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.

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.