Problems involving cruise ships owned or operated by Carnival Cruise Lines (Carnival) over the past 15 months have begun to take a tool on its’ business revenue and public image.
January 13, 2012, the ‘Concordia’ grounded and partially sunk resulting in passenger injuries and death. February 13, 2013, the ‘Triumph’ suffered an engine fire leaving the ship adrift for five days with passengers dealing with overflowing toilets, unsanitary conditions, food shortages, and makeshift sleeping arrangements. March 10, 2013, the ‘Legend’ experienced technical difficulties effecting the ship’s sailing speed resulting in cancellation of its’ last scheduled port of call. March 14, 2013, the ‘Dream’ experienced a problem with a back-up generator prompting Carnival to keep the ship in port in St. Maarten and not complete its’ scheduled itinerary.
The recent troubles involving Carnival ships have heightened the level of media and legislative scrutiny.
Senator John “Jay” Rockefeller, chairman of the U.S. Senate Committee on Commerce, Science and Transportation sent a letter to Micky Arison, chairman and CEO of Carnival on March 14, 2013. In the letter, Senator Rockefeller said, “I am deeply troubled by this incident [Carnival ‘Triumph’], but I cannot say I am surprised by it. This is merely one in a long string of serious and troubling incidents involving your cruise ships. In just the past five years, I am aware of 90 serious events that have occurred on your cruise ships, jeopardizing the safety and lives of those on board and prompting Coast Guard marine casualty investigations.”
Senator Charles Schumer is calling for a cruise ship passenger bill of rights for all cruise ships with U.S. ports of call regardless of the ships registry.
Jim Walker, a maritime lawyer in Miami wrote in his blog, ‘Trending Now: Carnival Cruise Line’s Reputation Circles the Drain’, posted on March 17, 2013, “One of the interesting things about social media is there are numerous services which track what’s trending now. Carnival cruise has been trending all week at a frantic pace, and the news is not good. The cumulative effect of the recent cruise ship fires, power failures and images of passengers on disabled cruise ships complaining about toilets over-flowing has turned Carnival’s reputation into a joke.”
In a Harris poll taken of 2,230 U.S. adults surveyed between February 19 and 21, 2013, Carnival’s perceived Quality score is down since the ‘Triumph’ incident, from 6.40 before the incident to 5.25 after the incident, an 18 percent drop. The Trust score is down from 6.13 to 5.11, a 17 percent drop. The Purchase Intent score is down from 6.10 to 5.29, a 13 percent drop.
For the cruise industry as a whole, 58 percent of those who have never taken a cruise indicate being less likely to take one now than they were a year ago. Harris poll Vice President, Deana
Percassi has said, “Even if the industry can earn back cruise likelihood among past customers, its those who have never been on a cruise who represent new business – without which no industry can grow.”
Carnival stock shares have dropped from a high of $39.95 per share on December 19, 2012 to $33.40 per share on March 19, 2013. The stock price is continuing in a downward spiral.
Moody’s Investors Service has revised Carnival’s credit rating outlook to negative. That rating was made in part to the number of incidents within a short time frame resulting in increased media coverage making a recovery from bad publicity and image longer and more costly that in the past.
While the cruise industry will most likely weather the storm of recently publicized incidents, it is clear Carnival has suffered image wise and financially. How long the suffering will last is yet to be determined.
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