Responding to Global Crisis with Christine Duffy: Carnival Cruise Line

Join host Gene Cunningham and guest Christine Duffy, President of Carnival Cruise Line, as they discuss how Carnival is overcoming the challenges of the Covid pandemic and the creation of opportunities to propel the company safely into the future.  This conversation is an excerpt from the 2021 Bayer International Business Conference that took place on December 7, 2021 at Saint Louis University.

Christine captains a company that sails a fleet of 24 ships, annually hosts nearly six million guests and employs more than 43,000 people who hail from 110 nations around the globe. Host Gene Cunningham is a current faculty member in the Chaifetz School of Business at Saint Louis University and retired Aerospace Executive with a 41-year career in International Business, Strategy, and Operations.

Special thanks to Bayer for sponsoring this episode.

Transcript

Speaker 1: 0:02

SLU International Business Now, Conversations that Matter is a podcast developed by the Boeing Institute of international business in St. Louis university's Chaifetz School of Business special thanks to founder Dr. Seung Kim, for his grant to support the launch of this Podcast.

Gene Cunningham: 0:21

A warm welcome to our listeners from the Saint Louis University Boeing Institute of International Business. I'm your host Gene Cunningham, bringing you conversations that matter. We're honored to have Bayer, a global leader in agriculture, pharmaceuticals and consumer health. As our sponsor for this episode, Bayer vision is health for all hunger, for none, and through important work of supporting farmers with new ways to grow our food, providing doctors and patients with improved treatments for critical diseases, or by helping consumers with products to enhance their lives. Bayer harnesses science and innovation help find solutions to the world's most pressing challenges. We have a special episode for you today. It's a fireside chat with Christine Duffy, the CEO of Carnival Cruise Lines. This was recorded at the Boeing Institute's 2021 Bayer International Business Conference. The conference focused on how multinational companies recover from global crises. We discussed how Christine and carnival the world's largest cruise line faced the challenges of the 2020 COVID pandemic and how they created opportunities to bring the cruise industry safely back into service. In 2021, Christine is a veteran of the travel and events industry before joining carnival. Christine was the president of Maritz travel company and later CEO of CLIA the Cruise Lines International Association. In addition to her leadership at carnival, Christine is the chair of the US travel association and she's so on the US commerce secretaries travel and tourism advisory board. Now let's join our fireside chat with Christine Duffy. Christine. Welcome. Thank you. It's great to have you here. I'm so glad you agreed to do this. Uh, this was an easy one. Okay. This was an easy one, especially with your history here in St. Louis, but talking to about history. So Carnival's going be 50 years old next year. Yes. There's some of you here that don't know what that age is. Others of us. Well, well, we won't talk about that, but carnival went from one ship 49 years ago to the leader of the cruise industry and then the pandemic hit. What did you do as a leader? What were some of the things you thought about as you were trying to figure your way through this massive change? You're number one and now there's nothing going on. Well, as you know, it was unprecedented, the idea that any industry or business would be completely shut down for 16 months in the US was wasn't even a scenario that we could have ever imagined.

Christine Duffy: 2:58

You know, the cruise industry, as you know, from your background, there's a lot of fun in the front, but there's a lot of technicals and regulatory. And so, you know, we do a lot of planning scenarios, drills. We have a Marine organization there's security, there's health, public health, but this is a scenario nobody ever really could imagine. And so I think those initial day, when we really understood that we were going to cease operations, it was hard to get your head around. And the fact that I will say for myself, because I was part of carnival corporation, we have nine cruise line brands globally, and we have a leadership team. You saw Arnold, Donald who coincidentally is also here in St. Louis. And, you know, we have the leadership team. I think there's seven of us that lead the brands and, and some of the big corporate shared service functions. And, you know, I was of the view that, well, we'll be, you know, this might be two or three weeks. I, I mean, this is not gonna be, you know, maybe a month. So there were others who believed it was gonna be longer. But I think anytime you're in a crisis in this case, the reality was it was complete uncertainty. No one really knew, and it wasn't just happening to us. It was happening to the whole world in many respects,

Gene Cunningham: 4:40

Right? So you faced with the crisis and you make your way through it with your team and now we're coming out and travel's kind of picking back up again. What are you doing to make sure your employees, your partners, your guests are safe and healthy as we go forward?

