Carnival Cruises Marketing plan and Business Case - Yolanda Williams

Yolanda Williams
ybowdrywilliams@gmail.com
www.linkedin.com/in/ybwilliams/
March 1, 2011
Marketing Plan: Carnival Cruises

Marketing Plan: CARNIVAL CRUISES Page ii
TABLE OF CONTENTS
1. EXECUTIVE SUMMARY.....................................................................................................1
2. HISTORY ..........................................................................................................................2
3. STRATEGIC PLAN AND FOCUS ...................................................................................4
3.1. Mission Statement ........................................................................................4
3.2. Competitive Advantage...............................................................................4
3.1. Marketing Goals and Objectives..............................................................5
4. SITUATIONAL ANALYSIS.............................................................................................5
4.1. SWOT Analysis ...............................................................................................5
4.2. Competitor Analysis .....................................................................................9
4.3. Customer analysis.........................................................................................9
4.4. Environment analysis ................................................................................10
5. MARKET-PRODUCT FOCUS .......................................................................................10
5.1. Target Market ...............................................................................................10
5.2. Positioning......................................................................................................10
6. MARKETING PROGRAM STRATEGY AND TACTICS...................................................11
6.1. Product Line...................................................................................................11
6.2. Packaging .......................................................................................................12
6.3. Promotion.......................................................................................................12
6.4. Place .................................................................................................................12
6.5. Pricing ..............................................................................................................13
7. IMPLEMENTATION PLAN............................................................................................13
8. EVALUATION AND CONTROL ....................................................................................14
REFERENCES........................................................................................................................15
APPENDIX...............................................................................................................................1

Marketing Plan: CARNIVAL CRUISES Page 1
1. Executive Summary
Carnival is "The World's Most Popular Cruise Line", with 22 "Fun Ships"
operating voyages ranging from three to 16 days in length to The
Bahamas, Caribbean, Mexican Riviera, Alaska, Hawaii, Canada, New
England, Europe, and Bermuda.Carnival's success is attributed to its
marketing programdirected toward the young, fun-seeking, first-time
cruiser. Oneimportant aspect of the marketing program built upon the
ship as thedestination rather than some particular port of call. The
mainadvertising theme has been that Carnival lines is a "Fun Ship."It’s
current marketing motto: FUN FOR ALL. ALL FOR FUN. Carnival
prides itself on delivering fun, memorable vacations to our guests by
offering a wide array of quality cruises, which present outstanding
value for the money.
The current economic landscape is impacted by an aging population
with disposable income as well as many external, environmental
forces. For instance, over 60% of worldwide cruise passengers are
over the age of 40. Despite the risks associated with terrorism, rising
oil prices, and natural disasters, cruises have and may continue to
become increasingly popular as Baby Boomers enter retirement.
Another growing segment has been family vacations.
This situation therefore represents a daunting task for management to
connect to various market segments to maintain a competitive
advantage in the destination vacation industry. On the other hand, it
has created a golden opportunity for the Carnival Cruise Lines to
increase market share in other areas and to make more money.
In light of the circumstances, a plan has been prepared raise
awareness of the Carnival brand among new market segments, whileat

the same time strengthening Carnival’s position in the multi-night
vacation industry and achieving increased profitability year after year.
A careful look has been taken of both our external and internal
environments. The external analysis looked at the macro-environment,
the market and the competition, while the internal analysis examined
the Bank’s performance, staff, infrastructure and delivery, and its
customers.
A “SWOT” analysis was then performed, to identify strengths,
weaknesses, opportunities and threats. This analysis lends to the view
that it is imperative that we change our existing strategy and focus on
other markets. It is not suggested that we ignore our existing market
of catering to the fun-loving, under 40 population sector, but rather
that we re-focus our energies on the experienced professionals over 40
years of age both single and with families, including doctors, lawyers,
managers, entrepreneurs and retired persons.
I firmly believe that by pursuing this avenue, and by implementing and
controlling the proposed fundamental marketing strategies and
marketing mix strategies, Carnival will be able to achieve the stated
objectives and maintain its leadership position in the multi-night
vacation travel industry.
2. History
Carnival Corporation & PLC is one of the largest global cruise and
vacation companies in the world. Carnival primarily operates in North
America, UK, Germany, New Zealand, Spain, Brazil and Australia. It is

