Did Carnival make a mistake by canceling the Pinnacle project?

[Joebucks]

Heres a video on it if you haven't seen it

 

 

What are your thoughts? Should they have done it? I know some people don't care for the mega ships. Does that mean it wasn't a good business decision? It looks like other companies, especially Royal Carribean has had success with this model. I have to say, Carnival would have been ahead of the game if they did this.

 

Either way, their mega ships are coming.

[MBP1]

At the end of the day Carnival's goal is to make money, they deemed that the ship would not be profitable so they did not build it. Since then they seem to be having success with the Vista class of ships.

[klfrodo]

Delete

Brought nothing to the table.

 

My bad.

[TheTravelista]

I personally think it was a mistake. At that time Carnival was an innovator, the leader in the industry and well on their way to shedding their “party cruise” reputation. Pinnacle would have solidified their position at the top for years to come.

 

They got cold feet, RCI became the new innovators and Carnival continues to try to ward off the “Walmart of the Seas” distinction that continues to befall them.

 

Was it a good business decision? No one here really knows enough to say. But I do remember a ton of people (especially on this very forum) saying RCI was crazy for doing Oasis and Allure, they’d never be profitable and they’d fail miserably and well...

[A&Jfamily]

I personally think it was a mistake. At that time Carnival was an innovator, the leader in the industry and well on their way to shedding their “party cruise” reputation. Pinnacle would have solidified their position at the top for years to come.

 

They got cold feet, RCI became the new innovators and Carnival continues to try to ward off the “Walmart of the Seas” distinction that continues to befall them.

 

Was it a good business decision? No one here really knows enough to say. But I do remember a ton of people (especially on this very forum) saying RCI was crazy for doing Oasis and Allure, they’d never be profitable and they’d fail miserably and well...

 

I don't think the Walmart of the Seas distinction befalls them for this reason- I think Carnival has instead embraced the idea of being the entry level, fun, family cruise line that, arguably, though in most cases, offers the cheapest, mainstream, family cruise vacation. The Walmart of the Seas title comes from that fact that when you are reduced to lowest common denominator, you are inevitably going to draw a segment of society that lacks in dress and decorum, allows their kids to occupy adult only hot tubs, press elevator buttons, etc.

 

I don't really see people on this board complaining that the food is below the standards of NCL or RCI (many think it wins in certain categories), and people love the Comedy, and other venues like Alchemy and piano bar. Where the main complaints come from is other passengers and their dress and behavior. There is even a current thread about what is the most disgusting thing you have seen another passenger do.

 

I am not saying that wealthy people can't lack class or manners - they certainly can. But, IMHO Carnival, by being lowest cost, is more likely to draw a larger segment which in turn earns this label. I just don't recall seeing some of the behavior I have witnessed on Carnival on other lines and I think this is why.

[gtalum]

Carnival is doing well, so I don't think they made a mistake. FWIW, neither did Royal Caribbean, clearly. They're pursuing different strategies, but both seem to be paying off.

[bUU]

At the end of the day Carnival's goal is to make money, they deemed that the ship would not be profitable so they did not build it.

Well, no. All we can say is that they deemed that the ship would not be as profitable as the other uses for their available capital. The result is the same... No Pinnacle... But the nuance is important. Obviously, Royal Caribbean did similar analysis and came to the opposite conclusion. We surely will never know who was right and who wasn't... And let's be clear, the conflicting conclusions could have both been correct, the conclusion each company arrived at correct for that company but not the other.

 

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[jimbo5544]

Well, no. All we can say is that they deemed that the ship would not be as profitable as the other uses for their available capital. The result is the same... No Pinnacle... But the nuance is important. Obviously, Royal Caribbean did similar analysis and came to the opposite conclusion. We surely will never know who was right and who wasn't... And let's be clear, the conflicting conclusions could have both been correct, the conclusion each company arrived at correct for that company but not the other.

 

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True enough. Interesting thread.... They (or rather Fincantieri) had a vision of where cruising was going and Carnival did not embrace that. Interestingly enough, these new ships (forgot the class name they pigeon holed on till they name one) do have a lot of attributes of the Pinnacle ideas.

 

 

I wonder on the pure size of these behemoths are there restrictions (specifically in the Caribbean) that limit where they can go (no tender ports due to the number of people, etc.). Perhaps our local expert can chime in on port drafts and debark issues that are pertinent on size.....