Christine Duffy: 5:02

Well, I would say one of the guiding principles and, and I think this has been so important for all of us to, to put first is, you know, for carnival, as the corporation, our greatest responsibility and our highest priority is really compliance environment, mental protection, the health wellbeing, our guests of the destinations that we touch, that we bring our ships and to our team. And when you are very clear that that is the number one priority when you're in a crisis, that is what we went back to as really the lens for all of the decisions that we had to make. And there were a lot of very tough decisions to be made. As we really began to understand this, isn't just stop operating for a month. This is now a CDC government, no sale order in effect with no expiration date. That was for certain, and the reality that you have guests on board, the ships that we were able to get home and get back safely. But now we have for the corporation close to 70,000 crew members from countries around the world on ships and for our brand, we had started in the early days after the guests had come off the ships saying, okay, well now we've gotta get crew home. So we started flying some of the crew home art aircraft. Well, that got very expensive very quickly when you realized this had to go on. And that was what you saw in the video. Ultimately, we used our ships to bring our crew home, but we had crew that were on ships for over a year because their own countries would not take them back. And so it was really, I always say, unlike the airlines that can park planes in the desert, you know, and we'll go back and get them later. You're an airplane guy. You can't do that with the ship. The ship has to be maintained. The ship has to move. The ship has to operate. So we were operating with what we call safe, operational all minimum Manning. So every ship had between a hundred and 150 crew members, but it was basically decking engine enough people to serve food. We still had to provision the ships. We still had to operate and come in and out of port. So while there is no revenue coming in, you still have, you know, a significant run rate of expense. Fortunately, you know, we have a great CFO and we raised 23.6 billion of debt and equity. So we had the runway we knew to keep going, but again, you know, watching everything that we were doing and like many come, we had downsizing and furloughs. And for me sitting here at the end of 2021, I'm grateful that, you know, we are not only back. We are back in a very big way. And, uh, I say the real blessing here has been the guests. You know, the customers, the customers there is great pent up domain and for vacations in general cruising specifically. And because carnival, I like to say is America's cruise line 14, us home courts, 50% of the us population can drive to a carnival cruise vacation. And these days, a lot of people like that.

Gene Cunningham: 8:36

So you had to find a way to get or staff home, but in some cases they weren't even allowed to go home. Now that you're back in business, has that staff come back, are you seeing a good return of those individuals?

Christine Duffy: 8:55

You know, our crew members, because they come from, I mean, almost all of our crew come from outside the us and they didn't have the government programs that we have here. So our crew was desperate to come back and get back to work. And many of them, I mean, it was tough for me. We did, uh, monthly videos that I would send back to all of the crew that was at home. And at one point I actually said, we don't know when we're gonna be sailing again. And if you can get a job, if you can get another job, you should get, get work, and we will call you back. And, and that was really hard. So when we began calling crew members back, they have been beyond thrilled. We were able to vaccinate our crew members because they didn't have access to vaccines at home. And we were able working with partners like the university and, and Texas medical school in Florida, we were able to get vaccines for our crew and they've been thrilled. It's, it's probably why we've also seen as we've come back. Our NPS scores, our net promoter scores. When we came back have been, you know, numbers that we've never seen before.

Gene Cunningham: 10:07

Outstanding, outstanding, but you're not unfamiliar with crises in your prior jobs. As Alfredo went through prior responsibilities, you were in key positions when we had nine 11 with the travel industry impact. And you were in a key position in 2008, when we had the financial crisis, what have you learned about crisis management as a leader, through all of these experiences? Obviously all different, but are there some real tenants to being a leader in a crisis that you can share,

