Chairman and chief executive officer, Carnival Corporation
Education: Attended University of Miami.
Family: Son of Ted Arison (cofounder of Norwegian Caribbean Cruises and founder of Carnival Cruises).
Career: Carnival Cruise Lines, 1972–1974, sales; 1974–1976, reservations manager; 1976–1979, vice president of passenger traffic; 1979, president; 1990–, chairman and chief executive officer.
Awards: Seatrade Personality Award, Seatrade , 2003.
Address: Carnival Corporation, 3655 NW 87th Avenue, Miami, Florida 33178-2428; http://www.carnivalcorp.com.
■ Micky Arison built his father's Carnival Cruise Lines business into the world's largest and most successful cruise-ship company, Carnival Corporation. He served as president of the business beginning in 1979 and has been the corporation's chairman and chief executive officer since 1990. Under Arison's direction, Carnival, which was founded by his father in 1971, became the industry leader by the traditional avenue of new ship construction to expand its fleet and by entering into new market segments, such as the fast-growing European market. Described as an extremely competitive person who hated to lose, Arison was commended by industry analysts for his keen attention to marketing and the bottom line.
Arison decided to follow in his father's footsteps in 1972 when he dropped out of college to join Carnival's sales department and learn the business from the ground up. Two years later he was made reservations manager and began working with his father and others to devise new marketing strategies
for Carnival Cruise Lines. One of the early successful strategies that Arison helped develop was to institute a more affordable pricing plan that would include shorter trips. The packages included airfare to and from the port of departure as well as entertainment, meals, and activities on ship. As a result of these moves, Carnival's trips quickly became competitive with other vacation packages and attracted a younger demographic, along with older people who had never taken a cruise.
In 1976 Arison became vice president of passenger traffic. In 1979, a year after the company announced that it would build the largest purpose-built cruise ship in the world, Arison was named the company's president. With company profits steadily growing, he oversaw the building of three more ships in the mid-1980s. But Arison was not interested in building ships that offered the same environment as the cruise ships and luxury liners of old. Instead, his new ships were destinations in themselves and offered vacationers distinct vacation environments that included, for example, retired streetcars and buses serving as dining cafés and shops.
Arison's successful strategy of focusing on steady growth and on attracting a new demographic of people who wanted to take cruises resulted in the company's going public in 1987. With the influx of a $400-million initial public offering (IPO), Carnival began to expand its fleet further and to diversify into land-based resort operations, such as the construction of the Crystal Palace Resort and Casino in the Bahamas for an estimated $250 million. Arison continued to enlarge the company's market segment and engineered the acquisition of Holland America, one of the world's oldest and most revered cruise lines. This acquisition allowed Carnival to move into the luxury, premium segment of the cruise industry. Looking back on the company's successful rise to the top by the late 1980s during an interview for U.S. News & World Report , Arison proudly noted, "We went from being bottom feeders to No. 1 in 10 years" (October 16, 1995).
In 1990 Arison's father stepped down as the company's CEO and named Arison as his replacement. Maintaining a steady course of expansion and acquisition, Arison led the company to acquire a stake in Seabourn Cruise Line and its ultra-luxury cruise ships in 1992. With his eye on Europe, Arison also engineered the acquisition of Europe's leading cruise company, Costa Cruises, in 1997 and the luxury operator Cunard Line in 1998. Arison's vision for Carnival was so successful that the cruise line was operating at 100 percent of capacity for several years by 1996, compared with an average 85 percent capacity for Carnival's competitors. Under Arison's guidance, the once-struggling company became the undisputed king of the cruise-line industry.
Flush with success, Arison continued to expand the company's fleet and ordered the building of 15 more ships during 1997–1999. By 2001 Carnival had a 35 percent market share and was a $16.3-billion company. Despite the success and overwhelming market share, Arison soon faced what many other CEOs had to contend with, a faltering economy and recession. Arison was forced to slash cruise prices in the fourth quarter of 2000 by approximately 3 percent. According to one leisure-industry analyst, this was the largest percentage decline for the company in nearly two decades.
By the first quarter of 2001 the company's profits had fallen 25 percent, from $172 million ($0.28 per share of stock) to $128 million ($0.22 per share). Furthermore, Arison admitted that his company had made a marketing mistake when it consolidated its high-end companies Seabourn and Cunard in 1999, thus blurring the brands. Problems were compounded that same year when faulty engines caused some ships to go adrift and several fires occurred; Arison believes that these mishaps also turned away potential customers.
Carnival and the entire cruise industry was dealt another blow after the terrorist attacks of September 11, 2001, in New York, Pennsylvania, and Washington, D.C. Although the attacks primarily affected the airline industry, people cut back in general on travel plans to go anywhere that was a potential terrorist target, including cruise ships. In addition, insurance costs for Carnival and other cruise lines soared.
In the two months following September 11, the company's advance bookings for 2002 cruises dropped dramatically because of a significant slowdown in travel. Although Carnival reported flat first-quarter earnings in 2002, the earnings were viewed as a rebound by industry analysts, because they greatly exceeded early expectations and were not the sharp decline in earnings that many had predicted.
