Industry Background
Three main players dominated the $15 billion worldwide cruise-line industry. Carnival Corporation, the world's largest cruise-ship company, was number one by far since its recent acquisition of PRO Princess in April 2003. It had 13 brands, 66 ships (17 additional ships on order), and 100,000 berths; carried 4.7 million passengers in 2002; and had 49% market share in North America. Prior to the PRO Princess acquisition, Carnival 2002 revenues were $4.4 billion with net income of $1.01 billion. PLO's 2002 revenues were $2.5 billion. PRO had originally worked a deal to merge with RCCL in November 2001. Subsequently, Carnival launched a counteroffer that ultimately won. It completed the $5.5 billion acquisition in April 2003. A key component of Carnival's strategy was tight cost controls. It reduced costs on ship design and construction by standardizing its fleets down to details as small as bedspreads and barstools. There were no rock-climbing walls or ice-