Carnival CEO talks cruise recovery, ticket pricing, and leadership lessons

Carnival Corporation CEO Arnold Donald joins Yahoo Finance Live to discuss the cruise recovery, the demand for travel, and ticket pricing amid inflation.

Video Transcript

BRIAN SOZZI: The cruise line industry is hoping this summer's travel season is vastly different than the last two that were badly hurt by the COVID-19 pandemic. There are signs that it may be the case, at least for industry giant Carnival. Carnival said earlier this month that its entire fleet is back in service. Joining us for more on Carnival is CEO Arnold Donald. Arnold, great to see you. As always, welcome. So all these ships are back out there, doing what they're supposed to be doing, bringing cruisegoers on vacation. How crowded are these ships?

ARNOLD DONALD: Brian, first of all, good to see you. And good morning to you. Look, we have on our Carnival brand, we have nine world leading cruise line brands. On our Carnival brand, yes, all 23 ships are back as of May 2. We have fantastic occupancy. People are having a great time. Carnival is doing very, very well.

Other brands, we have over 75% of our total fleet back. But as you know, there are places in the world that still are not open yet. China is, of course, on lockdown. Australia is just beginning to open. We're excited Canada finally opened up. Japan, you know, there's limited opportunity at this point in time, but that's changing as well. So we're on the upswing. And guests are having a great time.

BRIAN SOZZI: If I actually decide to take a vacation this summer, Arnold, am I going to get sticker shock if I try to take a cruise on a Carnival, just given this inflationary environment that we are on?

ARNOLD DONALD: I don't think you're going to get sticker shock, but if you're asking the question, how is pricing, generally speaking, pricing is stronger than what it was, say, back even in 2019 pre-COVID. But you're not going to see the same level of price increases that you've seen in some other sectors of the economy, and some other sectors of travel and leisure. But pricing is, at this point, strong, and we expect it to continue to be.

BRIAN SOZZI: Where have you been able to increase prices?

ARNOLD DONALD: Basically, it's ticket pricing, but then also we include in our overall revenue results, of course, on board spend. And there, that's just people-- we make available to people things they want. And we try not to sell much, but just make sure we understand what they want and make it available. And so on board spending is up significantly, but also in many cases, the pricing is up. And it's on itineraries generally across the board.

BRIAN SOZZI: When the ship-- the ships that are back in the water, what are you seeing from consumers in terms of onboard spending? Where are they spending? And is there any indication they are concerned about their own budgets?

ARNOLD DONALD: Well, I think right now, a lot of people are just happy to be traveling again and having the opportunity to have great vacation experiences on wonderful ships. In our Carnival line, Princess, Holland America. Abroad, AIDA, P&O, Cunard, and Costa. And so-- and of course, our ultra luxury Seabourn line.

And people-- so across the board, whether it's mass contemporary brands, ultra luxury brands, whether it's in spa, whether it's in excursions, whether it's in casino, whether it's specialty dining, we see across the board increase in spend, and retail as well. And I think a lot of that is just people are glad to be out again and glad to be socializing and glad to be building the joyful memories that cruising is all about.

BRIAN SOZZI: One of your competitors yesterday said on their earnings call, Arnold, that they're not going to go back to Russia until 2023 or 2024. Do you have that same commitment?

ARNOLD DONALD: Look, the commitment for us is first, obviously, we're going to be in compliance. Our number one priority is always compliance, environmental protection, and health, safety, and well-being of everyone. In the case of Russia, yeah, we've replaced our Saint Petersburg itineraries with destinations in Latvia and Finland and Sweden and other places. So we'll see when the time is right to go back. I'm not trying to predict when that will be. But we certainly aren't going back in the near term.

BRIAN SOZZI: Lastly, I think you surprised a lot of folks, Arnold, a couple of weeks ago. Said you were semi-retiring, if you can call it that. Why did you decide now?

ARNOLD DONALD: I think, first of all, I'll be moving to vice chair, effective August 1. I'm very excited about Josh Weinstein, who's going to assume the responsibilities of president and CEO. He's currently our chief operations officer. So very excited about the change. Why now? Things are pointing in the right direction. Obviously, you know, who knows what choppiness lies ahead? But overall, things are pointing in the right direction. We're on a path to get the full fleet back up and sailing.

We're on path to generate positive earnings, et cetera. And it's been nine years in the role. And it's time for the next generation to be able to assume the helm. I'll be around as vice chairman. Our chairman, Micky Arison, will still be around. So we'll have continuity, along with other members of our board who provide continuity. But it's time. And I feel it's a good time for a smooth transition. And that's exactly what we're enjoying. It's a joy to work with Josh and the rest of the leadership team. And we're already having fun with it.

BRIAN SOZZI: You do not get to lead a public company for nine years if you're not doing things right. I imagine you learned a lot over the past nine years. What is your biggest leadership lesson, having led Carnival the past nine years?

ARNOLD DONALD: I'll tell you, I'm an older guy. So I had a lot of experience before I came into this role nine years ago. But what was reaffirmed to me in this role is, listen, listen, listen. If you listen to your guests, they'll tell you how to exceed their expectations. If you listen to your employees, they'll tell you how to deliver for those guests what they're looking for in a sustainable way.

If you listen to the communities and the broader stakeholders, the shareholders, the media, et cetera, they'll tell you what they're expecting of you as a good corporate citizen. And if you listen carefully and then you execute against what you're listening, what you're hearing, you will absolutely enjoy success. And despite all the challenges we've had, we've come through this really well. We've demonstrated resilience. We're on the path for an even brighter future for the corporation that existed pre-COVID.

BRIAN SOZZI: I'll say this. You're one of the first guys that actually gave me an interview when I was first starting out in this crazy field, so I thank you for that. And good luck in your semi-retirement. Carnival Cruise Line CEO Arnold Donald, always good to see you. I'll talk to you soon.

ARNOLD DONALD: Thank you, Brian. Be safe.