Arison continued to keep an eye on Carnival's expansion and set out to add P&O Princess Cruises to the company's roster of brands. P&O had a long history in the maritime industry and had established markets in the United Kingdom, Australia, and the United States through its base in Los Angeles. But Arison found himself in a battle as P&O decided to merge with one of Carnival's primary competitors, Royal Caribbean. In a last-ditch effort to acquire P&O, Arison raised the bid to $5.4 billion. Arison and Carnival faced stiff competition from Royal Caribbean for P&O, and when questions about the legality of the acquisition surfaced, the U.S. Federal Trade Commission and the European Commission begun antitrust investigations. At issue was the belief that the company's combined 43 percent global market share after the acquisition would allow it to control prices.
Arison and Carnival were successful in gaining regulatory approval and finally persuaded P&O shareholders to go with his better offer, which Arison had improved by offering to create a single company that would be listed on both the U.S. and British stock markets. The offer also stipulated that 74 percent of the company would be owned by Carnival and 26 percent by P&O.
The acquisition of P&O was an enormous victory for Arison, cementing his company's status as the world's largest cruise company. When asked during an interview for NYSE Magazine why the acquisition of P&O was such a milestone for his company, Arison noted that intense competition among those in the industry greatly limited the opportunities for such an acquisition. He also said, "But it's also a very difficult time for the leisure travel, so taking on a huge capacity is exciting and challenging at the same time" (April 2003).
In the fourth quarter of 2003 Carnival Corporation reported a net income of $205 million, in line with the company's previous fourth-quarter earnings-per-share guidance of $0.24–0.28 per share. Arison was ranked 104 on Forbes magazine's list of the world's richest people, with a net worth of $3.2 billion. Arison did not rest on his laurels; he continued to expand the company's fleet, with several new Carnival ships and Cunard's Queen Mary 2 entering service in 2004. At 150,000 tons, the Queen Mary 2 was the world's largest ocean liner.
Industry analysts have pointed to many reasons for Arison's success in guiding Carnival to the top of the cruise-line business. They noted that his father was a good teacher and felt confident enough in his son to effectively delegate most of the company's daily operations to him by 1979. Arison has been known for his hands-on, open-door management style. Many of his employees even call him "Micky." On the other hand, Arison, too, believes in delegating authority. "Working with various aspects of the company taught me that if you've got the right people in the right spots, let them do their thing," Arison said in an NYSE Magazine interview. He went on to note, "My management style is not to get in their way" (April 2003).
Another aspect of Arison's success was his keen attention to company marketing (including glitzy television ads) and growth priorities. As noted by Jill Jordan Sieder in U.S. News & World Report , Arison always relied primarily on one strategy: "Built it, make it splashy, and they will come" (October 16, 1995). He applied that philosophy even to the Miami Heat professional basketball team when he took over his family's interests in the team in 1994. He hired a successful and expensive coach, Pat Riley, and pushed for a new, ritzy arena to showcase the team.
Finally, industry insiders and business analysts have noted that throughout Arison's career he has imposed tight cost controls on Carnival cruise ships. These controls include standardizing the Carnival fleet from ship design and construction down to bedspreads and furniture. Julia Boorstin in Fortune also noted, "Arison's pack-'em-in approach helps too" (June 9, 2003). For example, the Carnival line has typically run at 100 percent or more occupancy by such tactics as providing bunk beds for children. This strategy has led to a win-win situation. Passengers pay less per person for a room, but they end up spending more money onboard, which generates profits for Carnival.
In 2003 Arison and his family began to sell some company stocks as part of their estate planning and to diversify their investments. During the last four months of 2003 Arison sold more than $100 million of his Carnival stock, slightly reducing the Arison family's controlling stake in the company. This was the first time in nearly eight years that Arison sold any significant amount of his shares, and the sale reduced his holdings at that time from 65 percent to 60 percent. Commenting on the Arison family's sale of stocks, the industry analyst Joseph Hovorka told the Miami Herald , "They're doing a bit of estate planning and nothing more. They still have a significant investment in the company" (August 27, 2003).
See also entry on Carnival Corporation in International Directory of Company Histories .
Boorstin, Julia, "Cruising for a Bruising?," Fortune, June 9, 2003, p. 143.
Dupont, Dale K., "Arison Family Plans to Sell Some Shares," Miami Herald , August 27, 2003.
Fredericks, Alan, "Q&A with Micky Arison," Travel Weekly , November 4, 2002.
"Mick Arison, Chairman and CEO, Carnvial Corp. Winning Vacations," NYSE Magazine , April 2003, http://www.nyse.com/events/1057189596704.html .
"Micky Arison: When the Carnival Comes to Town," International Cruise & Ferry Review (Spring–Summer 2003), p. 15.
Sieder, Jill Jordan, "Full Steam Ahead: Carnival Cruise Line Makes Boatloads of Money by Selling Fun," U.S. News & World Report , October 16, 1995, p. 72.