Abstract
Carnival and Royal Caribbean control two-thirds of the global cruise ship capacity. Although they share the same ambition to grow in Europe, they have never shared the same strategy. Carnival adopted a strategy of multiple decentralized local brands, each with its own capacities and prices, while Royal Caribbean chose a global brand, capacity and pricing strategy. However, Royal Caribbean's acquisition of Pullmantur in Spain, and the subsequent announcements of a dedicated cruise line for France and of a joint venture with TUI in Germany, mark a fundamental strategy change. Using microeconomic modelling, this paper investigates the rationale for that change.
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