Christine Duffy: 10:43

As you said, you they're all a little bit different and you do learn from each one, but there are things that, that I can reflect that make sense, no matter what. And the biggest one is really around communication, especially in an environment where there is so much uncertainty and frankly fear, uh, that people want to hear from leaders, even when you're not telling them anything new, even when you don't have good news. The other lesson I've learned is that people are so much more resilient than we give them credit for. I think leader believe if I don't have the answer or if I can't share good news, then we'll, let's just wait. And I believe there is such a thirst for communication from leadership it during times of change and crisis. And that now that I'm back on the ships, I hear from crew members who say that every month when my video came, they would gather with their family to just watch the video. And even when I didn't have the news, they wanted to hear, they were so grateful to know what we were doing and letting people know what you're doing. So I think that applies in every crisis. And if you think about, and to think about all the stakeholders, because employees are a huge stakeholder, but there's lots and lots of stakeholders. And, you know, the things that we've learned, the hard way, I will say in both, uh, the crisis in 2008, the crisis that we've had in the cruise industry, when I ran the trade association is in the absence of you communicating and controlling the narrative, somebody else will make it up for you. And I think that has only become even more challenging to day because of social media and the 24 7 news cycle and fake news and whatever we wanna call it. But I think that is probably the biggest thing I say applies the, in this case, the other big lesson was people want leaders to make decisions. So, okay, we're in the crisis. Tell me what to do, and I'm gonna go do it, make a decision, make a decision. And I think in this example where we have seen how this pandemic has evolved, and we've had a lot of down ups and downs waiting to make decisions actually paid off, having pay dis around decision making and, and being patient. And it was hard. There's a lot of pressure to make decision and give people, answers, people in crisis want to go do something or fix, you know, and saying, there's nothing for you to do right now. Let's just wait and see, what's gonna happen was very, very difficult.

Gene Cunningham: 13:38

So communicating early and often, but being honest about what's really going on was kind of key to keeping all of thisd.

Christine Duffy: 13:50

Yeah.

Gene Cunningham: 13:50

Okay.

Christine Duffy: 13:51

Building trust. People have to ha you know, leader us matters a lot when people are feeling uncertainty and fear, and, and this was so different because it affected everyone, not only professionally, but personally, people were afraid. People were afraid for their families or for their elderly parents. There were people who couldn't even see their families. And so you have this pressure of that plus what's happening at work. And in some ways I think we worked really, really hard, and it was a good distraction from the worry that people would've had otherwise. Right.

Gene Cunningham: 14:31

Well, appreciate that. And I, I'm sure the audience can relate to that in all of your positions as we've been going through the pandemic. Can you give us a little bit, we've got a number of students and, and recent graduates in the audience who may have not been through a crisis other than this one. Can you give us some advice for them in terms of the skills you wanna see from the people around you when there's a crisis, what, what should they be doing?

Christine Duffy: 15:00

Well, I think there's a, a couple things. One is when you're in a, everybody's gotta do whatever it takes. So it's really difficult if you have people who you're dealing with a crisis and somebody says, well, I don't that, you know, that's a step down or that's a step back, or I wanna be, you need people that are just willing to do whatever it takes in the moment. And the other thing I think people found it was hard is what we said today might be D tomorrow. And so this idea that flexibility is a word that we use a lot when we talk about work, but truly being able to accept rapid change and having to go back and redo things. And the main thing is really having a positive attitude and being off optimistic matters, you know, the energy in an, in a crisis, like the one we've been in makes a difference to people. And so you want to be sure that if you're part of that team where you're working with leaders and people are under stressed, and I mean, there were people who weren't sleeping, we have 24 7 fleet operations centers. And so whatever that means, right, get a cup of coffee. Can you go out and get the P and do it with a positive attitude? I remember the people that did that. Yeah.

Gene Cunningham: 16:23

So energy enthusiasm, willingness to take on whatever the task is, that level of professional flexibility, what skills you wanted to see in people. Okay. You, you mentioned earlier, there are different points in the crisis. There's the time when you gotta identify immediate actions that have to be taken, but it seems like you also saw this crisis as an opportunity to maybe do some new things. And we saw, saw, and the video, the roller coaster being added to the Mardi GRA that had to have been done during the pandemic in order for it to be coming out when it did that. And what other innovations, or what other changes did you put in

