Cruise Industry SWOT

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SWOT - Cruise Industry & Carnival

The strengths of Carnival and the cruise industry include cheap fares and employment options, while the weaknesses include the Costa Concordia tragedy and high maintenance costs. The opportunities available for Carnival and the cruise industry include investing in gadgets and using Instagram to attract more customers, while the threats include lack of innovation and the limited presence of shipbuilders. Below is a detailed explanation of our findings.



Carnival Cruises places its cruise ships in areas that are easily accessed by Americans. They are also available across U.S. ports, which over 50% of the Americans can access within a day of driving. Cruises are primarily cheaper than other ways of travel; thus, Carnival focuses on low fares, which many customers find to be budget-friendly. Generally, the cruise industry creates employment opportunities from 800 to 1,500 new job positions for each new ship. On that note, Carnival Cruise is expected to launch four new cruisers in 2019, which could result in new job opportunities for the unemployed. Cruises feature various factors that motivate Americans to use them for vacation. These factors include increased violence and the migrant crisis at some tourist destinations. Besides, cheap fares and the high-class experiences Carnival and other cruise industries provides attracts many customers. Such experiences include above standard dining services and low price nightclubs that are inspiring many younger people to join cruise vacations.


The cruise industry was negatively affected by the Costa Concordia tragedy in 2012. Moreover, in February 2014, a fire in Carnival Triumph’s engine room left 3,100 people stranded for five days in the Gulf of Mexico. Consequently, repairs to the damaged vessel cost Carnival approximately $115 million. After the incident, Carnival spent another $300 million in a safety upgrade program. Overall, cruise companies should always operate and have their ships ready because one week of inactivity due to maintenance could cost them tens of millions of dollars and cause dissatisfaction among customers.


As technology and passenger apps continue trending in the cruise industry, Carnival introduced different technological innovations such as sensors, 4K touchscreens, equipment for gaming, i.e., PlayOcean and Ocean Medallion (an innovative and wearable piece of technology used for embarkment and entertainment). Furthermore, there is a rising trend in using Instagram regarding cruising. Carnival has become active on the platform and is constantly capturing 12,000 followers monthly.


The presence of few shipbuilders and technology developers in the industry pressures the cruise companies to accept the prices and costs offered to them. On the other hand, intensive repairs lasting for more than a month also cost players in this industry over $50 million. In terms of innovation, Carnival is inferior to the Royal Caribbean. Carnival’s entertainment options feature more classic polishes such as pools and mini-golf when they should be introducing innovative entertainment options such as waterslides or observation pods that can bring passengers up and out over the water.

On the other hand, Royal Caribbean has larger ships that can bring more than 5,500 passengers, while Carnival’s biggest cruisers can handle less than 4,000 passengers. In closing, after the Costa Concordia tragedy in 2012, cruise ship experts, passengers, and cruise ship injury law firms noted that some aspects of cruise travel were becoming less safe.
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Growth - Cruise Industry & Carnival

In reference to our findings, both the United States cruise industry and Carnival Corporation have been experiencing constant growth over the last couple of years. From our analysis of the United States cruise industry and Carnival Corporation, we have concluded that both entities will continue to experience growth going forward i.e. to the next 3 to 5 years. Our research methodology and findings follows below.


We started research by searching for the future growth metrics of the United States cruise industry and of Carnival Corporation. The targeted metrics were forecasted estimations of the annual revenues of both entities and the Compound Annual Growth Rates of the entities over the next 3 to 5 years. Our search was focused on industry resources such as the Florida-Carribean Cruise Association (FCCA) and the Cruising Lines International Association (CLIA), press release resources such as PRNewswire and Newswire, business news resource such as Forbes and Reuters, and statistical resources such as Statista and IBIS World. Through this strategy, we were not able to find any future projections that we could use to address the research criteria. However, we did find a significant amount of information that gave us the required insight into the growth of both companies over the past couple of years.

Because information on future projections was unavailable in the public domain, we decided to use the wealth of information that we found through the strategy stipulated above to triangulate answers to the items stipulated in the research criteria. Luckily, through the resources highlighted above, we were able to find enough data points to facilitate the triangulation of the growth of both the cruise industry and Carnival Corporation over the next 3-5 years in terms of revenue and CAGR. A detailed look into our research findings follows below.



