Chicago Booth Magazine Carnival CEO Arnold Donald, ’80, on the Power of Hospitality

Today Donald—who grew up poor in New Orleans, the youngest of five—lives on the oceanfront in Carnival Corporation’s hometown of Miami and keeps a residence in St. Louis. And he still finds any opportunity he can to dance, even though his job requires nonstop worldwide travel, which he savors. “I should have been begging for this job,” he said with a laugh. “It’s a ton of fun. Cruise is a small segment of hospitality but has a huge impact around the world because we bring the world of people closer together.”

No one has to be on a cruise. This business is all about the guests. It’s about hospitality. Cruising is experiential—you’re surrounded by activities on board and at ports of call—and costs less than a land-based vacation. But going on a cruise takes time: you take a seven-day cruise or a 21-day cruise or you go around the world for 115 days, 130 days. We see a greater number of people in the United States and the rest of the world heading into retirement. They’ll have time to cruise, and they’ll have a great experience at a great value.

When I became CEO, I had a one-time opportunity to change corporate culture. Carnival Corporation is the largest leisure travel company in the world. Its growth came, in part, though acquisitions; each was run as a separate brand. That was the firm’s legacy, and it had been successful. The challenge for me was to integrate nine lines: to coordinate, collaborate, communicate. Twice I brought leaders together at a retreat, to bond. What does success mean for your brand? For the corporation? Five years from now? What do we need to accomplish this? Both times they shared, they listened, and they owned it. That’s been my style ever since: bring together a diverse group of people around a common idea. 

It worked! With nine cruise lines working together—instead of competing—we wrested $20 million in cost savings my first year. The year after that we saved $80 million. Now we have coaches whose job it is to help us communicate across brands and leverage our scale. Let’s say we’re purchasing web page design. A collaboration across brands elevates everyone’s game. Together, we get to better ideas.

It’s part of my twofold strategy: First, exceed guest expectations so they’ll come back, and tell their friends and family. Second, contain costs. We have nine cruise line brands: we don’t need seven different contracts for arugula.

Think differently; hire widely. If you’re just checking conventional boxes, you’re going to get conventional choices. I look for talent and capability; new hires don’t have to come from the cruise industry. I recruited Orlando Ashford to be Holland America Line president from roles in human resources at Coca-Cola and Marsh & McLennan. Of course I recruit from within, but I don’t overlook people who don’t have a typical background or a college degree. Diversity drives innovation: it’s a business imperative and a powerful advantage.

Oprah is the godmother to a newly built Holland America Line ship. To have that crossover is a big deal for us and for the Holland America Line brand. Oprah is an icon. She’ll tout the transformative power of travel on that ship, the Nieuw Statendam. The godmother idea in maritime lore goes back 4,000 years; she brings good luck and protection to the ship and all its passengers. 

China is a huge market for us. We’re constrained by the number of ships and shipbuilders, so we entered into a joint venture with a shipbuilder in China. We’ll launch a domestic cruise line in China, which could be as large as the entire cruise industry today. 

“Gentleman, prepare yourselves. You’re going to run the world.” That’s what I heard daily at St. Augustine, the all-male, all-black Catholic high school in New Orleans I attended. It was the 1960s! Everything was possible. There were no excuses. We were a small school but we were national champs in math and debate. St. Augustine took me out of the ’hood. It was aspirational; they equipped me to realize those dreams. 

I had a gazillion mentors. My older sister taught me to read early. When I started school the other kids thought I was a genius. Growing up in New Orleans, in an integrated parish school, those experiences made me stronger, more tolerant, and more confident. Every summer during high school I worked as an intern at Exxon, then called Humble Oil. That gave me the idea to go into a science-based business. 

Making myself visible to youth comes naturally. Because I am one of the few black CEOs in the nation, it is important for me to be seen. Of course I talk at high schools and universities, including back home in New Orleans. The best way for me to show “I did it, so can you” is to do my job and do it well. Then that story gets told in the media, and young people see it.