[salty dingo]

Either way, their mega ships are coming.

Not coming to me.;)

[bUU]

Not coming to me.;)

In a way they are. As Cruise Lines adopt different approaches for their future that will invariably affect their customers who are looking for them to remain as they were in the past. At the very least it will impact the decision to switch to another Cruise Line. For some, especially those who benefit now from a high level of status with the cruise line, the impact could be quite significant.

 

Of course, those who change along with their Cruise Line stand to benefit greatly.

 

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[Micahs Grandad]

True enough. Interesting thread.... They (or rather Fincantieri) had a vision of where cruising was going and Carnival did not embrace that. Interestingly enough, these new ships (forgot the class name they pigeon holed on till they name one) do have a lot of attributes of the Pinnacle ideas.

 

 

I wonder on the pure size of these behemoths are there restrictions (specifically in the Caribbean) that limit where they can go (no tender ports due to the number of people, etc.). Perhaps our local expert can chime in on port drafts and debark issues that are pertinent on size.....

 

New class of ships for Carnival probably about as big as Pinnacle so perhaps they are doing it in a different way. However new class seems like it might be one very crowded ship but we shall see.

[bUU]

But doing it 10, 15, 20 years later is a completely different thing. I remember when Majesty of the Seas was touted as the biggest cruise ship on the ocean. It is now one of Royal Caribbean's smaller ships. If Carnival did Pinnacle when they originally were thinking about it it would have been one thing. Doing a ship that size now is something completely different, something a lot less innovative, much less of a risk, and basically playing catch up. In the intervening years, ports have been enlarged, channels have been widened and piers have been lengthened.

 

And I'm not saying that it's the wrong decision to be a follower like this. Very often it is better to let the other guy incur the costs of being the leader and then you just come along afterwards and cannibalize their revenue streams by directly competing with them after all the groundwork has been laid.

 

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[BlazinSunsets]

I personally think it was a mistake. At that time Carnival was an innovator, the leader in the industry and well on their way to shedding their “party cruise” reputation. Pinnacle would have solidified their position at the top for years to come.

 

They got cold feet, RCI became the new innovators and Carnival continues to try to ward off the “Walmart of the Seas” distinction that continues to befall them.

 

Was it a good business decision? No one here really knows enough to say. But I do remember a ton of people (especially on this very forum) saying RCI was crazy for doing Oasis and Allure, they’d never be profitable and they’d fail miserably and well...

 

Carnival makes 1billion more in net income than RCI. They are doing well, so is RCI, There is nothing wrong with being 'Walmart of the Seas'. Walmart is putting everybody out of business and making triple what their competitors are. I think Carnival would gladly take 3x the income of the next cruise line no matter what reputation they have. They also only have that reputation with people who think a cruise is something elegant. It's a vacation on a ship, it stopped being anything elegant many years ago imo unless you sail on the higher end cruises.

 

Back to OP question though. Being an innovator is fine but their job is to make money and not put out the nicest or biggest ship. They decided against the ship for whatever financial reasons they came up with, so no I don't think they made a mistake cancelling it.

[naxer]

Of the most interest for me, Farkus mentions that the connection to the sea has always been his and one of Carnival's priorities. I appreciate that. I always appreciate how I can find space to be outside and look at the sea from many different decks, and either alone or with crowds. I would have like to see his version of that on a pinnacle type ship. But that's an awful lot of money for my curiosity. ;) As it is I'm booked on the Panorama and am happy about that.

[bUU]

Carnival makes 1billion more in net income than RCI. They are doing well, so is RCI

Just to be clear, higher net income tells us not much in the absence of other data. To compare the two companies, we would have to compare EBITA ratios, net margin, price performance and debt ratios. Generally, the two large cruise line companies split the crown.

 

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[TheTravelista]

Carnival makes 1billion more in net income than RCI.

Carnival Cruise Line or Carnival Corporation? Because those are two very different things. If you’re referring to Carnival Corporation I truly hope they’re making that much more than RCI considering the vast number of cruise lines that fall under that umbrella.

[jasong38501]

Carnival Cruise Line or Carnival Corporation? Because those are two very different things. If you’re referring to Carnival Corporation I truly hope they’re making that much more than RCI considering the vast number of cruise lines that fall under that umbrella.

