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  • Luvmasterr Luvmasterr Jan 29, 2006 7:36 PM Flag

    The cruise industry

    Thanks everybody for contributing to a great post.

    Carnival as a company, I can't say enough good things about them. The one thing I noticed is that the entire staff seemed like they cared about what they were doing. I think the ships are very well run, the organization is also very well run.
    Starting next year if you leave for Mexico and wish to come back, you will need a passport. I think this may be true of the Caribbean and other non-US destinations. This will have some effect on the ease of cruising. It's a Department of Homeland Security mandate. It also makes it harder to leave the US and bolsters the notion of keeping your vacation money here in the states. I'm sure this won't effect the retired segment as most of them probably have Passports, but the younger folks... I don't know.
    My concern about the cost of oil is minimal for what it costs to run a ship as far as the pure oil consumption is concerned. I'm more concerned about food costs. The cost of energy is perhaps minimal to their food costs. Food and labor. Carnival has picked up a lot of labor from Asia, Europe and former Soviet block countries. The problem is, I don't think they can do much more than they have to cut labor without cutting staff and service. A rise in food cost would mean a very definite cut into the bottom line of operations, unless they did some radical changes to cut their food costs. How they can do this without affecting the cruise experience would be a neat trick. Food is very much an essential aspect of the experience.
    There is no doubt that Carnival has the upper hand in the cruise industry. And as the baby boomers retire and want to spend their golden years on a ship floating around I can see how this would be profitable.
    As the cost of energy goes up, the discretionary income of the average American goes down. If there isn't any money left over for vacations, it doesn't matter how much or little they charge, if you don't have the money, you aren't going. One thing that is kinda neat about the cruise industry that I haven't thought of is that the boats are moveable. If the Asain markets do better in a major world recession for example, it's easy to set up routes in Asia and cater to that market. Casinos in Vegas just can't quite do this.
    The one other thing that is kinda neat about Carnival is that they build up portfolios on people. When I left the cruise I was presented with one master bill. I spent about $600 on the cruise, not much. If it was more like $6000 I'm sure that I would be getting all kinds of phone calls from booking agents from Carnival in the future offering me great future deals on cruise, discounts on airfare, etc. That's the beauty of an all inclusive place that you can't leave, they can profile the passengers spending habits. Carnival can cut deals, but most likely they will want to cut deals to the big spenders first. This is probably how they can avoid recessions and empty ships.
    If times get rough in the cruising industry I really can see Carnival being able to sell off a few older ships to keep their cash flow going to ride out any storm. Carnival can ride out many storms. Baring a major terrorist attack, depression, or pandemic outbreak I can see it's a fairly good bet. Thanks for helping me come to these realizations.


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