Royal Caribbean: On Deck with Adam Goldstein

CRUNCHING COSTS

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.”