Sea ViewsFrom President and COO, Adam Goldstein

Sea Views Blog with Adam Goldstein

The Business Triangle

If one is going to be involved in managing a business then one must take what I call the Triangle into account at all times. The Triangle is shorthand for the three crucial constituencies whose interests we must look after in order for our business to be successful: customers, employees and shareholders. As an aside, I’ll note that sometimes people internally refer to travel agents as a type of customer while others believe the Triangle should be a Diamond with Travel Agents as a 4th constituency. However one looks at this, travel agents are important in our world. So are the destinations and communities we serve around the world.

Let’s look at each of the three constituencies of the Triangle in turn:

Customers – They want great and memorable vacations. They want the best value possible for their money. They want to be recognized for their loyalty.

Employees – They want to do their jobs well. They want to be recognized for their contributions. They want training and opportunities to advance their careers. In the case of our shipboard personnel, they want acceptable living and working conditions 24/7 while they’re onboard.

Shareholders – They want a great return on their investment. They want us to conduct our business to the highest standard of governance. They want as much visibility into our business model as possible.

The way to maximize shareholder value – the purpose of a business — is to make decisions that are as beneficial as possible to the interests of the three constituencies of the Triangle. In the short term, not every decision can be completely pleasing simultaneously to each of the three constituencies (not to mention, as I alluded to in a previous blog entry that within each constituency there is often considerable disagreement!) But, at a minimum, each of the three should feel that most of the decisions we make are understandable and positive for them. We spend a lot of our time understanding and handling trade-offs that the various interests within Triangle pose to us. One of the opportunities this blog presents is to explain some of these trade-offs as they unfold. I know you won’t agree with me 100% of the time but hopefully you’ll understand where I’m coming from nearly all of the time. And hopefully you’ll be enthusiastic enough about our way forward to want to continue to experience Royal Caribbean International’s products and services.

17 responses to:
“The Business Triangle”

  1. John Wise

    Penalty for Loyalty and Forethought?
    We are Diamond Members and every year have travelled on Mariner of the Seas at approx. the same time each year. This year we booked the Freedom which has replaced Mariner. The day after we made the reservation you announced a two day shipboard credit deal. It seems to me that we are being penalised for loyalty and early booking. A first time cruiser booking later than us would get a better deal. Can this be right. I emailed and telephoned C&A who showed little interest. Loyalty needs to be rewarded in these difficult times.

    • Royal Caribbean Communications

      Thank you for your comment. This is Vicki Freed, Senior Vice President, Sales, Trade Support and Services. Since you are a Crown and Anchor member and travel every year – you can always book onboard (NEXTCruise option) and decide at a later time and receive an onboard credit that can be applied to any sailing. This option gives you the most flexibility and therefore will be as good if not better than the occasional WOW sale -2 day sale referenced above. We do not allow combinability of discounts so you are not missing out when we have the WOW sale.

  2. Scott Jensen

    It would be nice if you gave an example of such a balancing act. Take one important decision and tell how each of the three would want it more in their favor but why it is best for all that a balanced approach was taken.

  3. LInda A

    Yes Adam, as a CEO you do need to consider the three major parts inorder to acheive the highest regard from all three. It is a true juggling act that you must excell at. What has changed in January 2009 that you never had to worry about before? I understand that thousands of people have lost their jobs and are unable to travel, but those of us that are still traveling should not be punished for it. And that is what you are doing by reducing the combine benefits under the Crown & Anchor Program. At this point of your juggling act, you should be paying more attention to those of us that are able and willing to spend money for your cruise line. If we can travel with RCCL, we also are able to travel on NCL, Princess, Holland America……. Crown & Anchor members want to be loyal, but as I stated, times and money are tough right now. They are looking for the best deal out there. If they leave and go to another line, then your stockholders will sell their shares since the price will be going down. Your employees will not receive their tips from the customers they serve onboard because no one will be sail with you. This may prompt your well trained employees to look else where for employment. Bottom line of any company is to maintain your current customers and entice new customers to your line. The customer is the one providing the revenue to pay for your employees, maintain your current ships, and the building of your new ships. You lose those, the company is will fall apart.

  4. Jamie Snyder

    Please don’t apologize for doing your job. You are paid handsomely to make tough choices; someone will always say “You made a bad choice”. Can I go on a cheaper cruise or vacation, yes, will I, no. That is my choice. If I am willing to chance my plans for a $200, how “loyal to Royal” was I to begin with. The C&A is very popular and as more and more new cruisers pile on difficult choices will have to be made. I hope that somewhere in Miami some group of bright RCI executives are planning for C&A’s future.

