Reputation Management Plan for Carnival Corporation

Reputation Management Plan: Carnival Corporation & PLC Corporate Reputation & Communication Module 14 Assignment

by Jessica Espada, Kori Gutierrez, and Megan O’Neill April 17, 2021

Contents Introduction

p. 3

Situational Analysis

p. 4

Stakeholders

p. 6

Vulnerabilities

p. 7

Media: Digital, Social and Traditional

p. 9

Spokespersons

p. 12

Corporate Social Responsibility

p. 13

Community Relations

p. 14

Conclusion

p. 15

References

p. 16

2

Introduction Carnival Corporation & PLC (“Carnival”) was founded in 1994 after 22 years of successful operations of Carnival Cruise Line, which was founded in 1972. In 1987, Carnival launched its IPO; the influx of capital allowed the company to expand through acquisition.

Carnival has established itself as a leader in cruise tourism and offers cruise experiences ranging from no frills to ultimate luxury. One of its successes is in offering price points that appeal to potential guests based on the type of experiences they desire. Nearly every American is able to afford a cruise on one of its many ships, making cruising an affordable vacation for every economic level of clientele. Carnival does fun well and its incorporation of fun into a core corporate value is obvious.

In 2022, Carnival will celebrate its 50th birthday. Thanks to shrewd business practices, Carnival and its nine cruise lines will have survived more than a year of a no-sail order from the US Government. Nothing has been more financially devastating to Carnival than the Covid-19 crisis. With a 75% loss in revenues from 2019 (Carnival, 2020), many companies may have shuttered.

We feel that the pandemic crisis meets the cruise industry at a crossroads and Carnival should take this opportunity to more fully address its reputation. As experts in Corporate Reputation Management, we have witnessed that a solid reputation can soften a crisis’ blow to stock prices, revenues and profitability. We have studied companies that have resurrected themselves and we believe Carnival can do that as well.

Below we present our plan for taking the helm of Carnival’s reputation and steering it into calmer waters. In each section, we begin an assessment of what Carnival has done and we end with our recommendations. These recommendations will stabilize its reputation and future successes1.

1

Throughout the document, we use Carnival Cruise Line as the example of one of the cruise line brands.

For the sake of brevity and because there are nine cruise lines under the corporate umbrella, we chose to focus on one only.

3

Situational Analysis Carnival’s top priority is to return to sailing as soon as possible. Resuming its services will provide much needed revenues that were lost in 2020. The pandemic still looms large and is the obstacle preventing Carnival ships from getting underway.

Since March of 2020, all Carnival cruises have been canceled (as is the case with the entire industry). The US Centers for Disease Control (CDC) has extended its no-sail order until at least July 1, 2021 (Bretz, 2021). Carnival has not yet announced if it will require guests and crew to be vaccinated.

In early April (2021), Florida Governor, Ron DeSantis filed a lawsuit against the CDC for disallowing the cruise industry to resume, citing economic damage. No doubt, local and national economies have been adversely affected by the absence of the cruise industry. Within the first six months of the pandemic, Florida alone lost $3.2 billion as a result of the industry shutdown (Tsai, 2021). Florida ports have also seen a decline in operating revenue of nearly $300 million, which is expected to increase in the coming months. Despite the losses, the CDC justifies its Framework for Conditional Sailing order with data showing that Covid-19 spreads more easily on cruise ships than in other environments.

Currently, Carnival continues to sell future voyages (even if it has to cancel them). Carnival’s social media shows dream vacations and plenty of opportunities for fun and excitement including Carnival’s CFO or “Chief Fun Officer,” Shaquille O’Neal explaining the newly added mini cruises. Carnival has not shared content related to the pandemic or its preparedness, but has chosen to focus on luring in customers with the positive. This has powerful appeal to people after a year of lockdowns and limited social interactions, and yet avoids the questions that are top of mind for customers and other stakeholders.

Nautical flag signaling a change of course.

Despite its efforts to return to business as usual, Carnival is neglecting good reputation practices. Typically when risks are present, a company focuses its energies on handling any threats or negative press that have already surfaced (Eccles, Newquist & Schatz, 2007).

