Carnival CEO Sees Higher Cruise Pricing, Eyes New Markets

Carnival (CCL) CEO Arnold Donald discusses the cruise company’s plans to enter new markets and meet its goal of a double-digit return on investor capital in the next three to four years. Donald explains that in order to meet that goal, the company is cutting costs and reinvesting in the business. ‘Fuel is our single largest expense. We’ve reduced over a billion gallons of fuel usage since 2007. So we continue about being very smart about consumption, and then LNG in the future, environmentally it is even better.’ Donald says switching to LNG will also translate into future cost reductions. Carnival recently signed a multi-billion dollar contract to build four new cruises ships that will be powered by liquefied natural gas, becoming the first in the industry to do so. The first LNG ship, which will have a total capacity of 6,600 guests, will be operating in 2019. In terms of cruise pricing, Donald said ‘we expect prices to go up. I would encourage people to book sooner rather than later because prices are going to go up.’ In its latest quarter, Carnival reported strong booking volumes. Carnival is also about to set sail into uncharted waters, by offering future cruises to Cuba. ‘There’s so much pent-up demand in the U.S.,’ said Donald. ‘Over time, Cuba is going to be a tremendous asset, not only to us, but to the industry overall.’