headquartered in Miami, Florida, with another headquarters in London,
UK.
Carnival Cruise Lines was set up as a subsidiary of the American
International Travel Service by Ted Arison. In 1972 Ted Arison, a
former executive with Norwegian Caribbean Lines, partnered with
MeshulamRiklis of American International Travel Service (AITS) to
form Carnival Cruise Lines. As an AITS subsidiary, they soon launched
its first ship, the Mardi Gras. The Mardi Gras experienced disaster often
compared to the Titanic and the new venture accumulated heavy debt.
In 1974 Arison bought out Riklis for almost nothing. By 1975,
however, Arison had turned a profit by careful positioning with regard
to Carnival’s target market. He added a second ship in 1976 and a
third the following year. In the midst of a market depressed by high
inflation during the late 1970s and early 1980s, Carnival prospered
under the leadership of Arison and his son Micky, who became CEO in
1979. By 1987, when it went public, Carnival was the leading cruise
operator in the world.
In the late 1980s Carnival diversified, adding short cruises to, and a
gambling casino in the Bahamas as well as land tours, a hotel chain/
Following the 1989 purchase of Holland America Line, luxury cruises
were added as well. During the mid-1990s the newly renamed Carnival
Corporation had established a heavy presence in Europe that
culminated with the early 1998 purchase of the upscale Cunard line of
Great Britain for half a billion dollars.

3.Strategic Plan and Focus
Carnival Corporation is considered the leader and innovator in the
cruise travel industry. With 81 cruise liners carrying over 7 million
passengers worldwide, the company controls around 44% of the global
cruise industry. The company makes money from ticket sales as well
as on-board revenue from gambling, shore excursions, bar revenues,
and other amenities across brands including Carnival Cruise Lines,
Princess, Costa, Holland America Line, P&O, AIDA, Cunard, and
Seabourn.
3.1. Mission Statement
Carnival Cruise Lines, Inc. has the implied mission of sustaining an
industry leadership position as a market-orientedfirm in the cruise and
leisure industry. Leadership meansproviding the best all-inclusive
cruise vacation to customers in its targeted segments of the market.
3.2. Competitive Advantage
Competitive Advantage
Carnival has a tremendous advantage in size that generates economies
of scale. Second, New-ship construction has risen dramatically and
thus only the largest cruise companies can afford the cost and obtain
the financing. This has allowed Carnvial to capitalize on its market
share. Third, economies allow Carnival to profit in the present market
while being the low-price leader. Thus, Carnival has the advantage of
being further advanced on the learning curve.

3.1. Marketing Goals and Objectives
In support of its mission statement,Carnival’sgoal going forward is to
maintain its leadership position in the multi-night vacation industry.
In order to its goal, Carnivalhas the following marketing objectives:
• Develop new cruise segments and innovative cruise packages
to reach a larger number of potential and past cruisers
• Employ sophisticated promotional efforts to achieve a greater
awareness by the public concerning the availability and
affordability of cruise travel including, attract
o the first-time and younger cruisers
o experienced cruisers
o upscale cruisers
• Promote cruises as an alternative to land-based vacations
4.Situational Analysis
4.1. SWOT Analysis
Strengths
Carnival is one of the world's largest cruise operators, has a large
fleet capacity and operates 11 of the most recognizable cruise brand
names. Their portfolio of brand names appeals to almost every
niche market, from budget minded, contemporary to luxury cruises.
Due to economies of scale, Carnival large company that they have
significant cost advantages over most of their competitors.

