Carnival Cruiselines

Carnival Cruiselines

Major Issues/Problems Identified:

* Relied heavily on travel agents: The vast majority of the company’s sales come from travel agents who arrange cruises on behalf of clients. Given the emergence of internet-based travel bookings and direct to consumer models of selling airline tickets, their business in general has declined. Because the company depends on a broad base of going-concern travel agents, any prolonged slump or major consolidation in the travel agency business could adversely impact the company. The net profit was $1,790 million in FY2009, a decrease of 23.2% as compared to 2008. Carnival derives a majority of its revenue (nearly 52%) from US customers. In 2009 the revenue from the North American market registered a double digit decline.

* Did not have enough consumer data: Carnival does not have enough customer data to better serve their existing customers. It is essential for them to keep track of their customers in order to increase customer satisfaction.

* Changes in Government regulations: Carnival has been taking advantage of special tax loopholes to avoid paying US corporation taxes. Carnival is considered a Controlled Foreign Corporation (CFC), which exempts shipping operations of a corporation from income tax. In 2009 the US government decided to look at closing those loopholes. If these loopholes are closed, it could affect their financial statements and fiscal bottom line in the future.

* Hurricane and bad weather: The Company can be adversely affected by particularly bad hurricane seasons, natural disasters, and inclement weather patterns. Many of the company’s cruises are to Caribbean destinations, where hurricanes pose a major threat to business. Consumers are less likely to buy, for instance, a Caribbean cruise if a major hurricane is anticipated. Furthermore, the company depends upon the availability of ports, so coastal weather patterns can limit CCL’s ability to procure ports. If inclement...