4

Carnival displays weak internal coordination and poor communication about the pandemic, thus allowing stakeholders to perceive that it is hiding something. Across industries, the pandemic has demonstrated the importance of being transparent and communicative with customers, and Carnival is falling short.

Because of the polarized political climate and the pandemic, it is more important than ever that Carnival creates a robust plan to respond to the pandemic that assuages fears about passenger safety and satisfies CDC requirements. Carnival is best served by ceasing business as usual and adopting a response that demonstrates care for its customers and other stakeholders.

A reputation management plan will provide a framework for managing reputation. (Doorley & Garcia, 2019)

5

Stakeholders Carnival Corporation & PLC identifies its key stakeholders as: ● ● ● ● ● ● ● ● ● ●

Guests Employees Home and Destination Port Communities Travel Professionals Suppliers Media Non-Governmental Organizations (NGOs) Government Agencies Investors Business Organizations

Recommendations We recommend that Carnival recognize its role in modeling responsible global citizenship and operations by adding the following as stakeholders. ● ●

Climate Change organizations (Deloitte 2030 Challenge, UN Sustainability Goals) Ocean Activism organizations (like Ocean Conservancy, 4Ocean)

Concern for the environment should be demonstrated as a corporate value, not simply stated.

This can be achieved by opening this conversation up to customers and making the environment higher profile across all lines and in customer communications.

6

Vulnerabilities Carnival has a reputation problem. It is perceived outside of its enthusiastic customer base as lacking integrity and transparency. The reputation ranking available showed Carnival ranked on a list of brands most targeted by activist groups (Ranking the Brands, 2019). Top complaints of activist groups were environmental abuses and labor/wage practices. There is also negative visibility as a result of Carnival ships lying to US government agencies, not protecting passenger safety and not paying taxes in the US. There are sensational stories of crimes, accidents, and passenger deaths that have resulted in lawsuits and congressional investigation. Carnival does not have a reputation as an honest and transparent company, and its silence about issues has caused further damage to its reputation.

Current Risks to Reputation Environmental Record In 2016, Carnival incurred the largest ever criminal penalty for environmental violations: $40 million (Geeky Explorer, 2020). In 2019, Carnival violated the correctional conditions of the 2016 mandate and incurred an additional $20 million in penalties (MacDonald, 2019). Carnival is known as a frequent polluter among environmental activist groups. In its 2020 Cruise Ship Report Card, Friends of Earth reported “All Carnival Corporation companies committed criminal environmental violations from 2017 to 2020.”

Greenwashing Environmental statements are made only on websites. The absence of this conversation on social media indicates a lack of conviction. Claims of environmental concern or progress feel dubious when considering the body of evidence of environmental violations.

Pandemic and Illness Cruise ships have a reputation for spreading illness onboard. Carnival exacerbated this reputation by mishandling coronavirus outbreaks on ships in the early days of the pandemic.

7

These disaster scenarios eventually required federal government intervention, to the frustration of the Trump administration which previously and publicly advocated for its autonomy (O’Connell, 2020). Carnival’s missteps resulted in a Congressional investigation (Allen, NPR, 2020).

No corporate tax liability in the US The increased political attention on corporate tax rates brings Carnival into the line of fire as offshore and foreign-based entities are facing increased scrutiny for profits made in America.

Accusations of ducking corporate tax liability as a result of its incorporation in a “flag of convenience” country Panama, has the potential to turn into a crisis.

Employee wages and hours Carnival is known for its inequitable pay and labor practices and it intentionally hires outside the US to keep wages low. These practices, if not managed, could increase scrutiny from activist groups and regulatory agencies.

Political Affiliations Chairman of the Board, Micky Arison is a personal friend of former president Trump. This affiliation, though a boon to its reputation in the eyes of some, is not popular among most Americans. Disassociation is advised.

Crime Cruise ships are a place where crime often occurs. Sexual assault is the crime most committed on cruise ships and many incidents are not reported. What’s more is cruise companies have admitted a lack of transparency about sexual assault.