Christine Duffy: 17:08

Place? Well, I have to say, you know, building a ship that ship took probably five, you know, planning and in the, that rollercoaster was decided a long time ago. And there was no going back on the rollercoaster that rollercoaster was actually built in, in Germany, on the ground and operated, and then dismantled and taken to Finland where Mardi GRA was built and put on top of the ship. So, but there were a lot of other things that we did do that we had already started investing in and we shipped a bit. So we have an app, like a lot of businesses do where, you know, the app was built to, you know, people can text on their phone with other people on the ship. And the, the app became a real tool for how were we going to manage COVID protocols when we could restart? How could we operate differently? Which would it be more touch, less touch? And so things like, instead of having to wait in at the dining room to get, you know, your table, you could go to the app and the dining room would let you know when your table was ready. So you could just come and, and go in, or, you know, instead of waiting in, in line to get the pizza from the app, you could just order your pizza and have it delivered to wherever you are on the ship. So there were lots of technologies that we had started that we were able to, you know, implement additional functionality that we're still working on. So now the ability to upload vaccine data into a, you know, into a, into a tool where people at embark can just come in, we, you have facial recognition that we worked on with C B P during the pandemic. So those projects continued things that we felt were really gonna make a difference at restart. And as you said, you know, there was a, there was an opportunity of time for some people to, to work on projects that, you know, we might not have had the focus on. Had we been in full operation?

Gene Cunningham: 19:14

How about sustainability? Are you working initiatives in that direction?

Christine Duffy: 19:18

So the, the thing that we didn't see in the video is Mardi GRA is the first liquified natural gas ship for the America. So carnival corporation has a platform called Excel. And so this is the platform that the ship is built on. And then each brand has built the guest facing on top of that. So that is a real innovation to reduce our emissions, which is a big commitment for carnival corporation for the entire cruise industry. We've also installed during the, uh, pause bio food digesters to reduce food waste down to liquid, which is a, a big innovation. We, we also carnival corporation pioneered advanced air quality systems to reduce sulfur emissions. We are working and announce just, uh, this year during the pause with the port of Miami are implementing shore power where cruise ships plug in to the electric grid. And it's literally a ginormous plug that we plug in. We do this in California in long beach with our ships. So this is now another innovation we've reduced significantly single use plastics cycle. So, you know, I think for all of us, environmental societal governance ESG, which everyone has just taken on a whole new meaning and along with diversity equity and inclusion, which as, you know, being a woman that I am has been an important thing for me in, in, in my career and how I can give back. So that's another great opportunity that we are focusing on it at the company, right?

Gene Cunningham: 21:02

Appreciate that with your leadership role at carnival, but also your leadership in the travel industry overall, and on the secretary of Commerce's commission, you're in a unique position to look at what's going on across this industry. So give us your take as to what's the direction carnivals going in, but also what's the direction the travel industry is going into the future.

Christine Duffy: 21:28

It's so interesting. And the one problem the cruise industry does not have, that is a huge problem for the travel and hospitality industry is filling jobs. There are hotels that are not operating at a hundred percent capacity because they do not have enough staff to clean the rooms or to serve the food. And so that is a big, big challenge for the entire industry. And when you think about places that are more remote summer resorts with visas summer visas that had been cut back, you know, we look at Alaska, which lost almost, you know, a second season in, uh, 2021. Had we not been able to get, uh, the sign off from president Biden to be able to resume cruising. So workforce is a big issue. And what does the workforce of tomorrow look like? We don't believe that workers are going to come back the way that we were before the pandemic. It's not just about hybrid it's, it's people want flexibility. People want to have the ability to live, where they wanna live. And, you know, I think companies are looking hard at what does that mean for how we operate, how we communicate, how do you build culture when everybody isn't all together every day nine to five in an office. So those are looming. I think the other interesting position for the travel industry finally is to have a seat at the table, as we look at the broader infrastructure investments that are gonna be made in this country. And so you think about the future of mobility, what the automotive industry is doing, what the, a aviation industry is doing space, and how does this fit into travel? The movement of people. And I think for years, I've been involved with the us travel association, going back to, unfortunately, what happened to nine 11. I think the work that we've done ensure that people understand that travel matters a lot, was all very positive up to, you know, pre COVID. But when you take something away from people and travel and the ability and the freedom of movement really was taken away during this pandemic, the pent up demand that we have for travel, the expectation from the next generation, who's always traveled, I think makes this industry much stronger and more important. And the recognition that we're finally getting from, uh, the folks in Washington at the administration is, is long overdue, but we're at the table, which is positive.

