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Arnold Donald Weighs In for FCCA Platinum Members Arnold Donald,
Arnold Donald Weighs In for FCCA Platinum Members
Arnold Donald, President and CEO of Carnival Corporation, joined an FCCA Platinum Member webinar on April 28 to give the group an update and help them prepare for things to come in the hopes of moving full steam ahead to economic recovery upon cruising’s return to the Caribbean, Central and South America, and Mexico. A lightly edited transcript follows:
There has been lots of press recently on legislators and local officials and even other cruise line CEOs pressuring the CDC to allow cruising to resume. Where are we really in all this? Are we any closer to the resumption of cruising?
In our case for Carnival Corporation, and likely all other cruise companies, our highest responsibilities and top priorities are always compliance, environmental protection, and the health, safety and well-being of our guests, of the people and the communities that we touch and serve – and of course our Carnival family shipboard and shoreside. So we stand with the Ministries of Health across all the nations and islands of the Caribbean to mitigate the spread of COVID-19 and shut this thing down, and we all stand together on that.
Yeah, we have been more than a little frustrated that we have been singled out as an industry for whatever reason and have been presented with pretty much unworkable solutions until this point, but we continue to be in dialogue with CDC and the Biden administration. There’s momentum, with the CDC coming out and declaring they would like to see the resumption of cruising by mid-July, and certainly the administration is saying they would like to see things resume in mid-July.
We see positive indicators in other sectors of society and from the U.S. We see definitely positive indicators from activities outside the U.S.; six of our nine brands have announced resumption of sailings in other places, including the U.K., Greece, Germany, Italy, etc. – and most recently, Seabourn announced it would have some sailings homeported out of Barbados this summer.
So, we see progress, and we can see the light at the end of the tunnel. None of us know how long that tunnel is yet, but we’re working with everyone. Every port has its own jurisdictions and mayors, governors and so on, and similarly for the destinations we visit – and we continue to work with everyone to try to get back so all the people who depend on cruise for their livelihood have an opportunity to get back to work and restore the quality of life for themselves and their families.
Can you share a broader update on the Carnival Corporation family of brands? Many hear ‘Carnival’ and think only Carnival Cruise Line, but I know you do have nine global brands, many that have already started operating.
Like others, we started in Germany and Italy and have been successful both from a guest perspective and health and safety standpoint – and that’s before vaccinations. We were able to safely sail, carrying thousands of guests with very few incidents. The few incidents were handled seamlessly without any major disruption either to the communities or ships and guests. So we have demonstrated a capability, as we have with other viruses, to provide a high guest satisfaction while deploying enhanced protocols to ensure to the guests, crew and destinations we visit that we are doing our part to mitigate the spread of the virus.
We’ve expanded with Cunard, P&O and Princess all with sailings this summer around coastal UK. AIDA has expanded some of its itinerary areas, as has Costa. Seabourn has announced in Greece. I know everyone’s anxious for Carnival, especially for the Caribbean, and we are too – and Carnival has not yet announced, and we’re cautiously optimistic and putting a lot of energy within our energy in the U.S. so that we will be able to start Carnival, we hope, sometime this summer.
A number of brands outside of your brands have announced operations homeporting in the Caribbean. Are you also considering this as an option? If so, which homeports are you considering?
We announced one with Seabourn out of Barbados for some sailings. We have not broadly done that. Carnival has not done that yet, and there are a host of reasons for that because Carnival typically sails out of 14 different ports in the U.S. – and has a drive-to guest base. We have large ships, and airlift is a challenge – even if you charter, it drives the cost up.
Most importantly, we just want to have the Caribbean accessible to the most guests so we can generate the biggest turns in the economies in the islands so all the people depending on cruise for their livelihoods have the best opportunity to recover and again get back to the quality of life they enjoy – and hopefully even better.
We’ll continue to look at the situation,
but in terms of having the level of activity that really is going to drive the economies, we need the U.S. to open up.
You hosted a recent COVID Science Summit with close to 10,000 online attendees. What struck me was that you did not talk about cruising. Why was that?
We did talk about cruising the first Summit, but we didn’t want to be self-serving. We co-hosted with WTTC, with Hilton and U.S.T.A. sponsoring – and the message was about the misinformation with COVID, with the idea to have a pure science summit.
We believe that if you follow the science, then cruise will be fine, and we’ll be treated like other sectors. Our goal was to basically do a public service and bring together global experts to talk about the myths, fictions, but also the facts and the strong opinions to get everybody grounded on the science of epidemiology, transmission, treatments, vaccines, protocols, etc. – and amongst these global experts, their opinions on dealing with this, how they and their families manage it, and what levels of risk they’re taking.
It wasn’t to promote cruise. It wasn’t even to promote travel. It was really to get the science out there because we think once everything’s well understood, then the rest will naturally follow, and we’ll be in a great position.
What were some of your takeaways from the Summit worth sharing?
We got tremendous feedback, and in fact a number of people said it was obvious you weren’t biased, which is exactly what we were trying to do because we want people to have the facts. People became far more knowledgeable about the vaccines, and one of the points of clarity was that all the vaccines minimize the risk of hospitalization and long-term effects or worse. The fact that all of them minimize serious effects from contracting the virus is a foundation to encourage people to take the vaccines.
The other one was that with the advanced treatments and protocols around treatments that you can mitigate the risks of having serious effects if you do contract the virus.
In addition, we still need to practice some basic things, even with the vaccines – which are not a panacea that solves all the problems. You still want to minimize the risks, so in certain settings you still need to wear masks and practice physical distancing.