All of these vulnerabilities will remain threats as Carnival tries to emerge from the pandemic crisis. To be transparent, Carnival should address all of them through strategic communications with stakeholders.

8

Media: Digital, Social, and Traditional Carnival needs to utilize digital, social, and traditional media to its advantage. Currently it is not maximizing its visibility using owned and shared media outlets. Carnival lacks an effective social media strategy. After examining the brand's social media outlets, the company is not interacting with others. It is missing the opportunity to have corporate leaders engage with a target audience. Further, its social media does not have personality, fails to use important content, and lacks consistency in content messaging and frequency.

We advise Carnival to conduct a social media audit and SWOT analysis of all social media outlets to examine and highlight the critical issue areas. We have provided examples of a social media audit and SWOT analysis for Carnival below so that it may implement a new strategy. We have provided recommendations and an example of a social media campaign that could be implemented to promote Carnival’s reputation.

Social Media Audit for Carnival Cruise Line

Followers

Last Activity

Posting Frequency

Twitter

https://twitter.com/car Carnival Cruise nivalcruise Line

260.6K

4/12

1/2 Days

Facebook

https://www.facebook Carnival Cruise .com/Carnival?ref=ts Line

5,008,646

4/13

1+/Day

Instagram

https://www.instagra m.com/carnival/

744K

4/13

Sporadic but Frequent

YouTube

https://www.youtube.co m/channel/UCQtaYLDk Carnival Cruise O94wL2Nc7riTkSA Line

85.1K

4/12/2021

Sporadic

Pinterest

https://www.pinterest.co m/carnivalcruise/_creat Carnival Cruise ed/ Line

55.8K

4/8

Sporadic

Site

URL

Profile Name

carnival

9

Referral traffic (monthly)

Site

% change last year

% change last month

Clicks / post

Clicks / post (previous month)

Clicks change from previous month

Facebook reach

% change last week

Followers today

Followers last month

Twitter Facebook Instagram YouTube Pinterest

Using internal data, fill out this chart across all social media platforms and for all cruise lines.

SWOT Analysis of Carnival Cruise Line’s Instagram Strengths ● ● ●

Weakness

Beautiful imagery in posts.

Significant number of followers.

Loyal and engaged following.

● ● ●

Opportunity ● ● ●

Not covering any CSR or Community Relations topics.

Could be more interactive with other Carnival social media outlets.

Consistency could be better.

Threats

Multiple community relations programs and initiatives that could be highlighted.

Bring more of our Facebook followers to Instagram to help us grow our reach.

Creating posts that highlight the employees of Carnival Cruise Line.

● ●

Competition’s social media outlets, such as Disney Cruise Line’s Instagram.

Possible backlash from new Covid-19 regulations for cruise lines.

Using internal data, follow this example to complete a SWOT analysis across all social media platforms and for all cruise lines.

10

Followers change

Recommendations Because Carnival lacks transparency, it should (on every cruise line and on every social media platform) talk about how it is addressing vulnerabilities, especially the pandemic. Get stakeholders to engage in conversations so that Carnival can better steer its efforts.

Utilize SEO and social media hashtags to help reach a new and broader target audience.

Develop digital and social media content around the following: ➔ Pollution/Environment: promote and talk about environmental efforts on board and corporate wide. ➔ Passenger safety: resources for staying safe on board, preventing falls, preventing theft and assault, hand washing, cough/sneeze etiquette, etc. ◆ Behind-the-Scenes video on Covid-19 safety prep ➔ Employee profiles: share employee stories and how working for Carnival has improved their life and economic situation. ➔ Contributions to port economies. ➔ Community Relations and Humanitarian Aid: Missed opportunity to post about Carnival’s willingness to assist in the St. Vincent eruption. Even though the Prime Minister called off the ships, Carnival failed to promote its involvement.

Social Media Campaign Example

Caption: We were happy to celebrate National Volunteer Month with the Boys & Girls Club of Miami-Dade this past weekend. Our employees volunteered in a community project to revitalize the neighborhood.

