Deploying the new regime

Deploying the new regime

Amid one of the many recent heated conference debates about the growing problem of congestion at marquee cruise ports, a cruise company executive stopped the show by claiming that the companies were precluded from coordinating deployments thanks to US anti-trust regulations.

Some of those present must have wondered how anti-trust could possibly apply to brands within the same company. Yet, according to Buckelew, Carnival’s 10 brands were acting as if it did just that.

Buckelew says: “The individual brands simply made their own plans without reference to the others. The only time there was collaboration was when they were using one of the Carnival-owned/operated ports or private islands.”

This was all part of the autonomous brand ethos of the group created by chairman and CEO Micky Arison, who wanted each brand to make its own decisions with as little interference from head office as possible. To ensure that the right decisions were taken, he made sure each brand president or CEO knew that he or she would stand or fall by those decisions.

No-one could deny that it worked pretty well as Carnival acquired more brands (peaking at 12 – now ten) and become a corporation that turned in US$2bn-plus profits.

But times changed, profits fell and Arison gave way as CEO to Arnold Donald, who was quick to put his stamp on the company with a new philosophy designed to leverage the corporation’s scale as never before through communication, collaboration and cooperation.

If that sounds suspiciously like corporate business-speak, Buckelew had been at the sharp end as president and CEO of Princess Cruises and he had long seen the need for exactly that kind of core change.

He explains: “The centre of the corporation has no ships and does not generate any revenue so, unless it is helping the brands to do that, it is not really adding much value. When I was at Princess, there would be situations where different central departments would be working on often overlapping projects, during which they would tap into brand people for the information they needed, taking them away from their day jobs.”

He had made his feelings about this and the general lack of brand cooperation clear enough for him to be the obvious man for the job when Donald was looking for someone to guide what will likely not be an easy transition.

“Once I got here as COO (December 2013), I wanted to make sure each department had a clearly defined mission,” he says. The over-riding mission, though, is to bring the brands closer together in a wide range of areas, from deployment and shore excursions to newbuilds and flight programmes.

“On deployments, it was too late for more than a little tinkering around the edges of the summer 2015 and winter 2015-2016 programmes but planning started in August 2014 for summer 2016 through to 2017 so the focus is on starting the changes there.”

Those changes will involve making decisions on which brands or ships should operate from and to which ports on which days to achieve the best results for Carnival Corporation.

“It won’t affect every brand or every destination,” says Buckelew. “Seabourn does not really compete directly with any of our other brands apart from maybe Cunard from time to time so it will be left to its own deployment devices. And in Alaska, Holland America Line and Princess have already been collaborating since their two (once separate) tour operating companies were combined into just one. Between them, the brands have 80% of a market they dominate so there is no need to change the way the deployments are working.

“But there are other places where there are opportunities for us to coordinate deployments to make us more competitive. For example, Carnival Cruise Lines has programmes to the Mexican Caribbean from homeports like Mobile, New Orleans and Galveston. We are now asking whether we should put a premium brand in there with Carnival.”

He also points to the recent decision to shift two HAL ships to the P&O Cruises Australia fleet from the end of 2015. “The Australian market is growing fast and this will allow our leading brand there to develop the emerging markets out of Brisbane, Perth and Melbourne.”

The relatively small size of the ships will also mean they are not affected by Sydney’s lack of berthing capacity for ships too large to pass under the harbour bridge.

Buckelew acknowledges that adjustments will have to be made when programmes are planned but says that since there has never been more than a few weeks between their different schedules, it should not be too disruptive to bring them all into line.

“It will help that we have already collected most of our brands into several larger groups,” he adds, referring to the Costa Group, which includes AIDA Cruises and Ibero Cruceros; Carnival UK (P&O Cruises and Cunard Line); and the Holland America Group, which recently added Princess to its Seabourn responsibilities.

This may also help the process when it comes to another, potentially contentious part of this new collaborative process: shore excursions.

He says: “All the brands like to think that they offer a distinctive set of tours that are unique to them. The reality is that there are quite a number that are interchangeable so it does make sense to rationalise the way these are procured.

“We have set up an All Brands committee to oversee this operation, which will obviously concentrate on the high-volume tour ports where there is more to be gained by one person negotiating for all brands, rather than several people doing so separately for individual brands. We have tasked people at different brands to look at ports in different regions so that they can decide where it would be best to use just one tour operator and where it is better to work with multiple operators – and then explain why to the committee before their decision is accepted.”

This article appeared in the Autumn/Winter 2014 edition of International Cruise & Ferry Review. To read the full article, you can subscribe to the magazine in printed or digital formats.

Tony Peisley
By Tony Peisley
30 October 2014

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