Carnival is one of the profitable cruising companies. The company's
average net income (FY2005 to FY2009) amounted to 18.1%
compared to the industry standard of 6.3%.
Carnival aggressively and effectively invests in print and television
media. Their promotions target the lifestyles of each group of
customers. Carnival are "Fun Ships" Holland America, a premium
cruise, is promoted through the tagline "a signature of excellence"
Seabourn, projects itself as "intimate luxury" while the Ocean
Village projects as "the cruise for people who don't do cruises".
Carnival supports its travel partners with training, online marketing
and exclusive offers and savings to its secondary markets.
Weaknesses
The vast majority of the company's sales come from travel agents
who arrange cruises on behalf of clients. Given the emergence of
internet-based travel bookings and direct to consumer models of
selling airline tickets, their business in general has declined.
Because the company depends on a broad base of going-concern
travel agents, any prolonged slump or major consolidation in the
travel agency business could adversely impact the company.
The net profit was $1,790 million in FY2009, a decrease of 23.2%
as compared to 2008.
Carnival derives a majority of its revenue (nearly 52%) from US
customers. In 2009 the revenue from the North American market
registered a double digit decline. The over-dependence on the US
market makes Carnival vulnerable to the economic fluctuations of
the American economy and this company is dependent on
customers’ disposable income.

In the middle of economic uncertainty Carnival has 13 ships under
construction as of November 2009, and the estimated cost of all this
growth is around $8.2 billion. It is difficult at best to justify such a
huge cash outflow in the middle of economic instability. This may
result in consequences like huge debt burden on the balance sheet
and reduced profitability.
Opportunities
The cruise industry has grown considerably in the past 10 years but
still occupies a very small proportion of the global vacation market.
Cruise lines accounted for only 4.5% of the $542.2 billion worth of
the travel industry in 2009. While the revenue for cruises has
declined in the US, it is growing in Europe and Asia, leading to more
opportunities for Carnival to expand in these regions.
They are planning to increase berth capacity for the European
market 37% by 2012.
Customers in Asia are now looking for luxurious cruises as a
vacation option. Disposable income of the Chinese consumer has
grown annually by 10% a year.
Trends have shifted in the cruising industry towards the 45-60 year
old age group. As this age group grows in population, Carnival can
take advantage of the economies of scale and offer them the best
prices.
Brand loyalty and loyalty to cruising are extremely high and should
result in a large number of repeat customers.
Threats

Carnival has been taking advantage of special tax loopholes to avoid
paying US corporation taxes.Carnival is considered a
'Controlled Foreign Corporation' (CFC), which exempts shipping
operations of a corporation from income tax. In 2009 the US
government decided to look at closing those loopholes. If these
loopholes are closed, it could affect their financial statements and
fiscal bottom line in the future.
The U.S. Environmental Protection Agency has changed laws to
reduce the sulfur content (emission) in fuel oil used aboard ships.
This increases the demand for lower sulfur fuel, which raises the
prices of the fuel. Carnival may have to deal with a significant
increase in fuel prices.
In 2009, Carnival experienced bad press when three passengers fell
off ships in a three week period. There were a total of 22 incidents
of passengers falling overboard in 2009. Such events reflect
negatively on the company and the industry.
The company is at risk of declines in its business from terrorist
attacks and geopolitical unrest, even if not targeted specifically to
its ships.In December 2008, passengers on the Carnival owned
Oceania cruise ship were attacked by Somali pirates. The threat of
terrorism and pirates overtaking cruise ships is a concern for
companies in this industry, and also negatively affect consumers’
perceptions of cruising.
The company can be adversely affected by particularly bad
hurricane seasons, natural disasters, and inclement weather
patterns. Many of the company's cruises are to Caribbean
destinations, where hurricanes pose a major threat to business.

