Cruise Ship Wars | Mayday | 4

24 Jul 2024 · 45 min

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In short

Business Wars - Episode 4: Cruise Ship Wars | Mayday

Podcast Overview Title: Business Wars Host: David Brown Description: Business Wars explores the competitive landscape between major companies, examining the strategies and dynamics that shape their battles for market dominance.

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Episode Summary In Episode 4 titled "Mayday," the podcast explores the intense competition between Carnival Cruise Line and Royal Caribbean during the early 2000s, culminating in a battle over the acquisition of Princess Cruises. The narrative dives into the strategic maneuvers and challenges both companies faced, particularly during the onset of the COVID-19 pandemic, which drastically shook the cruise industry.

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Key Themes and Highlights

The Rivalry

Carnival vs. Royal Caribbean

  • Early 2002 Tensions:
  • Mickey Arison, President of Carnival, aims to thwart Royal Caribbean's acquisition of Princess Cruises.
  • Richard Fane, CEO of Royal Caribbean, had proposed terms that included a "poison pill" clause making it financially burdensome for Carnival to gain control of Princess.
  • Strategic Negotiation:
  • Arison proposes a plan to delay the shareholder vote on Royal Caribbean's offer, allowing them time to gather regulatory insights and potentially make a more competitive bid.
  • The concept of voting to adjourn is introduced as a strategy to circumvent the poison pill and create an opportunity for Carnival.

The Shareholder Meeting and Public Perception

  • Hostile Environment:
  • During a critical shareholder meeting for Princess, Carnival executives face significant backlash from private shareholders who express reluctance towards an American takeover.
  • Mickey Arison speaks out to defend Carnival's brand and commitment to enhancing Princess's identity.
  • Turning Point:
  • After a long night of counting votes, the shareholders vote to adjourn, granting Carnival the opportunity to eventually secure Princess with a bid of $7.3 billion.

Impact of COVID-19 on the Cruise Industry

  • Pandemic Onset:
  • The COVID-19 outbreak in early 2020 poses an existential threat to the cruise industry, leading to widespread cancellations and no-sail orders.
  • The Diamond Princess becomes a focal point with a significant outbreak, showcasing the vulnerabilities within the cruise ship environment.
  • Crisis Management:
  • Carnival executives scramble to manage the repercussions of the pandemic while ensuring the safety of passengers and crew.
  • The episode details the logistical challenges faced by cruise companies, including securing medical attention for passengers and repatriating stranded crew members.

Recovery and Future Outlook

  • Post-Pandemic Landscape:
  • Despite initial devastation, the cruise industry sees a gradual recovery starting in late 2020 with new health protocols in place.
  • The narrative emphasizes the resilience of major players like Carnival, Royal Caribbean, and Norwegian Cruise Line, who navigate the challenges of the pandemic to emerge into a newly altered market.
  • Market Projections:
  • By 2024, industry analysts predict that the number of cruise passengers will surpass pre-pandemic levels, signaling a rebound for the cruise sector.

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Key Takeaways

  • The acquisition battle between Carnival and Royal Caribbean exemplifies the cutthroat nature of business competition.
  • The COVID-19 pandemic profoundly impacted the cruise industry, highlighting its vulnerabilities and prompting major operational changes.
  • Resilience and adaptation strategies are crucial for companies to survive crises and capitalize on emerging opportunities.

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Conclusion Episode 4 of Business Wars provides a gripping account of the fierce competition in the cruise industry, illustrating the complexities of corporate strategy against the backdrop of a global pandemic. The episode not only sheds light on the historical rivalry between Carnival and Royal Caribbean but also addresses broader themes of crisis management and recovery in business.

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Feel free to listen to the full episode for a deeper understanding of the nuances and dynamics at play in this fascinating business rivalry.

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Transcript

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0:07It's early 2002 in London, England. Carnival Cruise Line President Mickey Arison sits across from a Princess Cruises shareholder. Outside, icy rain pours down, and the cuffs of Arison's pants are still damp from his short walk from the cab to the restaurant door. But Arison's not letting his discomfort distract him. He's here in this cold, dark city on a mission. Look, I know that Richard Fane and other Royal Caribbean executives are out there saying that I'm a spoiler. The Carnival doesn't really want to buy Princess. We just want to prevent Royal Caribbean from buying it. But look, I can assure you that that's not the case.

0:47In late 2001, Mickey learned that Royal Caribbean CEO Richard Fane had made a deal to buy Princess Cruises. Now Mickey is doing everything he can to stop that deal from going through. And let's talk about Richard Fane. He swooped in and took over Royal Caribbean. Look, he's not a cruise man. He hires a bunch of Ivy League consultants to help him run the business. We've never had to do that at Carnival, because cruising is in our blood. My father practically invented this business. Has Princess ever needed to bring in consultants? I'm not sure. I doubt it. Now, let's look at what these Ivy League consultants brought to Royal Caribbean.