To learn more about our efforts to give back to the community please visit our website [embedded link].

And please take a moment to donate to the Boys & Girls Club of Miami-Dade [embedded link]. #Donate #Boys&GirlsClub #CarnivalCruiseLine #NationalVolunteerMonth #Volunteer #Carnival #ChooseFun #WeAreCarnival

11

Spokespersons The primary responsibility of a spokesperson is to manage the accuracy and consistency of the messages coming from the organization (Coombs, 2019). Carnival identifies its potential spokespersons as: Carnival Corporation & PLC ● Chairman of the Board: Micky Arison ● President & CEO: Arnold W. Donald ● COO: Josh Weinstein ● Chief Ethics & Compliance Officer: Peter C. Anderson ● CFO & CAO: David Bernstein ● Chief Maritime Officer: Vice Admiral William R. Burke (Ret.) ● CCO: Roger Frizzell ● Chief Human Resources Officer: Jerry Montgomery ● Senior Vice President and Company Secretary: Arnaldo Perez ● CIO: Gregory A. Sullivan Carnival Cruise Line ● President: Christine Duffy Recommendations As Carnival Cruise Line’s CEO, Christine Duffy is the face of the brand. She is typically the spokesperson used to communicate with the public and address any concerns that may impact the cruise line. She recently commented on Carnival’s future plans when cruise lines are able to sail again and stated that Carnival has not made a decision whether vaccines will be a requirement. She also made it clear that if given the opportunity to restart cruising, vessels will not be sailing from foreign posts and will stand by its position as being "America's Cruise Line" (Carnival YouTube, 2021). Earlier this month the CEO of Carnival Corporation, Arnold W. Donald, expressed a similar sentiment and communicated that cruise lines would “like to be treated the same as other sectors and travel and tourism and entertainment” (Tsai, 2021).

“If one can fly, stay at a hotel, or go to an amusement park, one should be able to go on a cruise.” (Christine Duffy, 2021) A message communicated on behalf of the company usually involves more than one person and it is crucial that Carnival allow Arnold W. Donald and Christine Duffy to communicate with stakeholders. Regardless of its reputation management plan, having Donald and Duffy participate in additional media training would yield consistent messaging regarding the pandemic and its preparedness, and would benefit Carnival.

12

Corporate Social Responsibility Corporate Social Responsibility (CSR) is an essential component of a reputation management plan. Carnival should be highlighting its actions, but currently the company is letting its efforts go unnoticed. With the launch of its sustainability website in 2016, it made one of its most significant initiatives to date addressing both climate change and decarbonization. Carnival has not seized the opportunity to promote its website to stakeholders.

Along with working on sustainability, Carnival is dedicated to cooperating with regulatory agencies within the US and UK governments to implement essential practices. for its shareholders. Carnival stated, “we are committed to governance policies and practices that ensure shareholder and other stakeholder interests are represented in a thoughtful and independent manner” (Carnival Corporation, n.d.).

The company highlighted its CSR efforts by releasing a press release to announce that it had been named one of “America’s Most Responsible Companies” in 2020 by Newsweek. However, it did not share this information with its stakeholders to maximize the benefit. The company also did not mention that it moved up the rankings in 2021 from #208 to #196, and its corporate governance score increased by over 10 points (Newsweek, 2021). This valuable CSR information would help boost the company’s reputation amongst stakeholders.

Recommendations We have provided the following recommendations on how to improve Carnival’s CSR strategy to improve the company’s reputation: ➔ Highlight the company’s yearly sustainability goals on all media platforms, not just the sustainability website. ➔ Highlight all company awards and recognition for CSR on social media platforms and to stakeholders. ➔ Provide updates on crucial CSR practices throughout the year. ➔ Highlight the company’s governance successes. ➔ Increase transparency among all stakeholders regarding CSR.

13

Community Relations Along with CSR, Community Relations is a crucial aspect of a company’s reputation management plan, and needs to be highlighted. Carnival has many community relations programs, yet neglects to communicate about them or share them on social media.

