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Mobile Shocked by Carnival

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Mobile, Alabama, was completely taken by surprise by the yesterday’s announcement by Carnival Cruise Line that it is pulling its only cruise ship in Mobile from the city and relocating it in Port Canaveral, Florida. City officials said they had no warning of the change, which will take place on October 22, 2011.

Mobile is a small southern town right on the Gulf of Mexico in Alabama. There was not much there at all until the local city council legalized casino gambling in the 1990s. This brought a fledgling hotel industry that has maintained a decent business although it has never gone much beyond the small town stage.

But Mobile rallied when Carnival agreed to place it oldest and smallest ship, the Holiday, there back in 2001 for two trial weeks. The city pulled out the stops and managed to get Carnival to extend the initial trial to seven weeks. Months of planning and spending on new dock facilities followed to convince Carnival to come back. Carnival finally agreed to move the Holiday there permanently in October 2004.

Several years of happy cruising from Mobile follow – only interrupted by Hurricane Katrina when Carnival leased the ship to the government to house aid workers. In 2007 received the “Port of the Year” designation from Carnival. The line soon announced it was replacing the Holiday with a bigger ship.

In August 2008, Carnival announces that Fantasy will leave New Orleans and replace the Holiday in Mobile. The Holiday was traded to a British company and has since been renamed. To accommodate the larger ship (600 additional passengers per week) the city council decides to build 450 new parking spots, a crew center and a Carnival warehouse.

Before Fantasy arrives Mobile learns it will get the newer, already refurbished, Carnival Elation, although the two ships are the same size. In Sept. 2009 the city orders a new gangway, built in Spain, at the cost of 2.6 million dollars to accommodate the new ship.

As late as last month, February 15, Carnival says bookings are up at record levels. Mobile has no idea that the company is planning any changes.

March 10, 2011, Carnival announces in a press release, with no notice to Mobile officials, that the Elation is leaving Mobile in October, and that there will be no replacement. Mobile officials say they are stunned, and shocked that they did not receive any prior notice that the change was set to take place.

Carnival says the decision is purely monetary – that while the ship was sailing full they could not raise the prices there without losing demand. The company cites a new energy emission standards set to take effect between 2011 and 2020 where all ships will have to burn cleaner but more expensive fuel up to 200 miles from the coast in the Gulf of Mexico.

“The itineraries from Mobile require much higher relative fuel costs to operate and those fuel costs will become even more unfavorable with the implementation of the new (emission) requirements starting in 2012,” Carnival Chief Executive Officer Gerry Cahill said in a written statement.

Cahill also said that while Mobile’s cruises were always full, Carnival had to offer below-average prices to book them.
“We have made every effort to drive higher demand and pricing through our sales and marketing initiatives and the deployment of a newer class of ship in 2009,” he said. “However, we have not been successful in achieving a sustainable level of acceptable pricing.”

All of this comes as a surprise to the City of Mobile, which up until yesterday thought everything was just peachy.

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Comment from Dave Beers
Time March 11, 2011 at 6:10 pm

Gee, a whole $25 onboard credit in compensation. That won’t even cover the gasoline for the extra miles for the drive to New Orleans from Mobile.

Carnival totally bungled this thing.

Comment from Kenneth Eden
Time March 12, 2011 at 5:16 am

Saw similar thing happen in Norfolk, Va with Holland America – Norfolk spent $35million on a new state of the art cruise ship terminal, was to have cost $25 million, only to have the Maasdam pull out before the terminal rose from the new pilings. This done by Carnival homeporting Holland Americas Maasdam in the city.

The old saying, watch what you wish for rings true.

Comment from Linda
Time March 12, 2011 at 7:14 am

I am sure that Carnival would have loved to have had the opportunity to talk with the Mobile leadership about this decision before it was annouced….however….

the official at Port Canaveral spilled the beans (it hit the wires like USA TODAY) and the only responsible thing for Carnival to do is confirm.

Mobile invested some 24 million total (including the last million dollar improvement) and was completely repaid by the Carnival passengers over the past 6 years through parking fees, port charges, taxes on the restaurants and hotels we did business with.

Mobile also got 6 years of promotion and advertising.

Now they have the infrastructure for another cruise line to slip into that did not cost them one dime.

Mobile is not a charity that Carnival abandoned. This was a business decision.

As a stockholder and frequent Carnival cruiser, I would expect nothing but the best decision to make the company money; while keeping my cruise costs as low as possible.

Carnival gave Mobile 6 years and Mobile did not produce the cabin revenue.

This has nothing to do with capacity or the price of the cruise.

These cabin revenues include all forms of income that a cabin produces….casino, spa, gift shop, shore excursions, bar sales etc.

Carnival gave Mobile 6 years…..truth be told…probably a year longer than they should have….

Comment from Thoth
Time March 13, 2011 at 10:08 am

Hopefully Mobile can get another ship. Fopr those of us around the Gulf Coast….Who wants to fly to Florida for a cruise when one can drive to Mobile ?
Why is fuel an issue with Mobile and not New Orleans ?

Comment from Jimmy
Time March 17, 2011 at 5:39 pm

This is about a promise to return two ships to New Orleans. In NOLA Carnival is doubling from 3,000 pax a week to almost 6,000 pax. There is no way to fill all those spaces, with Mobile still operating. To make it worst, NCL is stepping up and RCL is returning.
Mobile became the calf to be slain. Profitable in Mobile, or course they are. But, move that profit to NOLA instead.

Comment from Jimmy
Time March 17, 2011 at 5:40 pm

Oh Paul…one other thing. Casino Gambling is illegal in the state of Alabama. The only gambling was next door in Mississippi in Gulfport and Biloxi. There is no gambling in Mobile or anywhere in Alabama (with the exception of an Indian Casino near Montgomery.)

Comment from Kenneth Eden
Time May 7, 2011 at 6:45 am

I suppose a casino “near” Montgomery is not within Alabama?

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