1:27Since Fane took over, Royal Caribbean has consistently underperformed compared to Carnival. And per the terms of the deal, he'd retained the top position once he acquired Princess, I don't think there's any reason to believe he'd do a better job overseeing a bigger company. The shareholder cuts into his stake. I understand what you're saying, and I don't completely disagree. But even if Carnival came in and made a better offer, we don't know if the regulators would approve it. We could be throwing away a perfectly good deal with Royal Caribbean for a deal that could get nixed. It's true, but you don't know that Royal Caribbean will get approval either.

2:04That's a gamble you'll have to take with either company. But what about the poison pill? When making the deal with Princess, Richard Fain insisted on a clause stating that if Carnival gains control of Princess before January 2003, then the equivalent of$500 million of Princess money will go to Royal Caribbean. Fain is counting on his belief that Carnival can't afford to pay$500 million on top of what they'll have to pay to buy Princess. Mickey takes a sip of his wine and gives the shareholder a sly grin. He's confident he and his team have come up with an ingenious way around the poison pill. So, you and the other shareholders are set to vote in the Royal Caribbean deal in a few weeks, right?

2:49Mm-hmm. What if you just voted not to vote? What do you mean? Vote to adjourn the meeting. Don't make any decision regarding the Royal Caribbean offer. If you don't accept the offer, then the poison pill won't be activated. And Richard Fain's offer is binding for a year. He can't revoke it. That's plenty of time for us to know if the regulators will approve the sale to us. All you're doing is kicking the decision down the road until you have more information. No harm, no foul. The shareholder wrinkles his brow. It can't be that easy. Look, to be honest, I didn't think it could be true either. But our lawyers have been through this with a fine tooth comb.

3:28This is completely above board. And look, it's better for you as a shareholder if we can get into an open bidding war with Royal Caribbean. And not have our hands tied by a poison pill. You'll likely make more money. The shareholder leans back in his chair. This is interesting. Mickey nods. A few months ago, he thought the odds were long that Carnival would be able to spoil Royal Caribbean's deal and buy Princess itself. But now, he's starting to think he has a real chance, and he's going to do everything he can to secure the deal. Because if he does, Carnival will be uncatchable.

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5:55From Wondery, I'm David Brown, and this is Business Wars.

6:24On our last episode, Carnival Cruise Line was the first cruise company to go public, and it used its newfound war chest to acquire other cruise lines. But when they attempted to take over their biggest rival, Royal Caribbean, CEO Richard Fane was able to stave them off. For years, both companies continued to grow through acquisition. Carnival maintained its lead as the most successful cruise company, but Royal Caribbean was nipping at their heels. Now, whoever wins the fight to acquire Princess will be the undisputed cruising leader. But a bigger threat to the entire industry looms in the future.

7:06This is Episode 4, Mayday.

7:16It's Valentine's Day 2002 in London, England. Princess Cruise Line shareholder meeting. Mickey Arison walks into a packed ballroom in the Royal Lancaster Hotel. He's flanked by 14 other executives from Carnival. Each one of them has bought a single share of Princess stock in order to be allowed entry into the meeting. Arison and his team make their way to the front row of seats. Several of the shareholders glare at them. One man dressed in a tweed jacket and a bow tie hisses at the Carnival folks. Get the hell out of here! Arison ignores him. The Carnival team knew they would face a hostile crowd.

7:55Many are private Prince's shareholders. They are largely British and have no interest in the company being sold to the crass Americans of Carnival. Arison is counting on the institutional investors, those representing pension plans and index funds, to be his allies. They don't have nationalist tendencies and are primarily motivated by financial interests. Arison settles into his seat. The Prince's board looms above the ballroom floor on a makeshift stage. Arison whispers to Carnival Vice Chair Howard Frank sitting next to him. Kind of feels like we're on trial rather than attending a shareholders meeting, right?

8:34Frank nods. But before he can say anything, the chair of the Prince's board pounds his small gavel. Thank you all for being here. I call this meeting to order. Behind Arison, a man in a black suit stands up. Arison recognizes him as a representative of a retirement fund. I move to adjourn the meeting. A wave of grumbles and protests rises up from the private shareholders. The chair leans forward. There has been a movement to adjourn. We will now take comments on the proposal. Private shareholders swarm to the microphones that have been set up on either side of the room. One woman approaches the mic and grabs it with two hands.

9:15I want to keep things in England and keep England strong. A man follows her. Carnival is crude and opportunistic. They'll ruin the princess brand. The comments continue for hours. Arison sits there, listening as more and more people disparage Carnival. Finally, the line of private shareholders comes to an end. From up on the dais, the chair gestures toward Arison. Mr. Arison, is there anything you'd like to say in response? Arison's mouth goes dry. He's gotten much better at public speaking, but at his core, he's still a shy introvert. He has nothing prepared, but Frank nudges Arison with his elbow and gives him an emphatic nod.

