MIAMI — Carnival Cruise Line has come a long way since its first cruise: On March 11, 1972, the Carnival Mardi Gras left port in Miami on the line’s maiden voyage, packed with passengers, press and crew.
It didn’t make it far though. The Mardi Gras ran aground on a sandbar off Miami Beach. It took 24 hours for the ship to be pulled free.
“The ship was stuck on this sandbar and everyone was like, ‘This is never gonna work,’” said Peter Ricci, the director of Florida Atlantic University’s hospitality management program.
“When they were able to tug this thing off that sandbar, it was the beginning of one of the most successful and profitable leisure and vacation companies the world has ever seen,” said Philip Levine, a cruise-line marketing mogul and the former mayor of Miami Beach.
Carnival Cruise Line, which eventually gave way to parent company Carnival Corp., the world’s largest cruise operator, turned 50 on this month. Founded by Israeli-American businessman Ted Arison in Miami, today it’s one of the city’s largest companies with 40,000 employees.
“We sail about 6 million guests in a year and about a million of those are children,” said Christine Duffy, president of Carnival Cruise Line since 2015. “I think one of the smartest moves was building the foundation of Carnival, which is about have fun. ... We put our own spin based on who our guests are, so for Carnival, that ended up as a roller coaster on top of a cruise ship.”
Levine called the company a “a homegrown Miami success story.”
“When you think of how many homegrown companies in Miami achieve this level of success, you can count it on your hands,” he said. “And Carnival certainly became the biggest. Los Angeles has the entertainment industry, New York has Wall Street and Miami has cruises. Cruising is the industry that Miami exports to the world.”
Cruising existed before Carnival, but it was largely seen as a mode of transportation. With the Boeing 747 rollout in 1969, commercial air travel became more accessible to the middle class in the 1970s. Arison, who was born in British-controlled Palestine in 1924, bought a single ship, with the intention of making the vessel the main attraction, rather than the destination.
“Ted Arison invented the modern-day cruise. He came up with the concept of the ship being a floating hotel. Carnival invented the ideas of the buffet, the set dining times, onboard casinos and all the entertainment options and fun,” Ricci said.
Levine, who worked at Carnival in the late 1980s soon after he finished college, said Ted Arison was a “swashbuckling, incredible entrepreneur.”
His son, Micky Arison, who ran Carnival as CEO from 1990 to 2013 and remains chairman and the owner of the Miami Heat basketball team, “on the other hand, is a tighter operator. He’s more buttoned down. What a perfect combination.”
While Carnival and most of the world’s largest cruise lines have their headquarters in Miami, nearly all cruise ships are foreign flagged in order to avoid the U.S. justice and tax systems. The elder Arison practiced this not only in business but in his personal life: In 1990, he renounced his American citizenship and moved to Israel in part to avoid U.S. inheritance and estate taxes. He died a billionaire in October 1999 in Tel Aviv.
Carnival expanded in the 1970s and ‘80s, buying up more ships and eventually making a series of acquisitions that made Carnival Corp. the world’s largest cruise company. Carnival solidified its dominance with the $7 billion acquisition of California-based Princess Cruises in 2003. Carnival Corp. operates nine brands, including super luxury brands like Seabourn and Cunard, the iconic British cruise line that was an early pioneer in transatlantic steam ships and built the Queen Elizabeth and Queen Mary ships.
While competing brands like Royal Caribbean continue to unveil ships that outdo themselves, with more size, capacity and more amenities, Carnival Cruise Line has largely kept to its bread and butter: Affordable cruises that target working-class American families. The large majority of their 23 ships are based in the U.S. and they have home ports in places like Mobile, Alabama, and Norfolk, Virginia.
“I named Carnival ‘America’s cruise line’ when I joined seven years ago. ... The kind of culture that we have on board really is a very American experience,” said Duffy, noting that the company has 14 home ports in the United States. “It’s a vacation that’s accessible, available and affordable with most of our sails leaving from the U.S.”
Andrew Coggins, a professor at Pace University’s Lubin School of Business who specializes in the cruise industry, said that Carnival competes with land-based vacations more than other cruise lines.
“They’re targeting middle America,” Coggins said. “Royal Caribbean is their competition, but Carnival hasn’t gone as big, which must be by design. Their real competition is Las Vegas, Orlando and Branson, Missouri.”
Carnival’s 50-year tenure has been far from smooth sailing. Business wise, it founded several ventures that tanked, including a Carnival Air Lines, which operated from 1988 to 1997, and a casino in the Bahamas, which reportedly lost the company $135 million.
Carnival Corp. and the cruise industry came under sharp public scrutiny when the coronavirus pandemic hit in March 2020. Passengers and crew were stranded at sea, while the virus spread like wildfire on ships.
Passengers were mostly able to disembark within a month but crew members, who came from countries all over the world, were stranded on certain ships for months, some without pay.
By July 2020, a Miami Herald analysis found that there were at least 3,900 COVID-19 infections on ships operated by several cruise lines, ultimately leading to 111 deaths.
Crew members aboard Carnival Cruise Line told the Miami Herald four months later they only were paid for part of the time stranded on ships, and workers on Carnival’s Princess Cruises said they weren’t getting paid at all.
“I don’t think anything was done wrong, as much as I don’t think anyone really understood what this COVID virus was, and what to do or what not to do,” said Duffy, who used to run the cruising industry’s lobbying body in Washington, D.C., Cruise Lines International Association. “I think what got lost in a lot of the coverage was the fact that you have these cruises already underway. And that decisions that were made not necessarily by the cruise lines, but by governments.”
Carnival and many cruise lines had to dig deep for capital to stay afloat. Duffy noted that Carnival ships require at least 130 crew at all times, not to mention fuel costs.
In 2017, Carnival’s Princess Cruise Line was fined $40 million for illegally dumping oily waste and falsifying logs to cover it up, the largest environmental fine for polluting vessels in history, according to the U.S. Justice Department.
As a result, the Carnival Corp. and its nine cruise brands were put on probation for five years. Carnival has violated probation twice, resulting in a $20 million fine in 2019 and another $1 million fine in January this year. The January violation says that the company failed to implement a court-ordered independent internal investigative office and accused the company of promoting, “a culture that seeks to minimize or avoid information that is negative, uncomfortable, or threatening to the company, including to top leadership.”
Duffy said that Carnival Cruise Line has “addressed” the noncompliance accusations from the federal court and that the company is, “in a good place. We’ve really worked hard to show the improvement.” Carnival Corp.’s five-year probation ends in April.
But environmental activists say that Carnival has a track record of ignoring environmental issues.
“They have shown themselves to be incapable, or unwilling, of monitoring themselves,” said Kendra Ulrich, the director of shipping campaigns with Stand.earth, an environmental advocacy group. “At this point, we’re pushing for increased government regulation.
“For a corporation the size of Carnival, this is pocket change for them. It is not significant enough to drive the kind of change within the industry. It really highlights the fact that there has to be outside oversight,” Ulrich said. “As far as we’ve been able to tell, these fines are just taken as the cost of doing business, rather than a real punishment for the significant damages on environment and air pollution.”
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