Consumers are less likely to buy, for instance, a Caribbean cruise if
a major hurricane is anticipated. Furthermore, the company
depends upon the availability of ports, so coastal weather patterns
can limit CCL’s ability to procure ports. If inclement weather or
disasters hit port areas, the company can struggle to call on vital
ports, which would adversely affect its business.
4.2. Competitor Analysis
Its largest competitor is Royal Caribbean Cruises (RCL) which
commands a nearly 23% market share. Other notable competitors
include Star Cruises, which operates Star Cruise Line and Norwegian
Cruises, and Mediterranean Shipping Company, which operates MSC
Cruises and Disney Cruise Line. However, morecompetitioncomes
from outside the cruise industry in the form of land-based resorts and
hotels.
4.3. Customer analysis
Carnival Cruise Lines targets families, singles, couples, fun-loving
honeymooners, and travellers ages 25-54 that are interested in a fun
and affordable cruise. As the baby boomers continue entering
retirement, the company stands to benefit from the tailwinds of an
increase in senior traffic, as it derives a large percentage of its income
from passengers over 55. It is likely that seniors may continue to
gravitate toward warmer-weather vacations. Coupled with the fact that
retirement means more time to one’s self, and for many baby
boomers, time to travel, the company has significant demographic
tailwinds working in its favor. Additionally, there is growth in the family
market as Carnival moves to create brand recognition among youth
and teens as future consumers.

4.4. Environment analysis
• Political-Legal:
o Increased regulations are issued by the Coast Guard, U.S.
Department of Health, and Federal Maritime Commission.
o Periodic political tensions which occur in cruise areas (such
as the Mideast or Mediterranean) causes cruise competition
to intensify in safe waters until the tensionscease.
• High Competition
o The competitive nature of the industry makes it
unattractive to enter, and high start-up costs serve as a
barrier to entry.
o Rivalry between competitors is high, with six major
competitors (including Princess and Royal Caribbean Cruise
Lines) and eight minor competitors.
5.Market-product Focus
5.1. Target Market
 Online Travel Bloggers
 New customers
 Past customers
 Travel agents
5.2. Positioning
While Carnival Cruise Lines must constantly be aware of its industry
position, the brand is in andesirable position. Not only is Carnival the
world's most popularcruise line, but the Fun Ships brand is well known
to consumers.However, research by industry analysts at Bear Stearns
suggested that increasing similarity across brands in the design of new
ships and in the services offered has made it difficult for consumers to
discern differences between the brands.

Industry innovations--from bars of all types (pizza, sushi, ice cream,
cappuccino, wine, martini, and cigar) to the indoor shopping
promenades and pool-deck movie screens--were imitated in one form
or another by competitors, leading to no real sustainable advantage for
the innovator. Carnival's signature elements, from the showpiece
atriums to the in-cabin towel animals, are now commonplace as rivals
have integrated them into their own ship portfolios. There is more
important the ever to increase the brand positioning efforts particularly
online as that is where consumers usually begin research into
vacations.
As an example, a Google keyword search for Carnival Cruise Lines
resulted in about 4,270,000 results (0.12 seconds), and a search for
Royal Caribbean Cruise Lines returned About 1,940,000 results (0.11
seconds). This is despite the fact that the core brands are about the
same size. To manage the way its brand is represented in connection
with these 4 million hits, Carnival should use the full potential of the
Internet to reach its cruisers. Instant messaging, podcasting, and
weblogs are just three examples of nontraditional marketing
communications options Carnival should be continually explored.
6.Marketing Program Strategy and Tactics
6.1. Product Line
Carnival is the largest and most popular cruise line in the world, with
22 "Fun Ships". Recently, the line had three new ships on order,
including the 113,300-ton Carnival Splendor, set to launch Carnival’s
first Northern European cruise program July 13, 2008, and both the
130,000-ton Carnival Dream and Carnival Magic – to be the largest
“Fun Ships” ever constructed when they enter service in June 2009
and October 2011, respectively. They also maintainexclusive

