Big Changes at Carnival Corp.: Good News for Agents?

Agents and other travel industry insiders for the most part praised a move by Carnival Corp. & plc to centralize management for Princess and Holland America Line. The change was announced yesterday along with major changes to the cruise giant’s leadership team.

As of Dec. 1, both Princess Cruises and Holland America Line will be under the same umbrella, Holland America Group, headed by current Holland America president and CEO Stein Kruse. Earlier, Alaska land operations of the two cruise lines were merged.

Kruse’s rise in the ranks is part of a sweeping reorganization that also sees Howard Frank stepping down as vice chairman and chief operating officer of Carnival Corp. Alan Buckelew, currently president and CEO of Princess Cruises, will become chief operations officer of Carnival Corp.

Need for coordination
The moves don’t come as a total surprise. Carnival Corp. president and CEO Arnold Donald told Forbes magazine in the Oct. 28 issue that centralization was part of the plan to strengthen the company.

“This business was correctly built on the independence of the brands,” Donald told Forbes. “When there were a few ships, that made a ton of sense. When it was a fleet, it made good sense. Now it’s an armada. We have 102 ships.

“There’s a need for much more coordination than occurred historically in the business.”

Maturing industry
Florida-based industry consultant Rob McLeod agreed that Carnival’s decades-old decentralization strategy worked well in the past, but not the present.

“Today you have a maturing industry in North America, a growing-to-maturing industry in Europe and emerging in Asia/Pacific. These are big, big brands. Centralization makes so much sense because they can coordinate their strategy better,” McLeod said.

McLeod opined that Royal Caribbean has enjoyed an “advantage” because that company already operated its brands on a more centralized basis.

“[Carnival Corp.] should have changed all along, and now they have to evolve faster,” McLeod said.

Exactly what shape and form centralization will take beyond management changes remained unclear. Carnival spokesman Roger Frizzell told USA Today the changes would be “relatively invisible” to consumers.

Brand identity
For agents, the grouping together of Princess and Holland America Line could make things easier, “because there will be more consistency,” said Eric Goldring, a luxury cruise specialist in Colts Neck, N.J.

But Goldring, owner of Goldring Travel, cautioned that keeping the two brands intact is key. He said he worries about “homogenization” in the cruise industry. “You start to get identity loss and then brands become less important,” said Goldring, owner of Goldring Travel.

Longtime cruise seller Jo Kling, president of Coral Gables, Fla-based Landry & Kling, also noted the importance of maintaining separate identities for Princess and Holland America.

It “makes sense” to merge behind-the-scenes operations, such as purchasing and port operations for the two lines, she said, but “the brands need to stand and be represented differently.”

“Those are very strong brands that have very strong supporters and different ways of doing things,” said Kling, whose firm specializes in meetings and events at sea.

Execs understand agents
Agents praised the promotion of Kruse and Buckelew, and Princess executive vice president Jan Swartz, who will replace Buckelew as president of Princess Cruises. Swartz will report to Kruse.

Scott Koepf, vice president of sales for Avoya Travel / American Express, said he sees pluses for travel agents. “Philosophically, what I think the move does is it establishes the importance of the agency relationship.”

Koepf noted that Kruse, Buckelew and Swartz “have been around the industry a long time and learned the power of the agency community. That will benefit all of us on the distribution side. We know how we can help them achieve their goals.”

Re-embracing agents?
Brad Anderson, co-president of Avoya, predicted that the reshuffling will bring good news to Carnival Corp. shareholders and travel agents alike.

“This is self-serving, but it’s evident travel agents have an incredibly powerful position in this industry in helping people determine if they are taking a land-based vacation or an ocean vacation. I am reasonably confident these folks understand that,” Anderson said.

“I would be surprised if we didn’t see a re-embracement of the role of travel agents in all aspects of their success.”

Anderson added that a good way for the promoted executives to make a statement to the agency community would be to “minimize non-commissionables.”

Chuck Flagg, owner of a Cruise Holidays franchise outside of Atlanta, said, “Nothing has really changed. Right now I don’t see a downside.”

Seat at the table
On another note, Kling said she was pleased to see a woman being named to a top position within the Carnival organization.

“We were all very excited to see Jan Swartz being promoted. Women in leadership positions do have a different orientation than men; they have different emotional sensibilities, in a positive way. It’s about having a seat at the table, expressing your opinion and participating in idea development.”