9:59Arison has to speak. The chair offers Arison his own mic, so Arison clambers onto the stage. Carnival is a brand builder, not a brand destroyer. We've taken over several cruise lines at this point, and I would argue that all of them have thrived under our leadership. A man yells from the back. Don't listen to him. Carnival's just trying to spoil this deal. Arison feels his patience snap. He whips his head to address the man who spoke. If I weren't committed to seeing this deal through, would I have spent the past three weeks meeting with shareholder after shareholder and enduring your horrendous weather?

10:35From the front row, Carnival Vice Chair Howard Frank jumps to his feet. All we are asking is to adjourn the meeting. Give yourself time to consider both deals on equal footing. See what the regulators decide before you make a decision. You are out of order, sir. Frank sits, and Harrison steps down from the stage, returning to his seat. This period for comments is over. It is now time to vote on whether to adjourn the meeting. Assistants pass out ballots to the hundreds of gathered shareholders. But as Arison looks around the room, he realizes that it's going to take hours to count all these votes.

11:11He checks his watch. It's late afternoon. He scrunches down into his chair, trying to get comfortable. He has a feeling he's going to be here late into the night. Arison's right. The counting extends through the evening. The board arranges dinner to be brought in for the gathered shareholders. Meanwhile, the counting continues. Most people leave. Only a few diehards remain. Finally, at 4.30 in the morning, the chair makes an announcement. The shareholders have voted to adjourn. Harrison leaves the room with a grin. Fifteen years ago, Richard Fane helped outmaneuver Harrison and prevented Carnival from taking over Royal Caribbean.

11:58But this time, Harrison has won. Princess is going to be his. Over the next year, the Royal Caribbean offer expires, and with it, the poison pill. Carnival outbids Royal Caribbean and offers$7.3 billion to buy Princess. In April 2003, Princess shareholders vote to accept Carnival's offer. With the addition of Princess's fleet, Carnival controls over 50 % of the cruise market. It's a big blow to Richard Fane and Royal Caribbean. Over the next decade, the passenger count for cruises steadily rises. Cruise lines expand their sailing routes beyond the traditional departure points of Miami and San Diego, now including cities like Baltimore, Galveston, and Seattle.

12:51In 2013, Norwegian Cruise Line finally goes public. Its IPO had been delayed twice before due to downturns in the market. It's a successful debut, raising nearly$500 million for the company. With its new capital, Norwegian buys two smaller cruise companies, solidifying themselves in third place. Carnival is still the behemoth, dominating the seas. But in the 2010s, the industry leader will face choppy waters. In 2012, a ship owned by Carnival subsidiary Costa Concordia hits a rock formation off the coast of Italy. 32 people on board die in the crash. A subsequent investigation reveals that the captain of the ship had deviated from the approved course and came too close to the shore.

13:45He's found guilty of manslaughter and sentenced to 16 years in prison. A year later, a generator catches fire on board the Carnival ship Triumph, knocking out the ship's power. The ship drifts in the Gulf of Mexico for four days, unable to steer. Their fear and frustration is coming out and phone calls and texts sent back to loved ones here at home. Pipes are busting. I know the sewer is backing up and water is in the cabins, and it's just a nightmare. For those four days, the ship lacks air conditioning, lights, water, food, and a working sewage system. Human waste backs up and floods the ship, even running down the walls.

14:28It earns it the nickname the Poop Cruise on social media. Journalists uncover numerous reports flagging that the faulty generator was overdue for maintenance. Following the Triumph debacle, two other Carnival ships suffer from mechanical problems. Carnival has to cancel stops on the cruises, and in one case, fly passengers home. Mickey Arison increasingly comes under pressure.

14:58It's an early evening in June 2013 in Miami, Florida. Mickey Arison bustles around his office in Carnival headquarters. There's a knock on the door. Mickey flings it open. Standing outside is the president of Carnival's board. Oh, hi, you just caught me. About to head out. You have a minute to talk? Arison glances at the time. Sure, but just a minute. I gotta get to the game. Along with running Carnival, Arison owns the Miami Heat basketball team who are currently playing in the NBA Finals. Right, well, I'll get right to it. It's been a hard year for the company, some problems out of our control, but there were some unforced errors.

15:40Arison grunts non-committedly. He doesn't say anything, but he's pretty sure the president is referring to Arison's choice to attend a heat game while the triumph was adrift at sea without power. Arison took a beating in the press for that decision. The president continues. And the chickens are coming home to roost. Bookings are down, stock prices are down. Arison sets down his briefcase, suddenly understanding where this conversation is going. We've had a lot of discussions about secession and when exactly I would step aside. I take it the board has made a decision about that. The president nods.

