PR Fail: Carnival Needs More Cruise Control

In CNN‘s creatively chosen words, the troubled Carnival Triumph is expected “to finally limp into port later today”–but the PR emergency has just begun!

Cruise line executives breathed a sigh of relief last month during the industry’s peak season. This January got off to a much smoother start for them than last year, when the Costa Concordia ran aground off the Italian coast, impacting the industry’s reputation and bottom line. They were so focused on (successfully) selling their products they didn’t even have time to speak at travel industry marketing conferences.

However, cruise companies’ sense of calm has been shattered again as a result of the Carnival Triumph’s engine fire on Sunday. The vessel drifted off the Yucatan coast of Mexico for more than three days–and despite the fact that no casualties have occurred, the 3,142 stranded passengers have reported deteriorating and deplorable sanitary conditions.

The crisis is still unfolding and it’s too soon to know the full outcome. However, all signs (most prominently falling stock prices) bode badly for Carnival. So far the company hasn’t followed an effective course of action for service recovery during a crisis. Below are our takeaways from the ongoing saga.

1. Don’t keep screwing up:

Hey, accidents happen! And customers can forgive a company experiencing its first crisis. But Carnival ships have repeatedly suffered other performance and safety-related incidents. Carnival is also the parent company of Costa Concordia, so they were already on a short leash in terms of public perception. They should have taken extra precautions to avert another disaster.

2. Show them the money:

As this overused but apt movie phrase indicates, money (along with a quick resolution and sincere apologies) is what wronged customers want most. After the Costa Concordia fiasco, the company only offered to compensate passengers with a minimal refund, and then pressured them to accept the payout. This time, Carnival is offering a refund for the voyage and credit towards a future cruise. After an experience like this one, we don’t expect many customers to accept the latter.

3. Bigger isn’t always better:

Part of the Triumph’s problem may have been sheer size. Ships have become so large that the only solution Carnival was able to muster was to tug the boat at a snail’s pace to the nearest U.S. port, a process which is taking far too long. A smaller ship with fewer passengers would have allowed for more efficient evacuation options.

4. Cruise brands may lose ground to competitors:

Companies that cut corners on safety, training and performance risk damaging their entire industries. Carnival Corp went on a steady buying spree over the past few years, and now all the brands under its corporate umbrella and even the category itself may be vulnerable. Cruises are a discretionary purchase favored by a small, loyal customer base–and they compete with other types of travel services. Other all-inclusive vacation options like Club Med may stand to benefit from this disaster.

5. Will he or won’t he?

Micky Arison, owner of the Miami Heat and head of Carnival Corp, sent another high ranking executive to Italy to handle the Costa disaster instead of going himself but still found the time to appear at his team’s championship game and at their White House celebration to meet President Obama. Some thought he was distancing Carnival from the Costa brand, while others perceived the move as a lack of accountability. Hopefully he’ll show up in Mobile, Alabama when the struggling cruise ship and the suffering passengers disembark. Stay tuned.