  5. Jamie Snyder

    Please don’t apologize for doing your job.
    You are paid handsomely to make tough choices; someone will always say “You made a bad choice”. Can I go on a cheaper cruise or vacation, yes, will I, no. That is my choice. If I am willing to chance my plans for a $200, how “loyal to Royal” was I to begin with. The C&A is very popular and as more and more new cruisers pile on difficult choices will have to be made. I hope that somewhere in Miami some group of bright RCI executives are planning for C&A’s future.

  6. Mandy

    As a customer and a stock-holder, I represent two points on your triangle. Having cruised with other cruise lines, I also have some perspective by means of comparison.

    I cruise with RCL because I prefer the product. While I do not agree with all your business decisions, the loyalty perks are not a concern to me. RCL still offers more to its loyal customer base than most other cruise lines.

    As a stock holder, I do harbor some concerns about the company’s direction toward mega ships which offer limited port opportunities. While the Oasis and Allure undoubtedly provide greater WOW factor than anything else in the marketplace, they also provide a LOT of cabins to fill. They sail to locations already heavily saturated with cruise ships. I can see sailing on one of these ships once, to soak up that “WOW”, but how easy will it be to fill the ships repeatedly? Most cruisers want to visit new places, something which is not available on the mega ships. My next cruise is on Serenade, despite some concerns that I will miss the Royal Promenade and the ice show. I chose the cruise for the itinerary. I honestly believe that, while the ship most certainly factors into the buyer’s decision, the itinerary is the primary influence on a cruise purchase.

    I applaud the third corner of your triangle, employees. Perhaps the two biggest reasons I sail on RCL are the employees and the condition of your vessels. The service on RCL is amazing. And even your older ships look brand new, something that is certainly NOT the case on some other lines. In looking at the big picture, you may be unaware of how much of an impression that makes. I hear maintenance of the fleet mentioned often by RCL cruisers, as something at which your line excels. We notice!

    As someone who frequents cruise discussion forums, there is no doubt you have your supporters as well as your detractors. But it’s also clear that passengers appreciate the superior service you provide and the well-kept, innovative vessels you offer. This is why I became a RCL stock holder.

  7. Dustin lee

    Adam,
    I understand where you are coming from when describing the business triangle. However, I to some point, disagree. “The way to maximize shareholder value – the purpose of a business — is to make decisions that are as beneficial as possible to the interests of the three constituencies of the Triangle.” I feel is quite inaccurate. What the appropriate term for the business tirangle should be is the businss Pyramid.

    Employee/investor well being is almost entirely predicated by the first constituency, the customers. This brings to light the classic phrase ‘the customer is always right.’ This phrase is the basis to great customer service and without such an attitude, “great and memorable vacations” cannot happen.

    The assertion presented in this blog entry, i assume is to address the overwhelming concerns regarding the changes of intinerary. Any means to justify such, is appreciated but yet not honoring the customer; who is the basis for why the company is around, the core of company growth (thus yielding return on investments and growing employees.)

    If i have mistaken this blog entry please forgive me and please elaborate further…. Maybe i’m just harboring some resentment due to the shoddy customer service via phone that i’ve received as of late.

  8. Michael Daly

    Mr Adam Goldstein,

    As a Diamond Member and a stock holder, I admire the fact you realize the ” Triangle”. you say ” Customers – They want great and memorable vacations. They want the best value possible for their money. They want to be recognized for their loyalty.” What happened to the Concierge Lounge Access we did have??
    I am on board the Explorer on the 28th of May….been told that we are in San Juan fron 10:00PM till 11:30AM the next day. What can we do on an all nighter in San Juan????? ( suggest that we stay in St. thomas 3 or 4 hours longer and eliminate San Juan altogether or maybe go to Labadee, Haiti. What can you do for us there?

    Reading your blog, I understand that you can’t do all everytime.
    I understand that a propulsion problem can’t be fixed overnight. I can’t believe that you are running a fairly new ship this long before taking it out and fixing the problem. Jusy venting, its because i was on the Brillaince in Barcelona when the port was blocked by the fishing fleet. I was on the Soverign when it was blocked in San Juan on its maiden voyage.

    Maybe take a poll of passengers…then change that voyage on the Explorer. hoping that you will make the right choice so we can have a ” great and memorable vacation ” on Royal Cribbean Cruise Line.

  9. Dylan S.

    Hi Mr. Goldstein! Thanks for taking the time from your busy schedule to start a blog! Great idea! Quick question though: Why don’t you have a ship in Galveston year-round? The demand for Galveston is Very high, and Texas is the Second most populated state in the U.S. That’s a big market, yet, you don’t have a ship there year-round. Only from December – April. I was upset when the recent 2010/2011 itins came out, and I didn’t see anything for Galveston. My question, especially with Texas’ high population, and airfare being so expensive, is why is there no ship here year – round, but there are 5 in Florida? (Soon to be 6 with Oasis!) Are your employess or shareholders not happy with Galveston? Thanks for listening!

