1 Cruising with Holland America Line Tourism, corporate identity and corporate history Ferry de Goey Faculty of History and Arts Erasmus University Rotterdam The Netherlands [email protected] Paper for the EBHA Conference 2005 in Frankfurt am Main, Germany (September 1 - 3, 2005) Session 2 C: Images of Transport Do not quote without permission. © Ferry de Goey (2005) 2 “The reason for our success is that we meet and exceed the expectations of our guests every day; we create dr eams for them every day. There is no better value.” (Micky Arison, Chairman and CEO Carnival Corporation, 2004) If you remember Captain Stubing, cruise director Julie McCoy, bartender Isaac Washington, and yeoman-purser “Gopher” Smith of the 1970s television series The Love Boat, you probably have the right age to take a cruise.1 You shall not be alone; in 2005, about 11.1 million people will join you on a cruise. Economic research documents the tremendous growth of tourism in general and particularly the cruise industry after the 1960s. Worldwide employment in tourism in 2001 was 207 million jobs or 8 percent of all jobs. About 11 percent (or 3.3 trillion US Dollars) of global GDP is contributed by the tourist industry and some 698 million tourists generated this economic result. While tourism used to be located in Europe and the USA (in 1950 the top 15 tourist attractions were all located in Europe and the USA), today tourism is a global industry with multinational enterprises.2 Tourism is an exceptionally dynamic industry with businesses constantly inventing new attractions. Several general and specific factors affect consumer demand for leisure products. General factors include: demographic developments; the increase in per capita income; the rise in paid holidays; availability of accommodations; transport technology; mass media spreading news and pictures from distant ‘exotic’ places and creating new ‘myths’3; the international political climate; a tourist infrastructure (e.g. travel agencies, tour operators); economic prosperity and the business cycle. Specific factors include the development of tourist attractions, international impediments on travel (visa, passports, and health regulations), and language skills. The United Nations Statistical Commission officially adopted the following definition of tourism in 1993: “Tourism comprises the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and 1 This ABC television series, aired between 1977 and 1986, most surely promoted cruises in the 1970s and 1980s in North-America. 2 United Nations Environmental Programme (UNEP), Industry as a partner for sustainable development: Tourism (Paris 2002) 12-13. 3 For example the movie The Sound of Music (1965) starring Julie Andrews and Christopher Plummer, stimulated tourism to Austria. The blockbuster Pirates of the Caribbean: the curse of the Black Pearl (2003) created a new interest in the Caribbean as destination for cruises. Richard Voase, ‘Introduction: Tourism in Western Europe: a Context of Change’, in Richard Voase (ed.), Tour ism in Western Europe. A collection of Case Histories (Wallingford 2002) 10-11. 3 other purposes”. This definition demonstrates the methodological problems of sorting out business travel and pure leisure activities, but that need not concern us here.4 Figure 1: The relation between shipping, tourism and the cruise industry SHIPPPING TOURISM FREIGHT PASSENGERS MARITIME OTHER TOURISM TOURISM CRUISES OCEAN COAST RIVER MARINE Cruises are part of the leisure industry and the shipping industry at the same time and that makes them hard to define (see figure 1). A cruise is transportation and destination at the same time and therefore a definition would be: a ship making a roundtrip with paying costumers, calling at different ports at scheduled intervals, offering entertainment on board and ashore. The cruise industry consists of several niches, the most important are: ocean or deep-sea cruises, coastal cruises, river cruises and marine (underwater) cruises. In the remainder of this paper, the focus is on deep-sea or ocean cruises. This is the largest and fastest growing segment of the cruise industry in the last three decades. The cruise market is a small part of the global tourist industry, but its growth since the early 1980s is spectacular. Annual average growth of worldwide tourism 4 Tourism derived its name from the early-modern Grand Tour of the British upper class visiting Europe. See Fred Inglis, The delicious history of the holiday (London and New York, 2000) 14; Jeremy Black, France and the Grand Tour (Basingstoke 2003); Jeremy Black, Italy and the Grand Tour (Basingstoke 2003); Lynne Withey, Grand tours and Cook’s Tours. A history of leisure travel 1750-1915 (New York, 1997) The phrase Grand Tour first appeared in 1760, while the verb ‘tourist’ did not appear until 1800 (Richard Lassel, Voyage of Italy ; Christopher Hibbert, The Grand Tour [London 1987] 18). Continental European travellers showed a similar interest in popular destinations as the British: the big cities, spa resorts, historic places and pilgrimages to neighbouring countries. See Hermann Bausinger, Klaus Beyrer, Gottfried Korff (hrsg.) Reisekultur. Von der Pilgerfahrt zum modernen Tourismus (München 1991). 