Modern Crisis: Carnival LECTURE 9 Modern Crisis: Carnival A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Objectives Understand the factors affecting perceptions of the owner and operator of the sunken Costa Concordia cruise ship (2012) Discuss how such a crisis should be handled, in particular the role of the company’s leadership Examine how non-marketing issues impact corporate identity and branding A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Titanic 1912 Costa Concordia 2012 A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

What happened? Twice the size of the Titanic 114,000 tons and 952 ft. long 3,200 passengers and 1,000 crew on board Ran aground at night off the island of Giglio Evacuation took several hours 32 people died A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Carnival response ”This is a terrible tragedy and we are deeply saddened. Carnival Corporation & plc offers our sympathies and heartfelt condolences to all of the Costa Concordia guests, crew members and their families. We are working to fully understand the cause of what occurred.” January 14, 2012 Carnival, the shipowner, largely delegated responsibility for handling the crisis to its Italian subsidiary, Costa Crociere S.p.A. A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Why did it happen? Ship diverted from its scheduled course to sail closer to the island Some said that the evacuation of the ship was a shambles Some said that the ship’s captain left before many of the passengers A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Who was responsible for the disaster? Was it the operator of the ship – Costa? Was it the parent company that ultimately owned Costa and the ship – Carnival? Was it the captain? Why did he sail so close to the shore? Was the real problem the slow evacuation of the ship? And why was it so slow? And what should have been done in the aftermath – whether to help the victims or to stop it happening again? A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Carnival’s communication strategy Deduced from its actions: Low media profile Focus on strategic stakeholders – regulators, investors and customers Supported customers but did not take responsibility for the disaster Blamed the captain Strengthened safety, avoiding it becoming a critical issue for the cruise industry A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Investor reaction January 16: share price fell 16% on the first day of trading in New York March 6: share price retested its low in New York By year end, share price stood higher than before the disaster Usual pattern is a share price fall on news of a crisis, recouped over the next few months Analysts expected bookings to recover A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Public reaction Instant media and social frenzy Photogenic wreck Carnival keeps a low profile – successfully Benign political and regulatory response A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Choice of Spokesperson Experts urged: “Go to Italy, now!” Carnival Chairman and CEO Micky Arison issued brief statements, then delegated to Pier Luigi Foschi of Costa Wall Street Journal: “Where is Micky Arison?”(1) “The unit’s management is best suited to handle the on-the-ground response” – Carnival “Given that the ship was Italian, that it ran aground in Italian waters, subject to Italian jurisdiction, that the largest number of passengers was Italian, and that the local media spoke Italian, this was a smart move” – Keeping Shtum A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

A different view Seitel on “Carnival’s Crisis Cruise” – see suggested reading “The Silence of the CEO” Arison, owner of the Miami Heat photographed with Bill Clinton at a basketball game, February 2010 “Pilloried” in social media? “Tone deaf” offer to customers? A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Name… Blame The ship’s name, Exxon Valdez, ensured that disaster would forever be tied to Exxon Does anyone know who owned Titanic? And what is that company called today? “A problem with one product can’t be hermetically sealed if the corporate name is used” – David Bernstein(2) Maybe it’s time to take some corporate names off vulnerable assets and products? A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Suitable cases for brand detox? Berkshire Hathaway Berkshire Hathaway Energy, Berkshire Hathaway Home Services Carnival Corporation & plc Carnival Cruise Lines Volkswagen Group A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Lessons of Costa Concordia Customer confidence maintained by low profile, boosting safety and closing industry ranks Impact on the group minimized Local head of operations chosen as public face In background, CEO focused on strategy Carnival was sorry but did not take the blame A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)

Suggested reading Keeping Shtum, chapter 15 Fraser P. Seitel, The Practice of Public Relations, 12th edn., (Upper Saddle River, NJ: Pearson Education, 2013), chapter 17: Crisis Management NOTES Mike Esterl & Joann S. Lublin, ‘Carnival CEO Lies Low After Wreck,’ Wall Street Journal, January 23, 2012 David Bernstein, Company Image and Reality: A Critique of Corporate Communications, (Eastbourne, UK: Holt, Rinehart and Winston, 1986), 173 A course of lectures based on Steven Olivant, Keeping Shtum and Other Communication Strategies, (CreateSpace, 2016)