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35 years of Carnival

Associated Press
Published March 8, 2007


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MIAMI (AP) — Micky Arison says it's probably time to start looking ahead, like his father did before him, to the moment when he must find the next chairman of Carnival Corp.

"At this stage, I'm 57, and I have to start thinking about those kinds of things," Arison told The Associated Press in an interview for Carnival's 35th anniversary. "We have a lot of very talented executives around the world. And over time, we'll see how that all plays out."

Carnival Corp. is the world's largest cruise operator, ferrying 7 million passengers to ports of call around the world last year. The company, which controls 12 brands, reported a net income of $2.28 billion last year.

Ted Arison started Carnival Cruise Lines in 1972 with one ship that ran aground on its maiden voyage. The father named the son president in 1979, and over the next 28 years, Micky Arison and his employees have built Carnival through aggressive expansion and visionary marketing strategies.

On Sunday, Carnival held a naming ceremony for the corporation's 82nd ship, the 110,000-gross ton Carnival Freedom, in Venice, Italy. The 1,487-cabin vessel will be offering a 12-day cruise through the Mediterranean and Greek Islands until it comes to Florida in November.

The ship is one of 20 being delivered to Carnival's brands through 2011 — representing an investment of billions of dollars which will significantly increase the amount of passengers the cruise line can carry.

Clearly, much has changed since the first Carnival sailing of the TSS Mardi Gras.

Ted Arison founded Carnival Cruise Lines as part of a subsidiary of American International Travel Service of Boston. But as the Mardi Gras first set out from the Port of Miami, it hit a sandbar. Micky Arison was on the ship's bridge.

Two years later, Ted Arison bought Carnival for $1 and the assumption of $5 million in AITS debt. Five years after that, Micky Arison — who had filled several jobs in the company — got called to his dad's office for his promotion to president.

That's when Ted Arison left the building.

"We butted heads a lot when he was president and I was vice president," Micky Arison said. "He decided it was better for the family's sake and others' sake that, either he does it his way or I do it my way, but that butting of heads shouldn't continue forever. He actually at the time he did just walk away from the company and did other things."

Arison said he felt awkward at the beginning.

"The issue was more, I would say, pressure from executives that I wasn't deserving to be there and the nepotism issue and all those kind of things," Arison said. "At times it was difficult, on the other hand there was great opportunity."

By 1982, the company had added three ships, including the Tropicale, the first new ship in the cruise industry in several years.

In 1984, Carnival embarked on a groundbreaking advertising blitz featuring "The Fun Ships" slogan and the "Ain't We Got Fun" television campaign. Kathie Lee Johnson — who would later become Kathie Lee Gifford — sang in the television commercial. Other actresses considered included Bernadette Peters and Joyce DeWitt.

The buzz generated by the ads led to the introduction of three more ships by 1987, with marketing targeted at a middle-income demographic.

"Those three ships doubled the size of the company in about 22 months," said Bob Dickinson, 64, president and CEO of Carnival Cruise Lines. "Being on television, getting the name out, creating fundamental demand was very critical to the success of that."

After its initial public offering in 1987, Carnival began to expand. Carnival Corp. was eventually created to encompass acquisitions of Holland America Line, Costa Cruises, Princess Cruises, P&O Cruises and others.
But such growth leads to more problems.

Today, Carnival and other cruise lines face scrutiny over the effect of pollution from their operations have on the world's oceans. Increasing fuel prices are hurting operating costs, and the threat of hurricanes and chaotic world events threaten the entire tourism industry. Also, reports of illnesses and crimes on cruise ships have executives constantly fighting to keep their image clean.

Another challenge for cruise lines is maintaining or increasing demand among a new generation of travelers who can afford spending hundreds on a vacation.

"The hospitality industry in general has to be aware that just because they realize substantial profits from this generation, that doesn't mean the next generation is going to behave the same way," said Lori Pennington-Gray, an associate professor in the Department of Tourism, Recreation and Sports Management at the University of Florida. "Is that younger generation, when they reach that time, going to go after the same experiences, or have they already been there, done that?"

Arison seems confident in Carnival's future once it's his turn to step down, and he's not too concerned by it at this point. But will he be in the same office five years from now?

"I really don't know the answer to that," he said. "I see myself here for the next year, two years. But whether its me running it five years from now or some other talented executive ... it doesn't change the decisions you make today."

[Last modified March 7, 2007, 20:41:02]


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