The Carnival Foundation's signature program is the Carnival Scholarship and Mentoring Program in collaboration with Big Brothers, Big Sisters. This program is a four-year, in-the-workplace mentoring program for high school students, and it began in 2007.

The following are other community relations programs that Carnival is currently involved in: ● ● ● ● ● ● ● ● ●

Big Brothers Big Sisters of Miami, Carnival Center for Excellence Carnival Kids Program Florida International University, Chaplin School of Hospitality & Tourism Management HEAT Academy Jackson Memorial Foundation / Holtz Children’s Hospital Lotus House Smithsonian National Museum of African American History and Culture Miami Children’s Museum Mission United

While these are Carnival’s community relations programs, each subsidiary of the company has its own list of programs.

Recommendations We have provided the following recommendations on how to improve Carnival’s Community Relations strategy to improve the company’s reputation: ➔ Highlight the Community Relations programs on social media platforms and with stakeholders. ➔ Provide press releases about the community relations events that are taking place, and promote them with the local media outlets. ➔ Spotlight kids involved in the community programs’ success stories. ➔ Provide updates on significant milestones for the programs and those involved. ➔ Create relationships among Carnival, the programs, and the target audience.

14

Conclusion We have to ask-- does Carnival want to improve its reputation? Does it want to be perceived as having integrity and being transparent? Is it interested in conversing with stakeholders versus following out of style and inefficient social media practices?

Reputation Management is the only path to smooth sailing for Carnival Corporation and its nine cruise lines. We hope this plan provided entree points that yield rapid results. ESG reporting is soon to be required by the SEC and, as a publicly traded company, Carnival will be forced to publish its own environmental record. This could be undeniably contrary to values touted on websites, making transparency very difficult to establish thereafter. Carnival must begin now, using the best practices within Issue Management, to intercept environmental issues as they arise. Another high profile crisis would attract unwanted attention from governments and the public that could negatively affect business for Carnival.

We believe the recommendations within this plan will cause significant shifts in the corporation that will change even day to day operations. These will be difficult and costly to initiate and maintain. We strongly advise Carnival to undertake these changes and to begin now. Even if only a few are adopted, it will lead to further regard for its own reputation. We believe Carnival could emerge as a leader within the industry, using Reputation Management and Issues Management, that would deliver competitive advantage and added value to stakeholders and shareholders.

Nautical flag signaling a desire to communicate.

15

References Allen, G. (2020, May 1). Carnival cruise line subject of congressional investigation. NPR. https://www.npr.org/sections/coronavirus-live-updates/2020/05/01/849177717/carnival-cr uise-line-subject-of-congressional-investigation Bretz, S. (2021, April 6). Carnival cruises have been canceled since last March and will continue until July 1, 2021. Cruise Radio. https://cruiseradio.net/carnival-cruise-line-cancels-all-sailings-through-june-30-2021/ Carnival. (n.d.). St. Jude Children’s Research Hospital. Carnival. https://www.carnival.com/content/st-jude.aspx Carnival Corporation. (2021, March). Carnival Annual Report 2020.

https://www.carnivalcorp.com/static-files/48701769-9f2c-48c6-ac4f-4772bad2ff8b Carnival Corporation. (n.d.). Carnival sustainability. https://carnivalsustainability.com/risk-management Carnival Corporation. (n.d.). Community relations. Carnival Corporation & PLC. https://www.carnivalcorp.com/sustainability/community-relation Carnival Corporation. (n.d.). Governance. Carnival Corporation & PLC. https://www.carnivalcorp.com/governance Carnival Corporation. (n.d.). Media Center. Carnival Corporation & PLC. https://www.carnivalcorp.com/media-center Carnival Corporation. (n.d.). Recognition & Awards. Carnival Corporation & PLC. https://www.carnivalcorp.com/leading-responsibly/recognition-awards Carnival Corporation. (n.d.). Stakeholder Engagement. Carnival Corporation & PLC. https://www.carnivalcorp.com/leading-responsibly/stakeholder-engagement Carnival Corporation. (n.d.). Sustainability from ship to shore. Carnival Corporation & PLC Sustainability. https://carnivalsustainability.com/ Carnival Corporation. (n.d.). Transparency & Reporting. Carnival Corporation & PLC. https://www.carnivalcorp.com/transparency-and-reporting/our-sustainability-journey Carnival Corporation [@CarnivalPLC]. (n.d.). Tweets [Twitter Profile]. Retrieved April 16, 2021, from https://twitter.com/CarnivalPLC