16:16We think we need a reset. Show the public and our shareholders that we take all of the incidents that have occurred this year seriously. But I want to be clear. We're only talking about you stepping away as CEO. You'd still be chair of the board. Arison is quiet for a moment. He's been in charge of Carnival for over 30 years, and before that, it was his father's company. It's hard to imagine Carnival without an Arison at the helm. But he knows he can't stay CEO forever. I've always wanted to take up golf. The president sticks out his hand. We'll make sure the landing is soft. Arison looks at his watch.

16:58He has to hustle if he's going to make it to the arena by tip-off. At the end of June 2013, Carnival announces that Mickey Arison will step down as CEO and longtime Carnival board member Arnold Donald will be taking over. Carnival stock rallies in response to the change. Scandals continue to plague Carnival after Arison's departure, however. In 2016, Princess, now a subsidiary of Carnival, is slapped with$40 million in fines after pleading guilty to seven felony counts for illegally dumping waste into the seas. In 2019, they're hit with an additional$20 million in fines for more illegal dumping.

17:41The judge reprimands Carnival for continually flouting environmental law. But despite all the bad publicity, cruising overall continues to grow throughout the 2010s, and Carnival remains the top dog. And by January 2020, industry analysts predict the coming year will be cruising's biggest yet. They anticipate that 32 million people will cruise in 2020, up from 30 million the year before. But soon, everything changes.

18:18It's February 3rd, 2020. Captain Gennaro Arma stands on the bridge of the Diamond Princess. The ship is heading toward Yokohama Port in Japan on day 13 of a 16-day cruise. The ship has made stops in Hong Kong, Vietnam, and Taiwan, in addition to Japan. It's all gone smoothly, despite increasing reports of a novel virus spreading in China. The satellite phone rings and a crew member answers. After a moment, he turns to the captain, extending the handset. It's someone from the Hong Kong Health Authority. He says it's urgent. The captain takes the handset. Captain Armour speaking. I'm calling from the Hong Kong Health Authority.

19:01You had a passenger disembark here on January 25th? Okay. I'm calling to let you know that he has tested positive for coronavirus. Other passengers and crew on your ship have likely been exposed. But you said he disembarked on the 25th. That was nine days ago. How do you know he didn't contract the virus in Hong Kong after leaving the ship? Well, he reported that he started exhibiting symptoms on January 19th, one day before he boarded the ship. The captain hangs up the phone and doesn't say a word. But deep inside, he knows that his ship is now a viral hot zone.

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22:16The End

22:34passengers and test for the new coronavirus. The health ministry officer clears his throat. I know that passengers have been advised to stay in their rooms and you've canceled all scheduled activities, but what precautions are being taken below decks? What do you mean? Are there any protocols being taken to stop the spread of the virus amongst the crew? Well, we're washing our hands more. You don't have masks? I think the crew members working in the medical wing have some. And you eat communally? Yeah, in the cafeteria, and we pretty much sleep communally. For many of us, we share cabins, bathrooms, and everything.

23:08The health officer nods. This does not bode well. He hopes that somehow no one else got infected on this ship. Otherwise, he worries that they could have a major outbreak on their hands. They reach the end of the corridor. The crew member knocks on the door of the farthest cabin.

23:30A man who looks to be in his 60s answers the door. He's pale and sweaty, and he seems out of breath just from walking from his bed to the door. Behind him, his wife sits in a chair, her body racked by a dry, hacking cough. Any hope the health officer had that this ship had escaped infection is quickly fading. He pulls out one of his thermometers. I need to take your temperature. The passenger nods. The health officer holds the thermometer to the passenger's forehead. After a few seconds, it beeps. 102.2. You have a fever. The health officer looks past the man to his wife. Ma 'am, you have a cough?

24:10The woman nods. I'm going to collect nasal swabs from each of you, and we'll test it for the COVID-19 virus. Both the man and the woman nod, clearly exhausted. The health officer takes swabs from each of them, carefully labeling and securing the samples. Thank you for your time. We'll be in touch with the results. As he and the crew member leave the room, the health officer hears a different crew member knocking on the door down the hall. He looks down and sees the crew member delivering room service to a cabin. She's not wearing any protective gear. A chill goes through the health officer. The more he learns about how a cruise ship operates, the more it seems like the perfect incubator for a virus.