alliancesalso includes Holland America Line, Princess Cruises, Cunard
Line, Costa Cruises, and The Yachts of Seabourn.
6.2. Packaging
Carnival consistently shares a passion to please each guest, and a
commitment to quality and value, our member lines appeal to a wide
range of lifestyles and budgets. They offer exciting and enriching cruise
vacations to the world’s most desirable destinations.
6.3. Promotion
Carnival offers a first customer-loyalty program in the form of a
guest-recognition card. When guests embarked on a Carnival cruise,
they received a "Sail & Sign" card that was identification for boarding
the ship, a cabin key, and a credit card for purchasing almost anything
onboard.
Another great promotion includes the “Carnival is breaking records”
campaign, where Carnival breaks world records to be included in the
Guiness Book of World Records and local, national and international
recognition of its achievements. Some have included the world’s
largest beach ball and world’s largest piñata. This campaign futher
projects awareness of the “fun, fun, fun” vacation image the Carnival
wants to project.
For additional information on the “Fun Ship” vacation experience,
customers can contact any travel agent, call 1-800-CARNIVAL or visit
carnival.com.
6.4. Place
Carnival Cruise Lines has been a pioneer in the use of the Internet.
Carnival main website platforms to communicate with its target

markets are (www.carnival.com) as well as a separate multilingual
site for international markets (www.carnivalcruise.com). These
offer information for their guests, clients, and travel professionals
alike. Carnival values the travel agent channel enormously and believe
agents are a knowledgeable guide and an invaluable resource for
potential Carnival guests, and they encourage customers to use an
agent, if they so choose.
Funshipisland.com highlights unique products/ship features and serves
as a prospecting tool.Carnivalconnections.com focuses on community
and helps guests connect with other cruisers and to Carnival.
Carnival's international site offers separate sections for guests and for
travel professionals. Travel professionals are provided with
downloadable sales and marketing materials in 8 languages, hundreds
of ship images, pricing and product information, press releases, as well
as the latest promotions. Guests are presented with links to Carnival's
preferred partner(s) in their country of choice. Carnival also offers
complete online booking engines for travel agents (B2B) and guests
(B2C) where live inventory can be seen up to the last cabin level.
6.5. Pricing
Carnival offers guests a "fun, whimsical" environment at a price
comfortable for middle-income households.A seven-night cruise in late
January 2010, costs twice as much as the new 3,600-passenger
Carnival Dream. People are willing to pay more for what's considered
the industry's latest-and-greatest cruise at a great price. To that end,
prices range from $399 for a 3-day weekend excursion to over
$10,000 for a state of the art, high-end 14-day travel destination tour.
7.Implementation Plan
The original objective of the site was to increase bookings by encouraging
guests to invite their friends and family to join them on their FunShip

cruise.The recommended strategy doesn't require any extensive changes
in current programs.
• Monitor the industry andgeneral economic trends to determine
whether demand willrebound as expected.
• Continue to build relationships with bloggers, online travel booking
companies such as expedia.com and priceline.com.
• Continue and expand its usage of social media and interactive
technologies:
Additional social media components are:
• Blog: John Heald’s (corporate) Blog
• Virtual, interactive tour: FunShipIsland.com
• Online community/ social network:
CarnivalConnections.com.Â Photo / story sharing and
scrapblogging, trip planning, event organizing, Q&A
• Twitter: CarnivalCruise
• Flickr photostreams
The only recommendation is to regain profitability. Instead of building
new ships, upgrade and expand existing ships for future growth.
8.Evaluation and Control
The company's information systems are sufficient to evaluate the
performance of the recommended strategy and to separate costs
associated with the expansion. In closing, if Carnival carefully monitors
future demand andmakes necessary adjustments, I think it is in a good
positionto maintain its leadership position in the industry andcontinue
to be financially successful.