  10. Jim Schumacher

    A few weeks ago, I cruised on the Jewel, the people on the ship were great and enjoyed the cruise, but for one incident. This incident took place during a tour while at Cartagena, Colombia. Upon returning to the ship, I wrote an incident report, and discussed with Robert Taggart, Hotel Director, on the Jewel what had happened. The incident was never fully resolved when I left the ship, but was assured that I wud get full compensation, later on. I realize ur RCI uses vendors, for the tours, do they monitor how well they perform. I wud also imagine that RCI gets a percent of what we pay for the tour. Mr Taggart said I wud get back the full amount I paid for this tour, I was only received a 25% refund. I discussed this situation with ur guest relations in Miami, and there attitude was, lucky u got back anything, and go away. Since returning home have talked about the cruise with family and friends, told them about such a wonderful time, but that the tours may give u a problem. You may contact me and glad to give u the details, or u may read my incident report. Thanks for allowing me to express my views

  11. Jared

    Well lets see what some of these choices you are talking about are. In the end it comes down to what everyone chooses, if they don’t like it, they will choose something else, and just wonder about how it would be on world class RC ships! Sadly that’s what I had to do this time because of the lack of a year round ship in Galveston.

  12. G.Holland

    Have a question for you….we are cruising on June 12 from Seattle to Alaska….there are 5 couples in our group….we are all flying back to DFW on the 19th….all have a !:55 flight out but myself and wife…our flight leaves at 5:55 pm……that makes up sit all day at the airport and get into Dallas around 11:30 at night…then a 2 hour drive south home…we called the travel agent and were told the cruise line makes the air resv…..it was changed at our request for a $100 charge….why did the cruise line not put us all together in the first place…..this is our first time to cruise Royal Cruise Line…hope the cruise goes better than the air arrangements…….Thanks for you Time

  13. Edward Ring

    Mr. Goldstien,
    As a Diamond Member of C&A, who has sailed on RCL and Celebrity I am astounded at hte price difference between your brands and other lines. You have touted special pricing for military but for my 2010 vaction I have not seen any “deals”. To be competitive you have to meet the pricing of the other lines. If your operation costs are higher, then RCL is really in trouble. That is what is killing the airlines and the car companies.

  14. Jacqueline M

    Frankly I am highly dissappointed that a blog I posted was deleted from the site. I have concerns and issues and as a RCCL member think that ALL posts need to be kept on your web. Did what I say hit a NERVE! Was it the TRUTH! SHAME ON YOU RCCL. Adam, frankly I don’t see you answering any of the questions being put out there on your blog! Oh yeah, that’s because you are busy traveling to DUBAI, and getting on with your own life. When problems start to effect RCCL then I suppose you will be wondering why only a few people are still cruising and not most of us. Trust me eventually you will feel the effects of us normal people cruising.

  15. sheldon/fran meyers

    We have sailed approximately 25 times for a total of approx 300 days. We are extremely value/cost conscious. Our top pick for intimate ship atmosphere/food quality is Oceania, but Celeb/RCL are our top picks for ship features/entertainment/itineraries. We are Diamond members and have 3 RCL/Celeb bookings planned for the coming year. We are also both RCL shareholders. As a general comment, we are all the beneficiaries of increased competition – more ships, lower prices – as a result the general level of ship maintenance/quality of food has declined significantly across all lines – the good old days of cruising are probably gone forever, unless you are willing to book the premium brands – at the end of the day you get what you pay for. My main point I would like RCL/Celeb to adopt is a more honest/caring attitude to its customer base. Those of us who are experienced travellers realize we are getting less quality because you have less profit – What we want is more honest answers from ship staff – we are adults and we can handle it. And when you screw up – no one’s perfect – provide some nominal compensation to show that you understand and are willing to make amends – the land based travel industry does it – why shouldn’t you?

  16. Marcelo Fischer

    What is a Triangle with only 2 sides ?

    Adam,

    I do not know where you learned business or if you attend college, but Dude there is something that you must know; if you remove the base of the triangle, the two sides will collapse . . .

    and this is what you is seeding annoying the base of your Triangle – We the Loyal Customers!

    Here goes some free “customer service” 101 tips to you:

    1. It costs 4 times more to get a new customer than keep a current one

    2. Balance your business with core customers (AKA C&A Platinum, Diamond, etc) and put efforts to get new ones
    3. “Voice of the Customer” , listen, be humble and learn with who support your business
    4. Marketing:
    a. Marketing Funds – you control how to spend your marketing and advertising $ $ $
    b. Month to month recommendation: You do not control it, We Loyal Betrayed customers control it
    5. Keep your core customers satisfied, as they will not think in switch you over to the completion

    If your staff needs more tips, read the book “Marketing for Dummies” – it will teach then some basic Customer Satisfaction.

    PS: It is not honest and transparent to delete posts from C&A Members. If you are afraid of the posts think why people wrote then.

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