24:54He feels fairly certain that there's already a major outbreak of COVID-19 on board. He pinches his mask tighter and knocks on the next door. Ten people initially test positive for COVID-19 on board the Diamond Princess. The ship is ordered into a 14-day quarantine with passengers confined to their rooms. Eventually, more than 700 people are confirmed as having the virus, and 13 people die as a result of the disease. It's the largest outbreak outside China where the virus originated. But soon, there are more outbreaks of influenza-like illness on board other cruise ships, including ones that were not sailing in Asia, implying that the virus is spreading rapidly around the globe and that cruise ships themselves are particularly vulnerable to outbreaks.

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25:48Cruise company executives scramble to figure out ways to make cruising safe and to convince the government to allow them to keep sailing.

26:02It's early March 2020 in Washington, D.C. Olivia Troy sits at her desk in the West Wing of the White House. She clicks through a spreadsheet tracking suspected outbreaks of COVID-19 on cruise ships around the world. Troy is exhausted. She is an advisor to Vice President Mike Pence. President Donald Trump recently named Pence the leader of the White House Coronavirus Task Force. Ever since, the days have been long and complicated, as she and her colleagues have to navigate keeping Americans safe, balanced with the devastating effect on the economy of shutting whole industries down. The phone rings, and Troy answers.

26:41Olivia Troy speaking. Ms. Troy, I'm calling from the Cruise Lines International Association. Troy sighs. The Cruise Lines International Association is the industry's lobbying group. Look, I know you're concerned that the government is going to order all cruises suspended. All I can tell you is that the vice president and the experts at the CDC are still weighing the best way forward. No decision has been made at this time. I understand that. I'm just calling to make sure you have all the relevant information about what our industry is doing to keep people safe. We've already had robust disinfecting procedures in place, and we are increasing the frequency of those.

27:22Many of our ships are also installing plexiglass guards around the buffet tables. And we are in the process of developing testing and evacuation procedures should anyone get sick. I appreciate the information, and I will make sure to pass it along to the Vice President. If cruising is suspended, this would be financially devastating to all of our businesses. And I don't think I need to remind you how important cruising is to the economy, especially in Florida. The Vice President is very aware of the financial implications that suspension of cruising would cause. I know the Vice President is scheduled to come to Florida and meet with our industry leaders.

28:02Ma 'am, if you could please urge him and the CDC to hold off on making any decisions until he has that meeting, I would greatly appreciate it. I think if he can speak to our chief executives and see just how seriously they're taking this, he'll see that there's no need to suspend cruising altogether. I will pass that message along. And as I'm sure you know, Carnival Chairman Mickey Arison is a longtime acquaintance of the president, if that affects anything. Yes, we are aware of that. We will let you know when any decision has been made. Troy hangs up the phone and gets back to work. She will suggest actions for the vice president, but ultimately it will be his decision alone whether to suspend cruising.

28:47Troy doesn't envy him. Vice President Pence does agree to meet with cruise executives in Florida before making a decision about suspending cruising. After the meeting, Pence gives a press conference. He suggests that people over 65 and those with underlying health conditions that make them high risk for COVID-19 refrain from taking cruises. Cruise ships start implementing health and safety protocols designed to prevent COVID from spreading on board. And with those safeguards in place, many passengers still feel comfortable cruising. For now.

29:27It's March 6th, 2020, in Buenos Aires, Argentina. Donna Mann stands in a long line of people in the Holland America Terminal. They're all waiting to check in and board the Zandam, which is about to embark on a 14-day cruise along the coast of South America. The passenger behind Donna shuffles forward, his bag nudging against her leg. Donna looks back. Sorry. Donna nods. She's not upset about the bag bumping into her, but she's disturbed by what it says about how close the man is standing next to her. She's been following the news about COVID-19 and knows that experts are recommending people keep their distance.

30:08But everyone in here is bunched up as usual. Next to Donna, her husband Jorge Hill gives her a reassuring smile. Man does her best to smile back. She and Hill have flown all the way from California to take this cruise, and she wants to enjoy it. Hill is 79. Man doesn't know how many more trips like this they have in their future. Someone in line coughs. Man winces. Hill takes her hand and squeezes it. It's going to be okay. Remember that email Holland America sent the other day? They're doing all sorts of health and safety checks. They won't let anyone with COVID on the boat, I'm sure. Man nods.

30:49And there's only been a handful of COVID cases reported in all of South America. We're probably in one of the safest places on Earth right now. You're right. I'm just feeling paranoid. I'll feel better once we get checked in and go through all the safety protocols. The couple reaches the front of the line, and a Holland America employee beckons him forward. Next. Hill and Mann make their way to the desk. The employee smiles at them brightly. Welcome to the Zandam. May I see your passports, please? Hill and Mann hand them over. The employee checks the expiration date. Great. Everything looks in order.

31:27Welcome aboard. Mann looks at Hill with a frown. The email they received from Holland America says that employees would be checking passports to see if passengers had traveled to China and Italy, where COVID-19 was spreading rapidly. Passengers who had were warned that they would be subject to a more intensive medical screening. Neither Mann nor Hill had been to those countries recently, but it bothers Mann that her passport wasn't checked. The employee spins a tablet around, so it faces Hill and Mann. This is our health questionnaire. If you could please go through it and answer the questions.