References
Carnival Cruise Lines.(2010). About Us. Retrieved on February22, 2011
from www.carnival.com
Carnival Cruise Lines.(2010). Company Profile.Retrieved on February22,
2011fromhttp://www.wikinvest.com/stock/Carnival_(CCL)
Datamonitor.(2010). Carnival Information. Retrieved on February22,
2011from www.datamonitor.com
Greenburg, P. (July 2009). Three Passengers Fall Off Carnival Cruise
Ships In Three Weeks. Retrieved on onFebruary22, 2011from
http://www.petergreenberg.com/2009/06/17/three-passengers-fall-off-
carnival-cruise-ships-in-three-weeks/
Sloan, G. (2008). Cruise ship passengers describe 'pop, pop, pop' of
gunfire as pirates attacked. Usatoday.com.Retrieved on February22,
2011from
http://travel.usatoday.com/cruises/legacy/item.aspx?ak=59427724.blog&
type=blog
All About Marketing Tactics of Carnival Cruise Lines.
Allaboutcruisesandmore.com.Retrieved on February22,
2011fromhttp://www.allaboutcruisesandmore.com/marketing-tactics-of-
carnival-cruise-lines
Fun Ships Campaign (2008).Retrieved on February24, 2010
fromhttp://marketing-case-studies.blogspot.com/2008/05/fun-ships-
campaign.html
Carnival Cruise Lines: burnishing the brand(2006).Entrepreneur.com
Retrieved on February24, 2010 from
http://www.entrepreneur.com/tradejournals/article/149214178.html
Carnival Cruise Lines: charting a new brand course(2006).Cornell Hotel &
Restaurant Administration Quarterly. Retrieved on February26, 2010
from
http://www.entrepreneur.com/tradejournals/article/149214179_1.html
Carnival Successfully Sets Guinness World Record for “World’s Largest
Beach Ball”(2008). Cruisetalk.org.Retrieved on February24, 2010 from
http://cruisetalk.org/2008/11/carnival-successfully-sets-guinness-world-
record-for-%e2%80%9cworld%e2%80%99s-largest-beach-
ball%e2%80%9d.html

Appendix
Utilizing my marketing plan: Sample Capital Budget Request to regain profitability. Instead of building new ships, upgrade and expand existing ships for future growth.
Yolanda Williams Corporate Advance Finance
Capital Budget Request - Upgrade and Expand to increase revenue
Hurdle Rate (or Discount Rate) 40% Marginal Tax Rate 42% Year Built 2009
50% Tonnage 128,000 tons
New Asset: Depreciation Method MACRS Registry Panama
Cost of Asset $300,000,000 Passenger Capacity $3,626 Length 1,004 feet
Shipping 0 Avg Cost per Berth 2,800 Beam 121 feet
Working Capital 0 Annual growth 5% Passenger Capacity 3,646
Depreciable Life 5 Crew Size 1,369
Useful Life 10 Total Inside Cabins 688
Total Outside Cabins 1,079
Cabins & Suites w/ verandas 775
2012 2013 2014 2015 2016
Cruise Sales 361,642,736$ 379,724,873$ 398,711,116$ 418,646,672$ 439,579,006$
Cost of Goods sold 300,000,000$ 306,000,000$ 312,120,000$ 318,362,400$ 324,729,648$
Maintenance Expense 11,100,000$ 11,322,000$ 11,548,440$ 11,779,409$ 12,014,997$
Earnings Before Depreciation & Taxes 672,742,736$ 697,046,873$ 722,379,556$ 748,788,481$ 776,323,651$
5-year MACRS 300,000,000$ 300,000,000$ 300,000,000$ 300,000,000$ 300,000,000$
% 0.200 0.320 0.192 0.115 0.115
Annual Depreciation 60,000,000$ 96,000,000$ 57,600,000$ 34,500,000$ 34,500,000$
EDBT 672,742,736$ 697,046,873$ 722,379,556$ 748,788,481$ 776,323,651$
Less Depreciation (60,000,000)$ (96,000,000)$ (57,600,000)$ (34,500,000)$ (34,500,000)$
EBT 612,742,736$ 601,046,873$ 664,779,556$ 714,288,481$ 741,823,651$
Taxes (42%) (257,351,949)$ (252,439,687)$ (279,207,414)$ (300,001,162)$ (311,565,933)$
Earnings After Taxes 355,390,787$ 348,607,186$ 385,572,143$ 414,287,319$ 430,257,717$
Plus Depreciation 60,000,000$ 96,000,000$ 57,600,000$ 34,500,000$ 34,500,000$
Cash Flow 415,390,787$ 444,607,186$ 443,172,143$ 448,787,319$ 464,757,717$
Ship Statistics
Income Statement Impact
Data Section
Princess Cruise Lines owns five cruise ships that operate continuously in the Carribean Sea. Although the Western Hemisphere markets are decreasing, demand in the European
market is increasing. They are planning to increase berth capacity for the European market 37% by 2012. Currently each ship has 3626 berth (beds) with an avg cost per
passenger of $2800 at full capacity. This plan will increase berth to 4968. The firm is upgrading and expanding the berth (number of beds) of the ships in order to accomodate its
plans in the European market. The expansion with cost an average of $60,000,000 per ship for a total of $300,000,000. There is no shipping cost, because it is a ship or working
capital costs because this will be funded with the firm's cash reserves. The anticipated first year sales is $361,642,736 with 5% annual incremental increases thereafter. The firm
is also expecting an annualized maintenance cost increase of 3.7%, which is 10% of the anticipated capacity increase the first year with 2% annual cost increases each
subsequent year. The equipment will be depreciated over a 5-year period using MACRS. Princess currently owns all ships that are receiving the expandsions and upgrades.
Princess uses a hurdle rate of 40% for itsequipment expansion capital budgeting projects; its marginal tax rate is 42%.

