compromises all of that, destroying the basis of that customer experience.”
But he says cruise is a small part of the tourism problem.
“It’s a small part of the weight of people going into these places, but we still have an opportunity to lead by example and collaborate with the locals,” he says. “It’s not just about working with governments. Governments come and go, but people have got to live in these places, so we need to maintain the environments if we want to remain a part of them.”