32:02Mann skims through it. It's exactly the same as other cruise questionnaires she's filled out in the past. She doesn't notice any additional questions related to COVID. Behind man, another person coughs. Man closes her eyes for a second, calming her nerves, then goes about answering questions about gastric distress, fever, and chronic conditions. When they're done answering the questions, the employee quickly reviews it. You're all set. I hope you have an incredible voyage. But don't you need to check our temperatures? Nope. You're free to board. Mann nods uneasily. She looks back toward the terminal door.

32:41It's not too late. She and Hill could leave, go back home. Hill takes her hand. Come on. Mann nods and follows him up toward the gangway. She tells herself she's just being a worrywart. Everything's going to be fine. Although cruise ships are allowed to continue to sail, government officials increasingly urge people to stay at home. Major events like South by Southwest in Austin, Texas, and Apple's Worldwide Developers Conference cancel their in-person gatherings. On March 11th, the NBA shuts down. And people increasingly become nervous about cruising, especially passengers over 60, who make up the core demographic of cruisers.

33:26As more and more people cancel their passages, cruise ship companies scramble to cut prices and offer other incentives to entice people to come on board. But COVID continues to spread. On March 14th, the government steps in. The Centers for Disease Control issues a 30-day no-sail order, shutting down all cruises departing from the United States. Other countries issue their own no-sail orders, closing their ports. The entire cruise industry has just been grounded.

34:06It's March 14th, 2020 in Miami, Florida. Carnival executives gather via video conference to discuss the catastrophe. Carnival CEO Arnold Donald kicks off the meeting. Um, first, whoever's dog is barking, can you go on mute? Thanks for that. All right. So I hope everyone is healthy and getting through this unprecedented event. Obviously, we're in a crisis. There's no-sale orders for 30 days, but I think we can all agree, given the pace at which this virus seems to be spreading, that it will be extended. We just don't know for how long. John, I know you've done some calculations about how much money we're burning through every day we can't sail.

34:47Yes, based on my preliminary analysis, we're set to lose$650 million every month that the no-sale order is in effect. I want to reassure everyone that we're doing everything we can to soften the blow. We'll borrow money, we'll sell older ships. Any government assistance that is offered, we'll take. But we need to brace for hard times. It's likely there will be furloughs and layoffs. Around the screen, executives nod their heads. Okay, Kelsey, where are we on the ships that are still out there? We're in touch with the captains on all our ships and working with the State Department and Homeland Security to try to find them ports and to get those who need more advanced medical care to hospitals.

35:28But no country wants to take in a boat full of sick passengers. I need everyone working on this. If we can't take care of these people, the reputation of the cruising business could be destroyed for years. The executives log off and get to work. The future has never seemed so tenuous. It feels to many like the entire industry is going to sink into the abyss.

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36:39Take the first step towards making your organization secure. Visit cybersecurity.manageengine.com today. That's cybersecurity.manageengine.com. How hard is it to kill a planet? Maybe all it takes is a little drilling, some mining, and a whole lot of carbon pumped into the atmosphere. When you see what's left, it starts to look like a crime scene. Are we really safe? Is our water safe? You destroyed our town. And crimes like that, they don't just happen. We call things accidents. There is no accident. This was 100 % preventable. They're the result of choices by people. ruthless oil tycoons, corrupt politicians, even organized crime.

37:28These are the stories we need to be telling about our changing planet. Stories of scams, murders, and cover-ups that are about us and the things we're doing to either protect the Earth or destroy it. Follow Lawless Planet on the Wondery app or wherever you get your podcasts. You can listen to new episodes of Lawless Planet early and ad-free right now by joining Wondery Plus in the Wondery app, Apple Podcasts, or Spotify.

38:09It's the night of March 24th, 2020, off the coast of Peru. Donna Mann stumbles down the corridor of the Zandam. She's dressed in her pajamas and the complimentary bathrobe provided by Holland America. The hallway swims in front of her, and her left arm drags along the wall, helping to support her. In her right hand, she clutches a bag containing her husband Jorge Hill's asthma medication. The hallways are deserted. More and more people on board have been getting sick. And two days ago, the captain ordered all passengers into quarantine, confined to their room to try to stop the spread. Their room, which is about the size of a single-car garage with one small window, feels more like a prison cell than a cabin.

