Did Carnival make a mistake by canceling the Pinnacle project?

[Thorncroft]

If there's a catastrophic world recession sometime in the next 20 years, I can see Carnival still being around and some others, not. Discretion is the better part of valor.

[Joebucks]

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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You are correct to a degree, you do want to watch how much you spend. However, cost to produce takes the back seat when you can paint the picture to investors of what the returns will be. Also known as ROIC. That is absolutely necessary when you want to continue to double and triple your stock price. Amazon is famous for spending billions over the years, forgoing profits, to build something bigger. Many were weary along the way. Do you think it paid off? Amazon could not be where it is at today if it wasn't for those massive investments. If Carnival could prove its worth, a $2 billion dollar ship would go in the works.

 

For its time, the Pinnacle was a big gamble. Would a ship of this size be accepted by the market? What amenities made business sense? What else wasn't known at that time? That is a tougher gamble to make. They were also a smaller company at the time. Since it has become a model proven to work, the huge cost to build has become less of an issue. They now have multiple in the works. Telling investors that the future was too costly for them, especially when the competition has already done it, is stock price suicide.

 

I do agree that the mega liner experience. is not for everyone. I will be curious to see how that development evolves. Again, looking back 20-30 years, I'm sure people said the same thing about the same ships we have today. What new design, technologies, trends, itineraries, etc will develop that could shake things up? I don't see the Fantasy going away anytime soon. I was on one last week. Still a fantastic vacation. It won't be around forever though.

[riffatsea]

You guys seem to be mixing up Carnival Corporation with the Carnival cruise line. They are not the same thing! While the Carnival cruise line may be a low end intro experience the other lines in the corportation(Princess, Holland America etc. etc.) are not!

The corporation is doing VERY well and seems to be making good decisions.

I wouldn't second guess them!

[bUU]

You guys seem to be mixing up Carnival Corporation with the Carnival cruise line. They are not the same thing! While the Carnival cruise line may be a low end intro experience the other lines in the corportation(Princess, Holland America etc. etc.) are not! The corporation is doing VERY well and seems to be making good decisions. I wouldn't second guess them!

Some people are likely mixing up the corporation and the business unit, but it doesn't matter as much as some might think: The corporation's success is very likely strongly correlated with this specific business unit's success. Moreover, the specific changes within this business unit that are being discussed in this thread parallel changes being made by other business units in the corporation: Head over to the Holland America board, and you'll see an abundance of outright bitterness directed at the corresponding trends in that business unit: Bigger ships, a relaxation of formality, etc.