According to an article on Forbes, the cruise industry has been going from strength to strength since the recovery of the economy from the 2008 recession. Although the cruise industry is also subject to the unexpected fluctuations of the economic cycle, it has been booming since 2008.

In an interview with Emerson Hankamer, the President and Chief Operations Officer of Vacations To Go, Forbes noted that in 2017, there were approximately 26 million cruise passengers globally and "for the last several years the industry has been operating at near 100% capacity and it seems to be in the enviable position that growth is limited more by capacity than demand."

According to a report titled 2018 Cruise Industry Overview, that was published by the Florida-Carribean Cruise Association, in 2018 the global cruise passenger numbers were forecasted to reach 27.2 million, a figure that would represent a 10% increase over 2016. The report also noted that the yield of the industry and ticket pricing continued to increase through the help of a strong U.S. economy and consumer sentiments.

In reference to the 2018 Cruise Industry Overview report, in 2016, the United States had the highest number of cruise passengers at 11.5 million passengers followed by China, and Germany at a distant 2.1 million and 2.0 million passengers respectively.
In reference to another report titled 2018 U.S. Market Report that was published by the Cruising Lines International Association, in 2017 and 2018, the number of cruise passengers that were sourced from the United States was 11.94 million and 13.09 million respectively. The number for 2017 i.e. 11.94 million represented a 5% increase over the number from 2016 i.e. 11.5 million while the number for 2018 i.e. 13.09 million represented a 10% increase over the number for 2017.

From the fact that the United States leads in the number of passengers taking cruises by more than 9 million passengers over the second and third placed countries i.e. China with 2.1 million passengers and Germany with 2.0 million passengers shows that the cruise industry in the United States has been growing steadily over the past 3 years. Additionally, the steady increase in the number of passengers over the years i.e. from 11.5 million in 2016 to 11.94 million in 2017 then to 13.09 million in 2018 also shows that the American cruise industry has been experiencing a steady growth in recent years.
According to Statista, in 2010, the revenue of the United States cruise industry was $15.7 billion a figure that increased significantly to $23.2 billion in 2015. Additionally, this revenue has been forecasted to reach $31.5 billion by 2020.
With $23.2 billion as the starting value, $31.5 billion as the ending value, and 5 as the number of periods i.e. from 2015 to 2020, we calculated the CAGR of the United States cruise industry as 6.31% using this CAGR calculator. This figure is close to Technavio's global cruise tourism CAGR of over 6% by 2022.
Using this CAGR, we estimated the 2024 annual revenue of the United States cruise industry using this reverse CAGR calculator. With the starting value as $31.5 billion, CAGR as 6.31%, and the number of periods as 4 i.e. from 2020 to 2024, we projected the United States cruise industry annual revenue will reach $40.24 billion by 2024.


From the financial information that is available in the public domain, Carnival Corporation has been thriving in its market segment which is primarily the cruise industry. According to Macro Trends, Carnival's stock price over the last 3 years has been increasing steadily. In January 2015, the company's stock price was 43.96 while in January 2016, January 2017, and January 2018 the stock price was 48.13, 55.38, and 71.61 respectively. This steady increase in Carnival's stock price year-over-year signifies a continued growth that is experienced by the company.

In reference to the financial information that has been aggregated by Macro Trends, Carnival's revenue has also been experiencing upward growth over the years. This is illustrated below:
  • In 2016, Carnival's annual revenue was $16.389 billion, a figure that represented a growth of 4.3% from 2015.
  • In 2017, Carnival's annual revenue was $17.51 billion, a figure that represented a growth of 6.84% from 2016.
  • In 2018, Carnival's annual revenue was $18.881 billion, a figure that represented a growth of 7.83% from 2017.
  • Carnival's revenue for the 12 months that ended on February 28, 2019, was $19.322 billion, a figure that represented a 7.64% increase year-over-year.
Using the data points that we have been presented above, we were able to calculate the CAGR of the Carnival's revenue as a proxy for the measurement of the company's growth over the past 3 years and going forward.
With $16.389 billion as the starting value, $19.322 billion as the ending value, and 3 as the number of periods i.e. from 2016 to 2019, we estimated Carnival's CAGR over the past 3 years to be 5.64% using this CARG calculator.
Because future projections of Carnival's revenue were unavailable in the public domain, we used the calculated CAGR and the available revenue data to triangulate an estimation of Carnival's annual revenue over the next 3 years.