38:57But soon, it doesn't matter. Earlier today, Mann and Hill began to feel seriously ill. Mann is exhausted, and every muscle in her body aches. Hill seemed worse, though, coughing and struggling to breathe. Neither could get out of bed. Mann called the infirmary and asked for painkillers and cough medicine, but the staff member who answered said the ship was out of both. Mann implored the medical staff to please send a doctor to their room. She was especially worried about Hill, who is almost 80 and suffers from asthma and high blood pressure. Finally, in the evening, a doctor came by. She measured Hill's blood oxygen levels and announced that he needed to be moved to the medical ward immediately.

39:45He was transferred there with the help of crew members. A few hours later, Mann got a call asking her to bring Hill's medications to the medical ward. She's on her way there now. She's so weak, she's not sure she's going to make it. She knows part of the exhaustion is physical. Her body is worn down from fighting off this virus. But part of it is the mental stress. No nearby port will allow the Zendam to dock. There are people on board who desperately need to be transferred to a hospital, and Mann fears her husband is one of them. And for everyone, there's concern that they will run out of supplies.

40:25The captain and carnival executives are working to try to find somewhere for the ship to dock and a way to get more supplies on board. But Mann has no idea how long this will take. This was supposed to be a dream vacation, but it's turned into a nightmare. her. At last, Mann reaches the medical ward. She knocks on the door, but no one answers. She tries again, but even to her own ears, the knock sounds faint. Mann takes a deep breath and gathers her strength, pounding on the door as loud as she can. Her muscles scream at the exertion, and she feels like she might faint, but the door opens. A man wearing a surgical mask, his eyes bloodshot and his hair damp with sweat opens the door.

41:11Man holds up the bag of Hill's medications. I have Jorge Hill's medicine. The man doesn't say a word. He just points toward a bed in the back. Man makes her way to her husband, passing by beds of other sick patients. Hill is asleep, a tube through his nose, providing him oxygen. Bright lights shine down on him. He looks pale and he strains as he breathes. Mann sets the medication down on the bedside table and takes her husband's hand. Felt like such a blessing when we met. A second chance at happiness in my widowhood. We deserve more than eight years together. We have so much more life to experience.

41:54Mann stops. She's out of breath and bone tired. She just hopes Hill heard her, and that eventually they will get off this ship and be safe and happy at home again. After extensive work by the State Department, as well as Carnival, the Zandam finally arrives off the coast of Florida at the end of March. Four people have already died on board, and over 130 passengers are sick. Crew members have worked to the bone to care for their scared and sick passengers as the illness spreads among their ranks as well. It takes several more days of negotiation before Florida Governor Ron DeSantis and local officials allow the ship to dock.

42:42Fourteen critically ill patients, including Jorge Hill, are transferred to local hospitals and placed in the ICU. Those without COVID symptoms are put on flights home. Due to the restrictions, Donna Mann is not allowed to stay in Florida with Hill. She returns home to Southern California, while her husband fights for his life in his hospital room. Crew members are forced to remain on board the ship as Carnival works out how to repatriate them to their home countries. For many crew members, cruise companies that are at sea during the no-sail order decide the best way to get crew members home is to transport them by boat.

43:20The cruise ships essentially become like the ocean liners of old, as they begin the months-long process of sailing the globe, dropping crew members off as they go. At 7.31 p.m. on April 23, 2020, the lights in Mann's home suddenly go out for a few seconds. Later, she learns that it's the exact moment Hill died, 3 ,000 miles away. Three other Zendam passengers and one crew member died in Florida hospitals as well. With the dangers of cruising during the pandemic impossible to ignore, the no-sale order continues for seven months. More than 12 cruise companies close or file bankruptcy as a result of the shutdown.

44:09They're mostly smaller companies. Carnival, Royal Caribbean, and Norwegian Cruise Line all make it through. but they have to go to extreme measures to survive roughly a year without revenue. They max out their credit lines, sell off stock, and sell off their ships as scrap parts. In October 2020, the CDC lifts the no-sail order and allows cruise ships to embark on test runs with only crew members to see how well they can enact the strict health and safety protocols necessary to permit passengers on board. Carnival, Royal Caribbean, and Norwegian Cruise Line start booking passengers for sailings again starting in 2021.

44:54They begin with cruises in Europe and Asia, and by summer have started sailing out of the United States again. Some of the protocols include requiring vaccination for passengers and crew, testing all passengers for COVID-19, requiring masks in public places, and reserving certain cabins to isolate any sick passengers. But even with new health and safety procedures in place, it's a rocky restart for the cruise industry. Not long after sailings out of the United States resume, the Delta variant spreads, causing another roundabout breaks on ships. The companies scramble to adjust their protocols to mitigate Delta's spread.

45:37Many passengers are still wary of returning to cruising, and many ships remain out of service, causing the cruise companies to lose even more money. But finally, in 2022, business seems to look up.

