Travel Agents Mull Carnival-P&O Marriage

Some still worry whether supersize cruise company would wield power to diminish agents’ role and commissions

By: Theresa Norton Masek

As P&O Princess Cruises Plc moves toward a $5.6 billion marriage with Carnival Corp., travel agents expressed mixed emotions about what would become the world’s largest cruise company.

Several said they believe that a Carnival-P&O combination would strengthen Princess Cruises and enhance relationships with travel agents. Still, some also harbored concerns that the mammoth company, with an estimated 43% of the cruise market, could decrease agent commissions.

“If there is going to be an acquisition of Princess, I’d prefer Carnival,” said Ruth Turpin, owner of Cruises Etc., in Fort Worth, Texas.

Karen O’Donoghue of The Cruise Director Inc. in San Carlos, Calif., said, “If Carnival takes over Princess, it will be very well taken care of.”

On Oct. 24 P&O Princess announced it welcomed a proposal by Carnival Corp. to create a dual-listed company in which each company would maintain current listings on the London Stock Exchange and the New York Stock Exchange, respectively.

The P&O Princess board withdrew its recommendation of a merger with Royal Caribbean Cruises Ltd. and paid a $62.5 million breakup fee. If shareholders approve the Carnival deal, it is expected to close in the first quarter of 2003.

In an Oct. 29 letter to shareholders, P&O Chairman Lord Sterling of Plaistow said the next development is expected to take place in early 2003. He did not set a date for a shareholders meeting.

Meanwhile, agents wondered how the Carnival-P&O deal would impact Princess, a popular premium line based in Los Angeles.

“I’m not the slightest bit concerned,” said Pam Alexander, president of The Cruise Director Inc., in San Carlos, Calif. “It will only be a positive. Carnival has been brilliant at keeping their acquisitions independent.”

Carnival Corp. also owns Carnival Cruise Lines, Holland America Line, Costa Cruises, Cunard, Seabourn Cruises and Windstar Cruises.

“I think that many of my clients are worried that the quality of Princess will decline,” said Lisbeth Oden of Northern Star Productions in Aspen, Colo.

Turpin noted that Carnival keeps its brands independent and invests in them, unlike RCCL.

“Royal Caribbean absorbed Celebrity, which doesn’t have its own identity anymore,” Turpin said. “Royal Caribbean took Celebrity and made it Royal Caribbean.”

Bill Knight, president of All Cruise Travel in San Jose, Calif., said, “If Carnival handles Princess like all its other acquisitions, it will be a positive move for Princess.”

Carnival Chairman Micky Arison has said his corporation does not operate as a monolith and that individual lines even compete against each other.

“We operate by brand; the power of the company is in the power of the individual brands,” Arison told The Wall Street Journal. “There’s nothing to fear and nothing to be concerned about.”