Will Carnival Recover From the Latest Cruise Ship Mishap?

On its inaugural voyage in 1972, Carnival’s Mardi Gras cruise ship hit a sandbar outside the Port of Miami. The company’s quick-thinking founder, Ted Arison, invited the guests, mostly travel agents, on deck and plied them with drinks, turning the stalled ship into a floating party and an advertisement for his “fun ship” brand. Such good fortune has long favored Carnival, the world’s largest cruise operator. Even after its Costa Concordia ran aground off the coast of Italy last year, killing 32 people, the company’s shares barreled back. After falling 16 percent in two trading days, they recovered all the ground lost by June due to the continuing allure of its all-inclusive vacations. “Carnival is bulletproof,” says Jay Herring, a former employee and author of The Truth About Cruise Ships.

Now the company that’s proven so adept at turning potentially toxic business problems on their head is once more being put to the test. The question: Can it sail through the storm again, or have the near-constant images of its drifting ship, the Carnival Triumph, and news reports about the angry, sweltering passengers going to the bathroom in bags created more damage than refunds and a ship overhaul can repair? The Feb. 10 fire on the Triumph was the third major incident at Carnival in as many years. In addition to the Concordia mishap, a 2010 fire on the Carnival Splendor left that stricken ship to be towed for four days to shore with complaining, hungry passengers onboard. “The first time something like this happens, brands can bounce back well; the second time, less well,” says Allen Adamson, who consults with companies on crisis management at Landor Associates. “The third time it creates long-term problems.”