4 in the past few years was 4.5 percent. Over the past two decades, the cruise industry grew by 8 to 10 percent on average each year, making it one of the fastest growing industries in the world. The number of ocean cruisers grew from roughly 500,000 in 1970, to about 1.9 million passengers in 1980 and 8 million in 2000. If this trend continues, that number is expected to reach 12 million passengers by the end of 2010.5 This study examines the growth of the cruise industry in general and more particular Carnival Cruise Lines (CCL) and its wholly owned subsidiary Holland America Line (HAL). At present, CCL is by far the largest cruise operator in the world. How did CCL become such a large cruise operator? What explains the success of CLL? Why did CCL acquire HAL in 1989? Why are brand names and images important in the cruise industry? The cruise industry remains largely unknown to business historians and no recent scholarly work exists on cruises.6 In the first section, we will look at the history of the cruise industry until 2005. Next, we discuss the history of HAL until the take-over by CCL in 1989. Section 3 studies the development of CCL and its rise to dominance in the cruise industry. In the final section, we analyse the portfolio marketing strategy of CCL and its use of brand names. 1. A history of cruising in the Western world The verb ‘cruising’ originally referred to exploring and was part of the life of adventurers, scientists and discoverers.7 In the second half of the nineteenth century, steamers sailed to the North Pole or the tropics to survey coastlines or the fauna and flora of then unknown parts of the world. Scientific journals published reports stimulating debates on matters long forgotten.8 This 5 G. P. Wild (International) Limited, Implications of Fleet Changes for Cruise Market Prospects to 2010 (August 2001); Zafar U. Ahmed et al., Country-of-origin and brand effects on consumers’ evaluations of cruise lines’, International Marketing Revi ew 19:2/3 (2002) 285. 6 There are several specialised journals and these contain contributions on the history of tourism and leisure. An overview of the literature provides M. Thea Sinclair and M.J. Stabler, ‘New Perspectives on the Tourism Industry’, in M. Thea Sinclair and M.J. Stabler, The Tour ism Indu str y. An International Analysis (Wallingford 1991) 1-15. 7 In the navy cruising meant patrolling the sea lanes. According to Christian Schäfer, the verb ‘cruising’ first appeared in 1884: the Pleasure Cruising Yacht Company, but that is most certainly wrong. Christian Schäfer, Kreuzf ahrten. Die touristische Eroberung der Ozeane (Erlangen-Nürnberg, 1998) 47 (note 31). 8 E.g. Owen Stanley, ‘Notes of a Cruise in the Eastern Archipelago in 1841’, Journal of the Royal Geographi cal Society of London 12 (1842) 262-265; Mr. Mickie, ‘China; Notes of a Cruise in the Gulf of Pe-che-li and Leo-tung in 1859’, Proceedings of the Royal Geographical Society of London 4:2 (1859- 1860) 58-63. 5 sort of cruising probably inspired shipping companies to offer a similar kind of ‘experience’ to tourists. Today’s modern cruise, although highly organised, still appeals to the general feeling of adventure and exploring ‘the unknown’. In the 1960s, HAL placed advertisements for ‘Discovery’, ‘Adventure’ and ‘Mystery’ cruises.9 According to Bill Cormack, the real appeal of the cruise is the feeling of being away, while always staying at home. Ships might visits exotic resorts in tropic countries, once on board you immediately felt at home because everybody spoke your language and shared your values and customs. “A day ashore was a titillating experience, a venture into the unknown, but even in the depths of the kasbah, there was always the consolation that, a mere taxi drive away, England, home and beauty, lay alongside the quay or at worst, a ride away”.10 Cruising seems like an invention of the 1980s and 1990s, but in fact, it has a very long history. The era of ‘modern cruising’ started in the second half of the nineteenth century with the appearance of steamships. Between 1840 and 1890, several experimental cruises took place, until demand was sufficient to offer cruises on a regular basis from the 1890s and the first purpose- built cruise ships entered service. The First World War temporarily halted further development of cruises, but from the 1920s until the Second World War, cruising was very popular, especially in America. After the 1950s, North America became the most important cruising market and liner- shipping companies offered cruises during at least a part of the year.