Why did Holland America sell itself to Carnival in 1989?

[Sea King]

Bicker, A little background - maybe this helps to answer your question : 1983 had been a disastrous year for HAL caused by a dip in bookings. As a result, cruises had to be severly discounted. HAL was in the middle of a merger (with Westours), moving its headquarters to Seattle, selling off older ships (Statendam IV, Volendam II, Veendam III), building new ones (Nieuw Amsterdam III and Noordam III) and there had been a relatively high turnover in top management positions. The booking problems could not have come at a worse time. This all changed when Mr. A.K. "Kirk" Lanterman was appointed as president and CEO in SEP 83. He would make HAL into one of the most profitable cruise companies the world has ever seen. This was achieved by relentless cost control and a strict focusing of the core qualities of the company's product.

 

During 1988, the cruise industry for the short Alaska and Caribbean markets had been rapidly expanding with a continuous growth indicated. To be a serious player in this market, bigger ships were necessary as they had to offer all the amenities of a floating resort and at the same time be also more cost effective as they had lower operating costs. Other companies followed the same concept as it was the only way to survive.

 

One of the major operators was Carnival Cruise Lines of Miami. Carnival, with a very agressive new building program, was cornering a substantial part of the cruise market and appealed very much to "first time cruisers". HAL felt this competition severely! Carnival's way of operating severely threatened the seven-day cruise market as it could offer , with its biger ships, the same itinerary for a much lower price. In order to survive, HAL had to follow the other companies and order bigger ships, although it was not consistent with the company's policies. At the time, HAL had a fleet of four ships: Rotterdam V, Nieuw Amsterdam III, Noordam III and Westerdam II. A decision was made to order two 65,000 ton cruise ships from a German yard with a capacity of 1,876 pax each.

 

Before the new ships could be built, however, Carnival surprised everybody with the announcement on 25 NOV 88 that an agreement had been reached between Carnival Holding Ltd. of Bermuda and the Holland America Line Trust Ltd. of Bermuda thet it would buy their Division Tourism for U.S. $625 milion with all its assets and liabilities. This takeover became effective on 15 JAN 89.

 

Carnival , being the fastest expanding cruise company in the world, was also shopping around to expand even more quickly. After a failed attempt to take over Royal Caribbean, Holland America Line came into the picture. HAL was already firmly established in the cruise market and well run but did not look as if it was able to survive if Carnival continued to grow. A take-over would benefit both companies .

 

Source: 125 Years of Holland America Line by H.A. Dalkmann and A.J. Schoonderbeek.

 

Copper: with due respect to you, Capt. Schoonderbeek and Bruce Muzz. suggest you might also want to get a copy of Devils of the Deep Blue Sea by Kristopher Garren. Fascinating book in many respects; traces and outlines the beginnings of Carnival through its acquisitions including HAL and most recently Princess; A. Kirk did in fact save HAL by realizing Carnival wanted something (an in to Alaska) and HAL needed an infusion of money. A successful corporate marriage.

 

I'm no "big fan" of Carnival; but only from the perspective of sailing the line. You have to admire what the Arison family has accomplished but as importantly the way they did it: by letting each company keep it gained control over maintain its identity and product line.

 

The problem seems to be, IMHO, that Carnival is starting to forget the formula that made it successful; it should allow Seattle to keep the HAL basic tradition and improve on it, not do away with it or water it down where it becomes just about non-existent.

 

Think you'll enjoy the book.

 

By the way, it's also got pictures:)

[BruceMuzz]

Sea King,

 

Thanks for the advice. I read the book a few years back when it first came out. Very authentic story-telling for a true view of how the industry has developed.

 

Now I have some constructive advice for you. You should work in the HAL Seattle Head Office like some if us have, so you can get a hands-on realistic view of the real relationship between HAL and Carnival Corp. Quite an enjoyable "read" as well.

[Sea King]

Sea King,

 

Now I have some constructive advice for you. You should work in the HAL Seattle Head Office like some if us have, so you can get a hands-on realistic view of the real relationship between HAL and Carnival Corp. Quite an enjoyable "read" as well.

 

Bruce: thanks but no thanks:D:D

 

somehow, I think the "square peg into the round hole" problem would surface in 24 hours or less

 

plus, if you're going to be in the "lion's den", let's go to Miami .. at least the weather would be more tolerable:)

[hammybee]

You have to admire what the Arison family has accomplished but as importantly the way they did it: by letting each company keep it gained control over maintain its identity and product line.

 

The problem seems to be, IMHO, that Carnival is starting to forget the formula that made it successful; it should allow Seattle to keep the HAL basic tradition and improve on it, not do away with it or water it down where it becomes just about non-existent. :)

 

The Arison family bet the farm on the "build it and they will come" venture.

 

They have indeed done a tremendous job of enabling each brand to retain its unique mark to the extent that consumers will accept it. It seems to me that this is sometimes to the point of ineffeciency. It would certainly be more effective to minimally have one central booking point of sale, customer care center,website functionality and HR function, across the enterprise and yet this has not happened in all the years.

 

What Carnival does have is financial control of the enterprise and thus far it has managed to avoid having any

( not sure about Windstar) of its cruise lines get into the financial doo-doo they were in, upon acquisition.

 

It's not too disimilar to how GE or Berkshire Hathaway, to name a few, operate. All is fair in love and war and big business, so long as you make your numbers.

[Copper10-8]

Copper: with due respect to you, Capt. Schoonderbeek and Bruce Muzz. suggest you might also want to get a copy of Devils of the Deep Blue Sea by Kristopher Garren. Fascinating book in many respects; traces and outlines the beginnings of Carnival through its acquisitions including HAL and most recently Princess; A. Kirk did in fact save HAL by realizing Carnival wanted something (an in to Alaska) and HAL needed an infusion of money. A successful corporate marriage.

 

I'm no "big fan" of Carnival; but only from the perspective of sailing the line. You have to admire what the Arison family has accomplished but as importantly the way they did it: by letting each company keep it gained control over maintain its identity and product line.

 

The problem seems to be, IMHO, that Carnival is starting to forget the formula that made it successful; it should allow Seattle to keep the HAL basic tradition and improve on it, not do away with it or water it down where it becomes just about non-existent.

 

Think you'll enjoy the book.

 

By the way, it's also got pictures:)

 

Thanks for the heads up, Sea King. Will try to find/obtain a copy of that book and............pictures are good!;) Agree with you on the Carnival formula! Lots of HAL "things" appaer to have changed in the last year or so and not all of them for the better!

[hammybee]

Will try to find/obtain a copy of that book and............pictures are good!;)

 

$7.83 used, from Amazon.com.:)

[Copper10-8]

$7.83 used, from Amazon.com.:)

 

Thanks Hammy - Were you aware that Windstar has been sold by HAL/Carnival?

[hammybee]

Thanks Hammy - Were you aware that Windstar has been sold by HAL/Carnival?

 

You are welcome.

 

Yes I was aware that Windstar had been sold. My pal Mickey and I had a spat and he failed to call me for advise nor did he subsequently spill the beans about the reason why........ So, all I can do is assume that somewhere between loosing an entire ship to fire and not making their numbers, it was time to go.:)