Royal Caribbean: On Deck with Adam Goldstein
Cruises—people either love them or they’ve never been on one. That, in a nutshell, captures the biggest challenge facing today’s cruise lines, says Adam Goldstein, who recently sailed into the president and COO role at Royal Caribbean Cruises, Ltd., from his former post as CEO of the company’s flagship brand, Royal Caribbean International.
May 17 2014 by Jennifer Pellet
Cruises—people either love them or they’ve never been on one. That, in a nutshell, captures the biggest challenge facing today’s cruise lines, says Adam Goldstein, who recently sailed into the president and COO role at Royal Caribbean Cruises, Ltd., from his former post as CEO of the company’s flagship brand, Royal Caribbean International. “As a former colleague of mine used to say, ‘We’re not in the kind of busi- ness where you can hand out samples on the street corner,’” he notes. “Almost everyone in America has friends or family who are fanatical about cruising and yet, for whatever reason, they don’t sign up.”
Some non-cruisers fear seasickness; others shun the concept of being “stuck” on a boat teeming with partying twenty-somethings or swarming with tour-guidebook-toting geriatric folks. Many are mired in misperceptions born of the “Love Boat” era of cruise vacations, when passengers lounged on deck chairs by day and gorged themselves at all-you-can-eat buffets by night. Plus, recent events, including the grounding of Carnival’s Costa Concordia, a fire aboard Royal Caribbean’s Grandeur of the Seas and viral outbreaks aboard several ships, haven’t exactly helped convince ground-bound travelers to trade their spacious resort suites for staterooms on the Lido deck.
“The issues of recent years have probably accentuated what was already our biggest challenge and will continue to be our biggest challenge for the foreseeable future,” concedes Goldstein, who is quick to note that the industry as a whole has banded together to address the reputational challenges passenger safety crises pose. Chief among those efforts was the rollup of some 10 regional industry associations into the Cruise Lines International Association (CLIA).
CLIA members have since committed to a slew of safety-related policies, as well as the Cruise Industry Passenger Bill of Rights, which details specific measures members will take to ensure passenger health, safety and comfort. “CLIA has become a truly global spokesperson for the industry, which has been very beneficial, particularly in advancing new policies that take an already enviable safety record the industry has had over the last 50 years and moved it even more forward,” says Goldstein, a cruise line veteran who joined Royal Caribbean in 1988. “There is no such thing as perfect safety; there is perfect dedication to safety, and we must remain committed to that. Over time, that [goal] will enable us to minimize the number of adverse incidents; and, when they do occur, make the handling of the event—and therefore coverage of the event—as benign as possible.”
As the industry’s second-largest cruise line, Royal Caribbean has also worked diligently to lure non-cruisers into the fold by adding activities that most wouldn’t associate with the quintessential cruise experience. The company’s newer, larger ships— its Oasis-class ships can carry 5,400 passengers—already offer a wide array of “experience” offerings, from surfing wave pools and rock-climbing walls to zip lines and bumper cars, and more fantastical features are on the way.
“On Quantum of the Seas, which we’re bringing into service this year, you’ll be able to climb into a jewel-like capsule on a mechanical arm that extends 100 feet above the top deck—where you’re already 200 feet above water,” says Goldstein. “So you’ll have a bird’s eye view as you’re swung around a full football field’s length above the water. That’s certainly never been attempted before.” Both Quantum and Anthem of the Seas will also feature a wind chamber where passengers can experience the sensation of skydiving above the ocean.
“We do these things because guests love them and because having them tells people that the cruising experience is more active than you might have thought; it’s not just about eating in the dining room.”
In fact, Quantum will forego the traditional two-seatings at-6-and-8 in the main dining room entirely, instead featuring “Dynamic Dining,” or five themed dining rooms serving various cuisines. A new app will help its tech-savvy passenger population navigate their culinary options, letting them view real-time availability and make reservations that work with their other evening entertainment plans. “As people’s palates have become more sophisticated in terms of exposure to ethnic cuisines, we’ve branched into specialty restaurants to the point where on some of our ships there are more places to eat than there are nights of the cruise,” notes Goldstein.
Cost controls have also increasingly been a focus for Goldstein. As with many fuel-consumption-intensive businesses, energy efficiency has been a challenge for Royal Caribbean, which spends approximately 8 percent of its total revenue on fuel compared to 3-4 percent in 2003—despite the fact that the company’s ships are 20 percent more fuel-efficient.
“If you had asked us whether we were dedicated to reducing fuel expenditures back in 2003, we would have said, ‘Absolutely!’ and pointed to several things we were doing,” says Goldstein. “Looking back, it feels like we were kindergartners then, and that we’re at least in college, if not grad school, now.” Part of the challenge is fleet-related. Fuel efficiency factors heavily into every facet of new cruise ships coming on line, from the shape of the hull and the heating and air conditioning systems to the software that guides the navigation. Retrofitting energy efficiency into existing ships—each of which typically represents a $1 billion-plus investment—is more challenging and will only become more so as new restrictions and regulations come into play. “[Mandates] on reducing sulfur emissions, in particular, have put the industry in a position where over the next seven years we could be forced to spend considerably more on fuel than we have in the past,” says Goldstein, who reports that Royal Caribbean is exploring ways to scrub sulfur out of a ship’s exhaust. “If that doesn’t work, we’ll need to buy more expensive fuel types.”
LESSONS FOR LEADERS
With Goldstein now stepping into a strategic role at parent company Royal Caribbean Cruises, Chief Executive asked him to reflect on his 12 years as CEO of the nation’s second-largest cruise line to offer newly minted CEOs tips on coping with company and industry crises:
Build a customer-centric culture. “You need to have this in place before a crisis develops, because when you’re managing a situation there is very little time and often incomplete information. If you haven’t made putting the customer at the center of the situation a natural tendency, it’s not something you will be able to institute on the fly.”
Define situations that could occur and drill for them.“Every industry is different. Think about the situations you’re likely to face and practice how you would handle them on a regular basis. It may mean doing safety drills with your team or staging a mock press conference to practice handling questions.”
Figure out how you can communicate proactively.“We decided to put out the photo of the blackened hull of Grandeur of the Seas that got the most coverage ourselves. It wasn’t a nice picture, but we decided it was better to put it out and try to control the flow of information—and that turned out to be for the best. Media coverage of different situations varies, but with social media and a 24/7 news environment, you need to be prepared to be visible. The more significant the situation, the more visible you need to be.”