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How to Save a Cruise Line: One CEO Speaks Out

Locations in this article:  Berlin, Germany

PG: I have a philosophy…when you hear news that a troubled airline is adding somebody to run it and he’s had airline experience I think it’s a big mistake. This executive has probably screwed up another airline, so why would you take him on this airline?

Now you didn’t have any cruise experience. Right? At least there was hope with you!

KS: From the day I started it, it has been so much fun. You could turn the passion on for 20,000 team members here and let them understand where we’re going on our journey. I gave all of our management team the book Good to Great, the Jim Collins book, and we’ve been marching on that for five years.

We’ve had 19 quarters of success in earnings growth in an environment where the competitors have been completely flat for 15 years.

PG: At the time you came in, you had a product in Hawaii that was essentially not working at all. It was a huge loss to you.

KS: We lost hundreds of millions of dollars in that experiment. It was a great idea. Here’s an opportunity to pour assets into a market and not really understand how the market was going to perform. So you saturated the market, which broke down the pricing and you couldn’t fund. And you needed to service the ships with an American crew, which had never been done before. The turnover on the ships was worse than any McDonald’s that you could ever imagine. Not having the consistency of the crew was a game changer.

PG: The turnover that you have on your other ships is negligible.

KS: It’s rock solid. We have a very passionate group of people that have done in the past five years so many things. We’ve shortened turnover; we have by far the cheapest ability to call home and Skype to see their families. we’ve taken the food quality and brought it up to the quality that we have for our guests.

When I came in it was hurtful to me to see how the crew was treated in their accommodations–it might have been five people in a cabin sharing a bathroom. In the new ships we’re building we have individual cabins and crew members can close the door and have their own ownership.

PG: Are you saying every crew member has their own cabin?

KS: Not every crew member but we’ve gone significantly towards that and we’re pushing even further. We have 1,000 people in individual cabins now versus the old days when it would be people in a dormitory style kind of college thing.

When I was undercover boss I had to opportunity to check into the cabins. Shameless plug, I know but it was an opportunity for our brand. Since we are smaller than the other big corporations, we did the show to get the reach of frequency out there, to show that we are a different brand and that we do have the flexibility that no one else has in the industry.

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