The cruise industry is swimming along just fine.
For the full 2017 year, Carnival Corp. (CCL) , citing a "strong wave season," said bookings are "well ahead" of expectations and anticipates its revenue to increase 3.5% from 2016 and earnings in the range of $3.60 to $3.70 a share, compared to its previous guidance of $3.50 to $3.70 a share.
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With one month left of summer and construction having recently begun on its newest 3,974-passenger ship to debut in 2019, Carnival CEO and President Arnold Donald chatted with TheStreet on Tuesday, August 1, about what's been hot in the industry this season and what cruisers can look forward to in the coming months.
Here's a condensed and edited version of the interview.
Question: Do millennials take cruises?
Answer: Absolutely millennials take cruises. We have lots of multi-generational families traveling across all 10 of our brands. We also have lots of weddings onboard, and, of course, a lot of millennials, given their age group, are the ones getting married. We have lots of millennial groups on board for bachelorette, bachelor parties and others, reunion and travel. Cruising has turned out to be a preferred form of vacation experience for millennials and that's no surprise because cruising brings people together. Whether it's guest to guest, guest to crew, guest to the vacation, millennials are a very experiential bunch and cruising is, perhaps, the greatest vacation experience. And it certainly has great value. It's affordable and accessible to millennials, and it provides the type of immersion experience they seem to prefer.
Q: What are millennials doing on cruises?
A: Millennials are like everyone else. They don't fit in a little unique box. For example, on our Carnival Cruise line, we have comedy clubs, lots of experiential-crew-interacting-with-guests type of activities on board, whether it's water activities, dining activities or the shows and theater. People participate in all of those things in their own way, and millennials are no different. They're very interested in the destination, in adventure. On board they may be signing up for the yoga classes or some of the other fitness activities and then ashore, or near shore, they may sign up for kayaking, or swimming with dolphins or stingrays. Generally speaking, though, they take advantage of everything just like any other group.
Q: In gaining approval to sail to Cuba, how excited are you to have regular access there and who's taking those trips?
A: The exciting thing for us was not only being the first company in over 50 years to sail from the U.S. to Cuba and back but to actually be a part of Cuban decisions to change a long-standing practice that they had of no Cuban born, no matter where they lived in the world, could come or go by sea. They changed that long-standing practice and they referenced our company in the change when they made the announcement to all of the people of Cuba. That was a very special moment for us, only exceeded by the moment when Arnaldo Perez [Carnival general counsel] and his wife, both Cuban-born, were the first to step off the ship onto Cuban soil in over 50 years. That was a dramatic moment that the whole world saw. Cuba is very small for us today—you won't find it on any of our financial numbers—but it's the beginning. And it's the idea of what we do with cruising, which is bringing people together. We're very proud of it, but we know it's just the beginning and we're working with authorities on both sides to to expand and allow more people to visit, and of course, to allow people from Cuba to sail to the U.S.
Who's going? Anyone who is interested in going is going. So, you have a big gamut from millennials to people who have long desired to go to Cuba, but either couldn't or weren't comfortable [about it]. And now they know they have great accommodations, they've got views and angles and perspectives from the ship that they would never see from land. Sailing in the Havana harbor is one of the most dramatic visual experiences you can create. And then curated experiences onshore are very enriching and fun.
Q: You've talked a lot about making the new Ocean Medallion smart technology [launching on Nov. 12] "invisible." What exactly does that mean and why is that important?
A: The whole idea of a cruise is the experience. The experience you want is not to have to fool around and figure out technology. That's not what people are going on a cruise for. So it needs to be seamless. The idea is that the guest feels everything is engineered for them with no effort on their part. Things just happen the way they want it to happen. They don't have to learn a new way to do anything. It's better than getting a new phone, which, because it's upgraded, it's got different features. We don't want anyone to have to learn anything. You walk on, you walk off.
Q: You mentioned you got a new phone. Which one?
A: In the corporate world, we're always upgrading. So I have a new [Apple Inc. (AAPL) ] iPhone 7, without a headset plugin. It has wireless, so I went to plug in my headset [earlier in the interview] and I had nothing to plug it into. That's how antiquated I am.
Q: The cruise industry is becoming more popular. Research [from the Cruise Lines International Association] shows that the number of people taking cruises has increased annually over the past 10 years. Do you think, with uncertainty abroad, heightened fear of terrorism, cruising provides a safer option for people compared to them vacationing on their own?
A: I wouldn't say that. What I would say is safety is job one. The beauty of cruising is that it's mobile. We can move things. We can change plans. If you want to go to this port, if there's issues there, controversy, we can always redirect the ship somewhere else. We focus on safety, for both the crew and guest, and because our access is very mobile, we have a lot of flexibility. Despite the various things going on in the world today, the world continues. There are unfortunate events and crime in American cities, but that doesn't mean people don't go to cities. People want to travel. As long as the guests want to go—and, of course, we are totally linked in with every security reinforcement, intelligence community in the world—and we know there's no imminent danger, then we will take them there. We've changed some ports because people don't want to go there and we have certainly redirected ships when we've gotten intelligence that says there's going to be a heightened level of activity in that region. That's what we do. We're connected 24-seven. We monitor nonstop.
Q: Is there any market where you'd want a bigger presence in or where you're seeing a growing interest for other than Cuba?
A: Every market in the world is large and underpenetrated. In terms of the popular destinations, they continue to be the Caribbean; Alaska; the Baltic, especially this time of the year, for people all around the world; the Mediterranean will always be, with all of the rich history there, and then the Far East, China, Australia. These places are all desirable destinations. If you go to Antarctica, you experience basically the sea-equivalent of being on a safari in Kenya. It's just an amazing planet and there's so many wonderful places to see and cultures to experience and that's what cruising is all about.
Q: What's behind your recent push into TV—the launch of programs on ABC, NBC and CW networks?
A: It is to increase awareness and consideration for cruise. We have four original programs. We're developing some others. We're doing it outside of the U.S., as well. The idea is just to expose people to travel from different points of view and to share with them what guests on these ships experience. That's the objective and so far, so good. Along with the most powerful driver of all, word of mouth, we're exceeding our guest expectations every day. Doing that has certainly increased consideration for cruise over the past several years. The entire industry has benefited and certainly we have.
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