Using this reverse CAGR calculator and $19.322 billion as the starting value, 5.64% as the CAGR, and 3 as the number of periods i.e. from 2019 to 2022, we projected Carnival's 2022 annual revenue will reach $22.78 billion. We then changed the number of periods to 5 and used the reverse CAGR calculator to project the company's 2024 annual revenue as $25.42 billion.

From the available financial data, we concluded that Carnival Corporation will continue to experience constant growth over the next 3 to 5 years, a growth that we estimated in terms of annual revenue as $22.78 billion in 2022 and a projected rise to $25.42 billion by 2024.


The steady growth of the United States cruise industry has been going hand in hand with the growth of Carnival Corporation. This is because in many industries if the overall industry thrives, the key players in the industry also thrive. Carnival is the world's largest cruise line with an operation of 24 cruise ships that have voyages which range from 2 to 17 days. From this fact, we concluded that Carnival is one of the players in the United States cruise industry and as such the thriving of the industry will also lead to the thriving of the organization.
Carnival is a member of the FCCA. A report by the FCCA noted that demand for cruising has increased by 20.5% over the last 5 years and "to support this demand, FCCA and CLIA member cruise lines added nearly 22,000 lower berths through six new ocean-going vessels in 2017, while continuing to grow demand through innovative, exciting features and a more personalized guest experience complete with wearable, customizable onboard technologies, as well as media initiatives including even TV shows and movies to display what cruising offers."
Because Carnival is part of the FCCA member cruise lines, we concluded that the growth that is being exhibited in the cruise industry will positively affect Carnival by ensuring a sustained growth going into the future. The fact that the cruise industry is currently booming also points to the continued growth and thriving of Carnival Corporation in the United States cruise industry.