 

Here is a link with actual performance of each of the big three companies in first quarter of this year. Let's hope the link works. As you can see Carnival of course brings in more revenue because as you point out the corporation is much larger. But in metrics per passenger day, Carnival lags in many areas.

https://www.cruiseindustrynews.com/cruise-news/18926-cruise-lines-2018-q1-breakdown-by-the-numbers.html

[salty dingo]

In a way they are. As Cruise Lines adopt different approaches for their future that will invariably affect their customers who are looking for them to remain as they were in the past. At the very least it will impact the decision to switch to another Cruise Line.

There will always be choices for those of us who want to sail the smaller ships. I am not one who likes to live in the past, and definitely am looking for a bargain, but I don't see why a ship has to be the size of a supertanker to be profitable.

[LakeWobegon]

No. They chose a different operating model and are extremely profitable. They don't want to be RCCL. I am excited to try them for the first time and if we run into a rowdier crowd than RCCL or NCL, well, then, that's a good story so long as no one gets hurt. I would applaud them for the diversity of smaller to mid-size to their own version of mega-ships. Seems like they get a lot of complaints about Vista and Horizon being too big and "fancy" or "plain" but they offer options for everyone. And again, our upcoming Vista cruise is more than NCL's Escape and not a whole lot cheaper than some RCCL options we investigated. Seems like rational, profitable business model to me.

[bUU]

There will always be choices for those of us who want to sail the smaller ships. I am not one who likes to live in the past, and definitely am looking for a bargain, but I don't see why a ship has to be the size of a supertanker to be profitable.

Well that goes hand-in-hand with the earlier misconception: Corporations aren't seeking to achieve profit: They are seeking to achieve profit and as much of it as any investment of their available capital can possibly achieve. And big ships make more profitable use of available capital than small ships, at the mainstream price point. Beyond that, there's real value in making the smaller ships a boutique offering at a super premium price point. That is why CCL had Seabourn.

 

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[Joebucks]

There will always be choices for those of us who want to sail the smaller ships. I am not one who likes to live in the past, and definitely am looking for a bargain, but I don't see why a ship has to be the size of a supertanker to be profitable.

 

For now, you're right, but for how long? There was a time when the smallest current ships on the fleet, were some of the biggest at sea. What does cruising 20 years from now look like? It's hard to tell, but the trend doesn't seem to involve smaller ships. 30 years from now, the Oasis class may be minuscule.

 

One of the biggest areas where king Carnival corporate lags in the industry is spending per passenger. Now, you can make connections to their business model and target audience if you like, and they may be accurate. However, when you offer your customers an Oasis class vs Fantasy class, which is more likely to have your customers spend more?

[bUU]

The obvious direction is toward ships being more and more the destination. Less about the sea; more about being away from it all; more focus on casinos, amusements on board, and private islands. There will, of course, still be port calls, but I would bet on less of that.

 

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[salty dingo]

... there's real value in making the smaller ships a boutique offering at a super premium price point. That is why CCL had Seabourn.

That is so true it is scary. Small ships more expensive than the mega new ships.

[Thorncroft]

There is nothing wrong with being 'Walmart of the Seas'. Walmart is putting everybody out of business and making triple what their competitors are. I think Carnival would gladly take 3x the income of the next cruise line no matter what reputation they have.

 

I'm pretty sure that that's not the reason that Carnival has that unfortunate nom de guerre.

[jimbo5544]

For now, you're right, but for how long? There was a time when the smallest current ships on the fleet, were some of the biggest at sea. What does cruising 20 years from now look like? It's hard to tell, but the trend doesn't seem to involve smaller ships. 30 years from now, the Oasis class may be minuscule.

 

 

 

One of the biggest areas where king Carnival corporate lags in the industry is spending per passenger. Now, you can make connections to their business model and target audience if you like, and they may be accurate. However, when you offer your customers an Oasis class vs Fantasy class, which is more likely to have your customers spend more?

 

 

 

The analogy is about as broad as you can get. While it makes your point, their are plenty (and I mean a large number) where they want the interaction between them and the sea that the true mega liners just cant give. Are they making more money on Oasis the the Fantasy? Of course. Carnival has grasped that as well and that is why there are so many more passengers on Dream and Vista class than all others. The flip side of the argument is the cost to produce these behemoths. For Carnival it is 800 mill plus and for Royal on an Oasis class a cheap 1.4 Bill.

 

Take into account they still sail full (for the most part) on all the ships that are paid for. They recently just committed to the foreseeable future for the Fantasy class, which were built in the early 90's and they never even took liens against.

 

 

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