Royal Caribbean Cruises Ltd.: Safety, Environment, and Health case study tackles Gary Bald, senior vice president at RCCL. Bald was preparing for a meeting with the company's CEO and Chairman on the current strategic actions of the company. He was considering the company's current initiative or whether it should shift to a different strategy in the areas of safety, environment, and health.
John A. Quelch and Margaret Rodriguez
Harvard Business Review (514069-PDF-ENG)
February 20, 2014
Case questions answered:
- What is the background on Royal Caribbean Cruises International? When it was founded and by whom, the purpose of the cruise line, success in passengers registered, size of company cruise lines owned.
- Competition & Industry Demand: a. Who was the competition? The cruise line brands? b. How was the portfolio of brands differentiated? c. What were the economic conditions that impacted the industry?
- How did consumer behavior respond to the cruise line sales message? What was the Royal Caribbean Cruises marketing approach?
- What created major safety challenges for the cruise line industry? Name and describe some incidents.
- What has RCCL done to heighten safety on their ships?
- What are the security issues that Royal Caribbean Cruises Ltd. deals with?
- What are some public health concerns that RCCL has to contend with?
- What are the environmental issues at play?
- What is the CLIA, and what is its role in RCCL’s relationship with passengers?
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Royal Caribbean Cruises Ltd.: Safety, Environment and Health Case Answers
1. What is the background on Royal Caribbean Cruises International? When it was founded and by whom, the purpose of the cruise line, success in passengers registered, size of company cruise lines owned.
The Royal Caribbean Cruises Ltd. (RCCL) was established in 1968 by three Norwegian shipping companies. It intended to attract socialites who yearned to experience the transoceanic or global cruises.
In 2012, it welcomed more than 5 million passengers on boards. RCCL owned a fleet of 41 ships that belonged to 6 of its brands: Royal Caribbean International, Celebrity Cruises, Pullmantur Cruises, Azamara Club Cruises, Croisieres de France, and TUI Cruises.
RCI contributed greatly to the economy as it employed about 62,000 people and earned revenue close to $8 billion in 2012.
2. Competition & Industry Demand: a. Who was the competition? The cruise line brands? b. How was the portfolio of brands differentiated?
c. What were the economic conditions that impacted the industry?
There were 3 main players that dominate the cruise industry: Carnival Corporation, Royal Caribbean Cruises International, and Norwegian. The largest, top-tier operator was Carnival Corporation, which had revenue of $15.5 billion in 2013 and a portfolio of 12 brands.
Carnival focused on the North America market as it operated 6 brands in this region. It also received over 70% revenue in North America alone. Similar to Royal Caribbean Cruises Ltd., Carnival portfolio of brands differentiated on geographic regions and price points.
The third-largest cruise operator, Norwegian Cruise Line, differed from the two as it strategically focused on the fast-growing European market instead of the U.S. market. It also aimed to expand contemporary lines by initiating cost-saving measures.
The Norwegian brand did not enter the premium and luxury. The company’s revenue was only $2.3 billion in 2012.
The three cruise brands varied by ticket prices. Companies like Norwegian offer contemporary cruises with relatively low-ticket prices and more paid-in amenities on board; typically, this attracts young families.
Companies like Royal Caribbean Cruises or Carnival offer a full-package experience that focuses on stellar service, which is more appealing to adults. The cruise business is closely linked to the economic conditions because cruises are high-ticket items.
To incentivize customers to buy tickets during the 2008, cruise companies had to offer an array of discounts, cabin upgrades, free onshore excursions to maintain occupancy rates.
3. How did consumer behavior respond to the cruise line sales message? What was the Royal Caribbean Cruises marketing approach?
Many customers believe a cruise trip is reserved for special occasions such as anniversary or celebration and that cruising is not suitable for active people. To tackle these assumptions, the Royal Caribbean Cruises marketing approach accentuates innovations and service quality.
Many of PCCL’s ships are constantly updated to include a wide range of entertainment such as surfing simulator, zip-line, climbing wall, Starbucks, and Broadway. These kinds of activities stimulate not only old adults but youngsters, active people, and families.
RCCL is committed to exceeding guest satisfaction and treating co-workers with respect. All employees are carefully trained to deliver top-notch customers.
Also, as 30% of cruisers book their vacations directly with the cruise line, Royal Caribbean Cruises has…
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