Gene Cunningham: 24:12

So with those images, there was a point at which I was visualizing the carnival spaceship out there with, with cruising, taking a completely different perspective. But with that, let's take a moment and ask if there's any questions from the audience for Christine.

Christine Duffy: 24:31

So you kind of queued me up a little bit, but there's a movie called the fifth element. I don't know if you've ever,

Gene Cunningham: 24:36

We could

Christine Duffy: 24:36

Hear you. The fifth element has a cruise ship in space. Well, you know, I have to say my involvement with St. Jude, they just sent, uh, you know, Haley that worked as San, a Jude up to space on the, on SpaceX. And I had a chance to meet them. And, you know, when I think back 50 years ago to Ted Anderson, who was our founder at carnival cruise line, and we look at these, these first ships that we were sailing and you look at ships today with, I mean, who's to say 50 years from now, we not all be cruising in space.

Gene Cunningham: 25:08

Perfect.

Christine Duffy: 25:09

There are still destinations that we are not able to go to that have not developed protocols and not much different than here in the us while there are federal protocols and rules where a government will say, okay, we wanna open a up for cruising every state then determines under what conditions. So there's been a lot of, of work on, uh, the part of our teams with CDC, with the inner agency, working groups, to talk about what are the protocols for operating cruise ships from the us. And then we have, have to do the same thing with all of the places where we bring our ships. So in The Bahamas and across the Caribbean. So as we work through those protocols and requirements and reporting, you know, all of our crew were vaccinated. Uh, all of our crew right now are receiving their boosters. They were grateful to be able to receive vaccines because they couldn't get them at home. And so, you know, we're operating with 97% on average, our ship full, you know, vaccinated. And, uh, you know, we're, the protocols are working when we started, we were really constraining the capacity just to make sure the protocol all worked. And, you know, there's a lot of extra health, public health, medical staff on board. We're able to do testing on board. We have all of the things that we need to, to ensure that, you know, if there is a case we can manage it and happy to say that any of the cases are really, you know, very fact because everybody is pretty much vaccinated on the ship have been asymptomatic or, or mild. So, but it has been a lot of work and, and yes, changes in, in itineraries.

Gene Cunningham: 27:01

Thank you. Anyone else?

Christine Duffy: 27:03

Hi, Christine, you probably kind of just answered this, but do you foresee vaccination becoming the norm for cruising? The CDC has said that if you wanna sail what they call a vaccinated cruise that you must have at least 95% of people vaccinated, then some of the countries, uh, Bahamas said anybody that's eligible for a vaccine, uh, 12 and over must be vaccinated in order for us to even bring the ship in. So we've been operating under that rule for most of our, our ships that come out of that go to the Caribbean, but we also have other brands outside of the us where they don't have a CD, a, a similar requirement, and they've been able to manage and restart using testing as the way to manage without any sort of vaccine mandate. So it, it really depends on where, where we're sailing, you know, the length of the cruises, most of our cruises are, you know, seventies or, or shorter. So it's different than, you know, cruise lines. Some of our sister brands that are operating 14, 21 day world cruises.

Gene Cunningham: 28:16

So for the groups that test, is it testing before you get on the ship? And is there testing while you're cruising or is it just before you get on the

Christine Duffy: 28:25

Ship? So anybody that's vaccinated, right. It must be tested prior to getting on the ship. And we think that has been really the, the safest, uh, and then any of the UN vaccinated, which now are very small number because it's only those ineligible are test to Debar got it. And so if somebody does go to the medical center and has COVID like symptoms, we're able to do the test, they're able to go into, you know, a quarantine cabin until, you know, the end of the end of the cruise. So, but those have been really, really small numbers, fortunately, because I think people are vaccinated and we're doing the test before they ever get on the ship.

Gene Cunningham: 29:09

Thank you for the question.

Speaker 5: 29:11

Can't even imagine what you and that leadership team were going through in those early moments. Can you talk a little bit more about that?