45:57It's May 2022 in the Port Everglades Cruise Terminal, Florida. Holland America President Gus Antorcha stands in front of a dark ribbon being held by two crew members. Behind them are a gathering of crew members of the Zandam. The ship made headlines in early 2020 as it struggled to find a port to land in as COVID spread among its crew and passengers. And Torcho wears a mask covering his nose and mouth. It's been a long two years for the world with lots of pain and suffering, but slowly life is resuming and nothing feels like a symbol of normalcy than bringing the Zandam back into service. From here, the ship will head up the Atlantic coast for nine days until it reaches Montreal.

46:43He turns behind him, where a blind couple stands with their service dog. The husband holds an oversized pair of scissors. And now, I'd like to introduce Cornelis and Connie Maranusson, devoted Holland America cruisers. With their dog, Joska, they've spent nearly 700 days at sea. Cornelis, Connie, it's a pleasure to welcome you back on board a Holland America ship. Will you please do the honors? Cornelis feels for the ribbon and snips it with his scissors. The crowd cheers. And with that, all of Holland America's ships are back in service. Happy cruising. And Torcha steps aside and members of the maritime crew prepare to welcome guests on board.

47:26And Torcha watches them go. After so much turmoil, things are finally returning to normal. The cruise companies faced dozens of lawsuits accusing them of being negligent in their reaction to the COVID-19 pandemic. Many were from passengers who got caught on cruises where outbreaks occurred, including the family members of passengers who died from contracting COVID on board. There are also lawsuits from crew members who were stranded on board ships as the companies worked to repatriate them to their home countries. They claimed that at times they were only fed bread and butter for a meal. Despite the tragic outcomes of cruising during the early days of the pandemic, the cruise industry has rebounded.

48:11In 2024, the number of passengers cruising is expected to surpass that of 2019, the first time the industry has exceeded its free pandemic business. After all the tumult and backstabbing and thievery, the industry has settled into a status quo. Far from a niche vacation for retired Floridians, cruising is a well-established way of vacationing, ferrying passengers to ports around the world. But the major players, well, they're the same. Carnival remains the master of the high seas, carrying 43 % of all cruise passengers each year, while Royal Caribbean is in a distant second, carrying 25 % of passengers.

48:56with Norwegian Cruise Line in third place with 10 % of passengers. Next time on Business Wars, we're setting sail with journalist Daniel Klein, founder of the online publication Come Cruise With Me to find out what's behind the industry's miraculous rebound and whether they can keep it up.

49:26From Wondery, this is Episode 4 of Cruise Ship Wars for Business Wars. A quick note about recreations you've been hearing. In most cases, we can't know exactly what was said. Those scenes are dramatizations, but they're based on historical research. If you'd like to read more, we recommend Devils on the Deep Blue Sea by Christopher A. Guerin and Cabin Fever by Michael Smith and Jonathan Franklin. I'm your host, David Brown. Austin Rackless wrote this story. Our senior producers are Karen Lowe and Dave Schilling. Our producers are Emily Frost and Grant Rutter. Sound design by Josh Morales. Fact-checking by Gabrielle Drolet.

50:01Voice acting by Zeke Alton, Bobby Foley, Michelle Phillippe, and Kieran Regan. Our managing producer is Matt Gant. Our senior managing producer is Ryan Lohr. Our executive producers are Jenny Lauer-Beckman and Marshall Louis for Wondery.

50:23In the fall of 1620, a battered merchant ship called the Mayflower set sail across the Atlantic. It carried 102 men, women, and children, risking it all to start again in the New World. Hi, I'm Lindsey Graham, the host of American History Tellers. Every week we take you through the moments that shaped America, and in our latest season, we explore the untold story of the Pilgrims, one that goes far beyond the familiar tale of the first Thanksgiving. After landing at Cape Cod, the Pilgrims forged an unlikely alliance with the Wappanog people who helped the Pilgrims survive the most brutal winter they'd ever known, laying the foundation for a powerful national myth.

50:59But behind that story lies another, one of conflict, betrayal, and brutal violence against the very people who helped the Pilgrims survive. Follow American History Tellers on the Wondery app or wherever you get your podcasts. You can binge all episodes of American History Tellers The Mayflower early and ad-free right right now on Wondery+.

From the publisher

As the cruise industry enters the 21st century, Carnival and Royal Caribbean square off again as they battle to acquire British company Princess Cruises. Whoever wins Princess will be virtually uncatchable as the largest cruise company in the world. But when the Covid-19 pandemic breaks out, the cruise industry struggles to keep passengers safe, and the entire existence of the industry is in jeopardy.

Listen to Business Wars on the Wondery App or wherever you get your podcasts. Experience all episodes ad-free and be the first to binge the newest season. Unlock exclusive early access by joining Wondery+ in the Wondery App or on Apple Podcasts. Start your free trial today by visiting wondery.com/links/business-wars/ now.

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