Expected Cash Flow PV 40% Present Value
2012 415,390,787 0.714 296,707,705
2013 444,607,186 0.510 226,840,401
2014 443,172,143 0.364 161,505,883
2015 448,787,319 0.260 116,823,021
2016 464,757,717 0.186 86,414,462
888,291,473 PV Inflows
(300,000,000) PV outflows
588,291,473 Net Present Value
Expected Cash Flow PV 40% PV 50% Present Value - 40% Present Value - 50%
2012 415,390,787 0.714 0.667 296,707,705 276,927,191
2013 444,607,186 0.510 0.444 226,840,401 197,603,194
2014 443,172,143 0.364 0.296 161,505,883 131,310,265
2015 448,787,319 0.260 0.198 116,823,021 88,649,347
2016 464,757,717 0.186 0.132 86,414,462 61,202,662
sum 2,216,715,152 888,291,473 755,692,659 PV Inflows
AVERAGE 443,343,030 (300,000,000) (300,000,000) PV outflows
588,291,473 455,692,659 NPV
PV 40% 888,291,473
PV 50% 755,692,659
Difference 132,598,814
PV 40% 888,291,473
Cost of Equipmt (300,000,000)
588,291,473
IRR 62.18%
40%+((D74/D70)*5%)
Conclusion
References
Vacation To Go - Carnival Dream http://vacationstogo.com/ticker.cfm?r=0&sa=495
Ship technology - Carnival Dream http://www.ship-technology.com/projects/carnival-dream/
Marketing Teacher - Carnival SWOT http://www.marketingteacher.com/swot/carnival-swot.html
The $300,000,000 has a payback of less than 2 years. The NPV at the 40% hurdle rate is $888,291,473
and the IRR is 62.18%, which is 12.1% above the hurdle rate. This analysis confirms that this
expansion of the product line would be a good investment. Expanding the passenger capacity of 5
cruise ships would add profits to Carnvial's bottom line.
Net Present Value
Internal Rate of Return

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Carnival Cruises Marketing plan and Business Case - Yolanda Williams