Christine Duffy: 29:19

Sure. So I'm on the corporate leadership team. So Arnold Donald's leadership team. So we were meeting every day. I think we were meeting twice a day and, uh, you know, and we have people that are, you know, around the world. And then I have my leadership team for carnival cruise line. And so then we were meeting every day and you know, we're in Miami and I have a condo and my poor husband is on the other side of the wall. And we were just on the phone. I mean, it was, they were, you know, 15 hour days. And, but you know, when you're in it, I just think you get into, you know, this is what you've gotta do. And it, it was fluid. It was evolving. And we were, you know, Arnold, I will say the biggest lesson, I really did learn from him because you could sense, of course, people were stressful. It was uncertain. And our CFO is raising money, right. That we, you know, we still have to keep going. And it was Arnold that really, you people wanted to be decisions. And what I can clearly I could clearly see in hindsight was Arnold saying, yep, hear you, let's talk about it again tomorrow. And by tomorrow, the thing that we would've decided the day before probably wouldn't have been relevant or the right thing. So that was a big lesson learned for me. You just keep going. It was also the concern. I think all of us had for the crew getting the crew. We had to get crew members home safely. And there's a, there's a picture that you saw there with the 13 ships. You, you could multiply that by or five times, because if you think about the number of crew members that work on ships from all brands that come from the Philippines and Indonesia and Bali, all of the cruise ships repatriating, their crew home and Manila bay just filled with these cruise ships. It was incredible. And the government in Manila had to come on every ship one at a time and get the information about their citizens. The crew members had to go into a quarantine on the ship before they'd be allowed to get their card stamped. Then they had to get off the ship. We had to put them in a hotel before they were allowed to then make their way back to their home. So the logistics of what the teams were dealing with were so comp I mean, literally buses, trains, as I said, there were some countries that would not take their people back. And so those crew members were on some the, the, I think we had someone on the ship for over a year before they were able to go home and people that, you know, they didn't see their family. So you just keep going cuz you know what you're doing really matters to a whole lot of people that are counting on you.

Gene Cunningham: 32:20

So with that, let me ask, do you have any last comments for the audience before we end this lovely fireside chat? We need a little fire that

Christine Duffy: 32:30

We do. I, yeah. That one of those fake, you know, like a Christmas morning, you turn on. Well, you know, I just, uh, I think as I reflect back on this topic of crisis, they're all different. And so again, being resilient and being open and really taking lessons that, that you learn in leadership just magnify and become so much more important, but having a, a clear per and what is it that we, as a company, we, as a leadership team, what is our commitment and having that clarity makes the decisions a lot easier.

Gene Cunningham: 33:12

But you had that before because you knew what your mission was.

Christine Duffy: 33:15

Yes. And you understand that from your,

Gene Cunningham: 33:19

Just a little,

Christine Duffy: 33:20

A little, exactly. Right.

Gene Cunningham: 33:21

Exactly. Makes perfect sense. Yes. Christine, it's been great having you here today. Again, it's been just wonderful conversation. Appreciate the understanding and the challenges you must have been going through for the last 18 to 24 months. Unbelievable. Our best for you for the holidays and to everyone at Carnival and to the audience. Thank you all for your participation today and the great questions, including the fifth element coming in.

Christine Duffy: 33:50

Yes. I've gotta go watch that movie. Thank you. Thank you all for your great attention. And I hope that some of, of what I've shared here can be helpful as you, uh, think about and navigate your own. Hopefully never crisis like this. Again,

Gene Cunningham: 34:06

We hope you've enjoyed this fireside chat with Christine Duffy, looking at how multinational companies respond to global crises. We examined how Christine and her Carnival cruise team navigated the 2020 COVID storm with its cruise industry shutdown and emerged in 2021, ready to lead the cruise industry to new levels of safety technology and sustainability. If you learn something from this podcast, please be sure to leave a review with your podcast provider and join us next time as we continue to look at global business strategies, I'm your host Gene Cunningham, bringing you conversations that matter.

Speaker 1: 34:47

Thank you for tuning in to the SLU International Business Now Conversations that Matter Podcasts, we invite you to subscribe to this podcast series. So you don't miss any future episodes. To learn more about the Executive Master of international business program. Please visit biib.slu.edu. Again, that's biib.slu.edu