16

Carnival Cruise Line [@carnivalcruise]. (n.d.). Created [Pinterest Profile]. Retrieved April 16, 2021, from https://www.pinterest.com/carnivalcruise/_created/ Carnival Cruise Line. (n.d.). Home [Facebook page] Retrieved April 16, 2021, from https://www.facebook.com/Carnival/ Carnival Cruise Line. (n.d.). Home [YouTube Channel]. Retrieved April 16, 2021, from https://www.youtube.com/channel/UCQtaYLDkO94wL2Nc7riTkSA Carnival Cruise Line [@carnival]. (n.d.). Posts [Instagram Profile]. Retrieved April 16, 2021, from https://www.instagram.com/carnival/ Carnival Cruise Line [@CarnivalCruise]. (n.d.). Tweets [Twitter Profile]. Retrieved April 16, 2021, from https://twitter.com/carnivalcruise Carnival Cruise Line Careers [@carnivalcareers]. (n.d.). Posts [Instagram Profile]. Retrieved April 16, 2021, from https://www.instagram.com/carnivalcareers/ Carnival Cruise PR [@CarnivalPR]. (n.d.). Tweets [Twitter Profile]. Retrieved April 16, 2021, from https://twitter.com/CarnivalPR Carnival Foundation. (n.d.). All aboard for a better future. Carnival Foundation. http://www.carnivalfoundation.com/ Coombs, W. T. (2019). Ongoing crisis communication: Planning, managing, and responding (5th edition). Sage Publishing.

Doorley, J. & Garcia, H. F. (2019). Reputation management: The key to successful public relations and corporate communication (4th edition). Routledge.

Eccles, R. G., Newquist,, S. C., & Schatz, R. (2007, February). Reputation and its Risks. Harvard Business Review. https://hbr.org/2007/02/reputation-and-its-risks Geeky Explorer. (2020, August). Cruise ship pollution: A tale of Titanic tyranny. https://www.geekyexplorer.com/cruise-ship-pollution/ MacDonald, J. (2019, July 1). The high environmental costs of cruise ships. Jstor Daily. https://daily.jstor.org/the-high-environmental-costs-of-cruise-ships/ McClimon, T. (2020, January 2). 5 Corporate social responsibility trends to follow in 2020.

Forbes. https://www.forbes.com/sites/timothyjmcclimon/2020/01/02/5-corporate-social-responsibil ity-trends-to-follow-in-2020/?sh=69b2925c7e69

17

Newsweek. (2020). America’s most responsible companies 2020. Newsweek. https://www.newsweek.com/americas-most-responsible-companies-2020 Newsweek. (2021). America’s most responsible companies 2021. Newsweek. https://www.newsweek.com/americas-most-responsible-companies-2021 O’Connell, J. (2020, March 26). Cruise lines, early source of coronavirus infections, out of bailout package. Washington Post. https://www.washingtonpost.com/business/2020/03/26/cruise-line-bailout/ Syed, A. (2019, January). The influence of corporate social responsibility and corporate reputation on customer loyalty. Research Gate. https://www.researchgate.net/publication/339926884_The_Influence_of_Corporate_Soci al_Responsibility_and_Corporate_Reputation_on_Customer_Loyalty Tsai, K. (2021, April 9). Florida to sue CDC to allow cruises to resume U.S. sailings, industry asks to be treated like airlines. CNBC. https://www.cnbc.com/2021/04/08/florida-sues-cdc-to-allow-cruises-to-resume-us-sailing s.html Zingano, A. (2021, March 25). Carnival cruise news, will not sail outside of U.S., CEO Christine Duffy update [YouTube]. https://youtu.be/qI76QmqDCeY

18