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What Carnival Is Doing to Attract More Cruisers and Why It Won't Work

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Carnival (NYSE: CCL  ) recently announced its Shore Excursion Best Price Guarantee. If you book a Carnival shore excursion and find a comparable tour for less offered by another operator, then you will receive a 110% credit of the difference.

If you're someone who goes on cruises, then you likely already know that once you're sitting on the pool deck -- drink in-hand -- and enjoying the sunshine, it's highly unlikely that you're going to be concerned about paying an extra few dollars for a shore excursion. And receiving this 110% credit requires more work than you might anticipate (more on this soon). Therefore, Carnival's most recent initiative isn't likely to lead to market-share gains vs. Royal Caribbean (NYSE: RCL  ) and Norwegian Cruise Line (NASDAQ: NCLH  ) . However, when it comes to market share in 2013, the results might surprise you.

2013 market-share results
Carnival is still the market-share leader for the cruise line industry. On the other hand, due to several on-sea missteps, it's possible that you would have expected Carnival to suffer significantly in this regard.

At the end of 2013, Carnival's namesake brand owned a 21.2% market share for the cruise line industry. Its Costa Cruises brand owned 7.7% market share. And its other popular brands: Princess, AIDA, and Holland America, owned market shares of 6.1%, 4.6%, and 3.3%, respectively.

Royal Caribbean's namesake brand is second only to Carnival's namesake brand, currently owning 16.4% market share. Its Celebrity brand owns 4.4% market share.

Norwegian Cruise Line owns 7.6% market share. And Walt Disney owns 2.5% market share.

This is a positive for Carnival, but not if its top-line engine has stalled:

CCL Revenue (TTM) Chart

CCL Revenue (TTM) data by YCharts

Carnival must be innovative in its attempt to maintain, or expand, its market-share position. With that in mind, let's take a look a closer look at its most recent initiative.

Working on vacation
If a cruise line wants to offer a 110% onboard credit of the difference for a comparable share excursion, what do you think would be the easiest way for this credit to be rewarded? You're probably going to say finding a link to the comparable shore excursion and then presenting it to Carnival. That would make sense and allow you to spend the majority of your time on vacation.

Instead, here are the following requirements to receive this credit. First, the cruise you're on must be sailing out of North America. That's understandable, as well as likely. Second, if you find a comparable shore excursion for less, then you must fill out a claim form. On this form, you must fill out the name of the comparable tour, where the tour was advertised, the duration of the tour, the price of the tour, and any added items that the tour offers, such as lunch, drinks, transportation, and admission fees. Third, the comparable tour must be on the same date as your tour. Fourth, you can fill out the claim form prior to or during your cruise, but not after. The terms "claim form" and "vacation" don't go hand-in-hand. 

The good news for Carnival is that since it's offering a 110% onboard credit, this initiative doesn't cost it much. This can be seen as low-risk/low-reward initiative.

The bottom line
Carnival's Shore Excursion Best Price Guarantee isn't going to help get its top-line growth out of the mud. If anything, it's a sign that Carnival may be failing to innovate and fuel top-line growth. Investors may want to set their sights on Royal Caribbean instead, at least for now. For more information on this topic, you can read, "A Bullish Sign for Royal Caribbean." As always, please do your own research prior to making any investment decisions. 

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Read/Post Comments (4) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 24, 2014, at 7:00 PM, Dignolita wrote:

    I will never use Carnival again--ever. Not because they are a bad cruiseline but they appeal to a market that makes it miserable for anyone over the age of 30 to enjoy the cruise.

    Young adults completely take over the pools with their drunken and bawdry behavior. If that is not bad enough there are literally hundreds of children running around screaming and out of control, running into you all the while there parents just sit there either ignoring them or thinking it is cute. Cubans are particularly bad about this.

    Makes you not want to go on a cruise. Never had this problem on Royal Carribean or Holland.

  • Report this Comment On January 24, 2014, at 9:34 PM, servererror1 wrote:

    Carnival is a haven for lowlife losers who love to suck up the watered down booze and act like animals.

    Food, at best, is upscale Denny's.

  • Report this Comment On January 25, 2014, at 8:18 AM, mike331331 wrote:

    you must not travel a lot. I have done over 25 different cruises and it is most of the time the same way in the pool.i will say that Holland is a little better.but for the price carnival is the best price you you will pay at lease 6 are 700 dollar more on Holland witch is owen buy carnival and royal carribean even more.most of the time people get on these ships and go stupit.they do not care that other people are trying to have fun.

  • Report this Comment On January 25, 2014, at 10:26 AM, WreckTangle1 wrote:

    I don't go on carnival for the food, or the people. I go for the excursions, and I have never paid carnival for one excursion I've gone on. I go through a different company. Doing this might be worth it, and something to look into, but on the other hand, I'm not cattle, and refuse to be herded around like such while on one of their excursions.

    It really is about making the best of it, and when it's my money, I will do whatever it takes to make my vacation the best as I see fit. If that means, going with a different company for excursions to get the best experience and worth my money, so be it. Never been late or had a problem being back on the ship in time either. The locals know where it's at, and how to make your experience the best possible. I've been on 10 carnival cruises btw, and we make sure we hit 4 ports when we cruise.My kids have been on 4 out of the 10, and they are not allowed to run around like wild banshees either, and also have a curfew. When we're in the room, so are they. usually by 1 AM. If we take them, the cruise is built around them to suit their needs, not ours. That's why when we go by ourselves, it's a different story.

    I would also like to try a few other cruise lines in the future, but carnival is more affordable at this time.

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Dan Moskowitz

Dan Moskowitz spends the majority of his time researching stocks. He believes that fundamentals, and logic pertaining to industry trends, win out over the long haul.

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