The last one is that even with the global experts, there’s a range of risk tolerance amongst them. One of them was willing to go to a hockey game. Another, even having been vaccinated, still wanted to sit isolated outside at a table. So that’s the range of risk tolerance, which everybody’s entitled to and is a personal choice, instead of medically based. I think it’s important in society that we realize people have different tolerances of risks and personal choices, and we have to respect that and allow for freedom of choice.
Is there a lot of demand for cruising right now?
As we shared in the business update, we’re in the high end of the range in bookings, especially in 2022, versus where we would have been in 2019 or prior. This shows there is robust demand. Also, we continue to have a number of people choosing onboard cruise credits or future cruise credits rather than seeking cash back on their deposits, which shows there’s a high demand.
Then the logic kicks in, which is that there are in our brands alone about 14 million repeat cruisers once every two years – and there’s been a whole year where the repeat cruisers haven’t been able to cruise. So that’s a huge base of people chomping on the bit about getting back on a cruise ship, not to mention the fact that many haven’t been able to do anything, and the pent-up demand is going to be the Roaring ‘20s again.
Add to that the constraint that we’re not going to be able to bring back all the ships at once; it’s going to be a staggered introduction of ships as we come back because the destinations are going to be uneven in terms of when they open and what the rules and regulations will be, along with getting all the crew ready.
So, we’re going to have greater demand than you’d have in a normal year combined with fewer ships sailing plus exiting a number of ships out of our fleet – so more demand, less capacity, it’s going to be a robust environment in that regard. But the good news is people are anxious to go, engage again and visit places. In the U.S., we know most of the stimulus money hasn’t been spent yet, so there’s going to be great opportunity for economic vitality in the places ships go.
As you know many cruise companies have been promoting and announcing ‘vaccinated cruises.’ We have not really heard Carnival taking a stand on vaccinated cruises. What are your thoughts on a vaccinated-only cruise approach?
Our thoughts are very simple: this is all evolving. If you went back six months ago and established protocols, that was a completely different environment. Vaccines have just been introduced. Distribution is still uneven. Today children aren’t even eligible, which will hopefully change soon. So, we’re letting it evolve. We’ve announced some selected sailings, but not a brand policy for any brand, where all guests are vaccinated by choice for some sailings, like in the U.K. and with Seabourn’s sailings in Greece and Barbados. We also have cruises that started before the vaccine where nobody was vaccinated, and they’ve gone safely with a different set of protocols.
We’ll see how it all plays out, but today we as companies don’t have direct access to vaccines. A number of islands in the Caribbean have been gracious to suggest they would help us to vaccinate crew, but the vaccines are not available to us. Hopefully that will change; everybody thinks there will be plenty of vaccines available soon, we hope so because we encourage everyone to get vaccinated. But we’re not at a point yet to declare anything to be mandatory.
Everyone keeps asking exactly what the onboard and excursion protocols will be once cruising resumes, especially with vaccinated guests possibly on board with non-vaccinated guests and further complicated by crew that may or may not be fully vaccinated. What will these protocols look like?
I can share what exists today, but it’s going to change. Hopefully whatever protocols the destinations are establishing, they’re going to do it in a manner where it can adapt to the realities as society moves forward. But today, where we have no vaccinated people on board a few months back, we had universal testing prior to or at embarkation. We had testing capability on board, additional medical screening, physical distancing, mask wearing and enhanced air handling and sanitization protocols. Then of course protocols for handling any incidents, with isolation protocols and a quick exit from the ship to a facility where people could be treated.
We’ve had things for excursions where similarly to all of our crew needing testing, the tour providers all need to be tested along with our protocols of mask wearing, physical distancing, etc., as well as following a certain route to stay in the ‘bubble.’
That’s today – tomorrow, if people have vaccines, how much of that will be required remains to be seen and will be informed by the medical experts and in compliance of what the rules are wherever we go.
What will occupancy look like?
Initially, occupancy on sailings will be lower so that the crew can get used to handling everything. Then thereafter it will ramp up, assuming that community spread is low in the places we’re going and we have some decent proportion of the guests and crew vaccinated. In the near term we also need to consider physical distancing, so it may be a little while, maybe next year, before we see 115-120% occupancy.
It all depends on how this virus migrates around the world and to what extent it has been contained and people are not at risk to serious effects. The fewer we see deaths, long-term effects and hospitalizations, the more we can feel comfortable. I don’t think COVID-19 is going away, with it likely becoming like a variant of the flu, but if we learn to live with it and manage it, then we’ll be okay.
What message do you have our destination partners, and what can they be doing as they prepare for the return of cruising?
Thank you for weathering the storm to this point – I know it has been extremely challenging. Economies have been devastated. We had to repatriate 90,000 crew members back home. It’s been painful for us to have furloughs and workforce reductions – so the first thing is that we’re all in this together because we are partners.
There is light at the end of the tunnel, but we have to get to it. So, thank you for weathering to this point, and please continue to work with us so we get through it together.
The second thing is to please pay attention to the science, not just the emotions and fears, while knowing you have to deal with public sentiment as well. But please be grounded in what the science and facts are and then do your best to stay as close to that as possible because that’s the best path forward for all of us.
And tell us what you need from us and what you expect from us so we can be prepared to try to honor that.
Last question. We used to ask you what keeps you up at night. Now, has that changed?
I would always give a flip answer in the past, like a Netflix show or replay of a game, before the serious answer that used to be the only thing that really bothers me is if people are afraid to travel or can’t travel. Well, what happened?
Bottomline is now what keeps me up at night are only positive things because I’m never having another negative thought. What keeps me up is being excited about the joy, the exuberance, bringing people together, of them learning what they have in common and celebrating their differences – the human spirit and elevating experience of travel.
The excitement of that is what keeps me up at night, especially having those experiences on a cruise.