From Part 01
  • "the 26-ship line will have its newest, biggest ships sailing from Miami, and Cape Canaveral, Florida, and Galveston, Texas — three of the country’s top four busiest ports."
  • "The latest moves fit in with Carnival’s long-held strategy of placing cruise ships within an easy drive of Americans. About half of the U.S. population is within a day’s drive of a Carnival port, the line says. That includes major gateways like Miami, Fort Lauderdale, Galveston, Canaveral, and Seattle, as well as smaller ports including Norfolk, Baltimore, Charleston, San Juan, Mobile, and Tampa. In all, Carnival sails from 18 year-round and seasonal ports."
  • "And in 2020, the biggest Carnival ship ever — a 5,286-passenger behemoth known for now as “XL” — will start sailing from Port Canaveral. A second XL is slated to join the fleet in 2022, but its home port has not been named yet."
  • "A multimillion investment into new, more innovative and ever-bigger vessels capable of carrying up more than 3,000 passengers, offering lower fares and shorter cruises to benefit from economy of scale and onboard activities such as multi-story shopping centres ..., spas, gyms, swimming pools, tennis courts, ice skating rings, and a long etcetera of amenities to meet the changing vacation patterns of today’s market and exceed the expectations of its customers with practically a cruise option for everyone."
  • "Carnival Corporation, headquartered in Miami (Florida, USA) and London (England, UK), is the undisputed leader in the sector and the most profitable leisure company in the world, with 12 cruise brands in North America"
  • "the presence of a few shipbuilders and techology developers in the industry forces the cruise companies to accept the prices and costs offered to them"
  • "the large number of suppliers of equipment, fuel and food products allows them to bargain for the best prices"
  • ""
  • "Generally, the base cruise fare will be cheaper when evaluating comparable trips"
  • "modern-day cruise ships are packed to the gills with onboard activities. The newest ships sport rope courses, water parks, mini-golf, film screens, rock climbing walls and crazy attractions like zipwires, bumper cars, surfing and skydiving simulators and other thrill rides. Daily schedules are filled with wine tastings, dance classes..."
  • "Carnival Cruise Line specializes in budget-friendly fun, offering frequent sales and early booking deals on already low prices. In fact, finding itineraries for less than $200 per person, per night is the norm on the line's 25 ships. Access to the ships' activities (think: waterslides, sports courts, casinos, piano bars, comedy acts, nightclubs and more) won't cost a penny."
  • "Passenger-facing apps and connectivity solutions will continue to be hot topics"
  • "The most talked about next-generation technology is the Ocean Medallion announced in January 2017 by Carnival Corporation. The Ocean Medallion is a wearable technology, or you can carry the coin-sized device in a pocket or bag, that will be sent to passengers at home or which they will pick up during embarkation"
  • ""
  • "Carnival Corporation, owner of the high-end cruise line best known among (and frequented by) the older generation of passengers who remember the brand from the hit '80s TV show The Love Boat, has outfitted the entire Caribbean Princess cruise ship with sensors, 4K touchscreens, and other connected devices to support a new interactive platform called PlayOcean."
  • "Each Medallion is also connected to a virtual avatar, which Carnival developed in the Unity 3D game engine after teaming up with game developers from across the industry. These avatars remain within reach as the guest moves around the ship, appearing on nearby screens and on the passengers' mobile devices"
  • "These games are also available on dedicated 4K touchscreens during the cruise. One of the newest PlayOcean experiences, currently in beta testing, is an interactive poker run called Good Spirits Card Hunt."
  • "This entire project came about because Padgett has watched as gaming has become a part of everyday life for vacationers of all ages. "
  • "Instagram photos are driving interest in travel around the world. With onboard connectivity, cruise passengers are filling Instagram feeds with diverse travel experiences both onboard and on land from several cruise destinations."
  • "However, Royal Caribbean definitely seems more innovative with the things to do on the ship. Newer ships include the world’s tallest waterslide at sea, bumper cars, ice skating, a surf simulator, and even an observation pod that can take you up and out over the water. Carnival offers plenty of fun things to do as well, but it’s typically more of the classic things to do on a cruise ship, like mini-golf, movies, pools, and jogging tracks."
  • "Consider that Royal Caribbean’s Symphony of the Seas is nearly 1,200 feet and carries more than 5,500 guests. Carnival Vista is a full 120 feet shorter and carries under 4,000 passengers. When it comes to size, Royal Caribbean ships definitely have an edge."
  • "Similarly, safety has been propelled to the head of the industry agenda following the Costa Concordia tragedy in 2012 and a spate of high-profile engine room fires last year, the most high-profile being aboard the Carnival Triumph in February, when a blaze in the engine room disabled the 272m-long ship’s power and propulsion systems, leaving 3,100 passengers stranded in the Gulf of Mexico for five days with dwindling food reserves, no air conditioning and inadequate sanitation."
  • "large-scale refurbishment programmes can take up to a month and cost in the region of $50m"
  • "The Carnival Triumph underwent repairs at cost of $115 million"
  • "In response, Carnival Cruise Lines rolled out an unprecedented $300m upgrade programme aimed at boosting emergency power capabilities, implementing new fire safety technology and improving the level of operating redundancies -back-up technology designed to replicate key engineering systems – across its 24-strong fleet. The company is also investing in leading-edge fire prevention, detection and suppression systems."
  • "cruise industry experts, passengers and cruise ship injury law firms realized that certain aspects of cruise travel were becoming increasing less safe and the passengers on those vessels were less protected, both by the cruise lines and by the legal rights offered to them."
  • "The cruise contracts specific to each cruise line that passengers agree to before boarding spell out exactly what passengers are entitled to in various situations that might occur at sea, Cruise Critic’s McDaniel said. That includes what happens during bad weather"
  • "For most cruise ships, the staff needed to run them is somewhere between 800 – 1,500 people, meaning that for every new ship there are thousands of cruise job opportunities"
  • "Factors such as the migrant crisis in Europe, strategic terror attacks, and increased violence in Mexico are driving passengers aboard cruise ships."
  • "Families are able to afford a world-class experience--such as access to four pools, fine dining, and even nightclubs--without paying an exorbitant price. The idea that cruises offer more than most people felt they could afford is driving many younger passengers to get onboard with the idea of a cruise vacation"
  • "A ship out of service for a week for routine maintenance means the loss of tens of millions of dollars and thousands of dissatisfied customers."