betty: this is titans at the table. we are taking you to the high seas to find out how one vacation industry is giving up with the modern age. rakes ine industry more than $37 billion in revenue last year. more than 21 million passengers. what does it take to be the biggest fish in the sea? we find out from the two biggest ceos in the business. biggest and best christian about there. to stay on top, his

company has spent $3 billion on new ships that have everything up person could want. and some things they could never expect. >> this is the next generation of cruise ships. we are constantly striving to move the bar higher and higher. caribbean may have one of the biggest boats in the water, but arnold donald says bigger is not always better, and have the markets are to prove it. arnold: we so 80 million passenger cruise days a year. betty: carnival has 50% of all cruising business, and pulled and $16 billion last year, almost royal -- double royal caribbean. he says that staying on top is about variety. >> we have nine brands whether you are an adventure or quiet person. betty: the industry has made

huge gains since the last recession. the profit margins are still in the single digits. just as it was recovering, things like this started to hit the headlines. >> get the kids. go, go. >> i never want to go on this crucial begin. betty: the cruise industry has run aground on some very public disasters. from viral outbreaks that have ripped through ships to the devastating sinking of a ship nearly twice the size of the titanic, killing 32 people. the industry is facing a public relations nightmare they could keep passengers ashore. to these two captains of industry have what it takes to turn the ship around and sale back into double-digit profit margins? the answer may lie halfway around the world. onis all hands on deck titans of the table.

table.ns at the most americans remember the titanic as a movie. the 19beginning of century, giant ocean liners were the only way for the masses to policy atlantic. starting in the 1960's, flying replaced cruising when jetliners took to the skies, rendering these giant seagoing vessels obsolete. after, the massive liners were reimagined for a different purpose. an ocean bound getaway, the lumbering liners of old being used more for recreation than transportation. ♪ boathen the show the love became popular in the 1970's, it helped to trance -- turn vacations into a a giant growth industry. but the success was not due to bigger and better ships aimed at

a ballooning population of the american middle class. by registering ships under foreign flags, companies avoided u.s. labor laws and tax regulations that regular land-based tourism was forced to follow. 1970-2014, the passenger load grew more than 4000%, from 500,000 to more than 21 million cruisers each year. the industry's environmental practices and working conditions have drawn a lot of scrutiny. in the last several years, the industry has been plagued with a series of incidents that have hit the headlines and scared passengers and public alike. sick at sea. >> a rail caribbean cruise forced to turn back. betty: from outbreaks on a separate cruises last year to an ebola scare that created panic.

>> we knew something bad was happening. betty: to the devastating crash of the costa concordia they killed 32 people and landed its captain in prison. and then there was the infamous poop cruise. strandedwer outage 4000 passengers without food, water, or working toilets. that incident happened just months before carnival's ceo took the home. as he told me, don't believe all the hype. 99.9% of everyone that cruises has a great time. betty: and it doesn't make the headlines. arnold: the 99.9% does not make the headlines. how many people are stuck on a runway in an airplane waiting to take off. how many times to the have a traffic jam that they are stuck in on a highway. those kinds of incidents.

the concordia, that was an accident and the tragedy, and that was more serious, but it happens once in 100 years. newcomer,elative donald only became the ceo in 2013, appointed by the founding family. he is charting a new course for the biggest name in the industry. under the banner of the cruise line industry association, there are 62 cruise lines worldwide. with big names like disney, norwegian joining royal caribbean. carnival is the largest with a other brands, more than 120,000 employs across the world and 10 million passengers last year, nearly half of the cruising population. that bigger market share also means a bigger spotlight when things go wrong. there's one professor who came out with statistics and found that there were between

2009-2013 300 plus incidents on crew ships. the perception that these are happening more and more on cruise lines and that there seems to be an epidemic of safety, have you combat that? arnold: our guest satisfaction scores are through the roof. you saw the excitement of the guests and how things work. it is just not true. au can do anything and have one off incident, but 80 million million plus are having not only a smooth day, the vacation of a lifetime. betty: whether these incidents are overblown, there is no denying that people are talking about it. cdc, shipso the sailing under the kernel flag were hit with 17 cases of norway is in 2012.

cases of a virus in 2012. safety is not the only issue these days. the industry is also fighting the perception that only a certain type of person climbs aboard to cruise. when i talk to people about going on a cruise, generally , and not anecdotally scientific, the perception is negative of the cruising industry. ,hat it is for senior citizens younger people don't go on cruises, or they red about the costa concordia. have you change that perception? arnold: that is a challenge. three and a half percent of the vacation population that goes cruising into -- every year.

the fact is that most people love it. all these negative things, really don't exist. betty: when we come back arnold donald takes me on it to her to show me why carnival is the king of cruising. ♪ , richard fain of royal caribbean. all the stops on their leadership. he's out to prove that in order to pull ahead of the cup, it's go big or go home. they want the biggest and the best, and this ♪ is the biggest and best to ship out there. ♪

betty: have you been on every single ship? when you walk on to one of carnivals fun ships, you notice the attractions, a county fair on water. after you dry off, it's time to take in some extravagant, vegas style entertainment. ♪ and then it is off to a meal fit for a queen or king. and you can burn the calories off all in the same place. >> we have personal trainers, dietitians.

betty: donald and i walked the dekes to the luxury spot. arnold: the spot is my favorite place. betty: to some of their nighttime hotspots, where he showed me some of his signature dance moves. he for all the amenities, says that when it comes to cruising, there is no one-size-fits-all ship. a cruise is not a cruise is not a cruise. every brand has a different type of experience. there is a reason for that. we are all different. lots ofple want partying, water parks, excitement, lots of kids around, families around. others want to relax and be with their immediate close ones. so, you have to have different types of offerings for people. if you get on the right cruise, you will love it. betty: with over 100 vessels, carnival has a different chip ship for whatever floats your boat. not far behind israel caribbean

ceo richard fain. he says he has a boat that is so big, it has it all, making it hard to feel trapped at sea. if it has surfing on board, skydiving on board, bumper cars, it's hard to say that i'm going to feel confined. with 5 million passengers, royal caribbean is the number two player. earning more than a billion dollars in revenue last year. is determined to close the gap on the competition , and to do that, he would need a bigger boat. ovation of the seas --quantum of the seas. richard: people wanted more choice. they did not want a regimented vacation, and he wanted to have more choices to pick from. we wanted to provide something where the entertainment gave

them a plethora of activities to do. with the food selection where they can choose any kind of foods whenever they wanted it. i would say that probably the biggest changes is the level of choice the ship offers. we have this new dynamic dining -- betty: he took me on a tour. , withr 1000 feet long nearly 5000 passengers, it's one of the largest crew ships on water. up?re how many stories richard fain almost 30 stories up. this is a perspective you never get to see. betty: it does. this is amazing. at the very highest, we were above the statue of liberty. 300 feet out over the water. richard: it's really cool. betty: the northstar is just the

first attraction that has everything you can think of. and then some. here we go. lucky number ate. i'm taking this one. number cars might be the last thing you would expect to see on a cruise ship. here on the quantum of the seas it somehow feels right at home. and if being added c is not enough for you, this boat has a weight of getting you airborne. >> am i ready for this are what? the best job in the world. betty: there is the requisite high-end shopping. and of course, fine dining. can i sample something? with 18 restaurants to choose from. the real experience is not just

the cuisine, it's how you get to it. richard: this is what we call royal iq, dynamic dining. it's too many for a page. three service space, just hit reserve and it comes up and ask you how many want and when you want it. betty: you can do this on your mobile phone. technology is part of what makes real caribbean stand apart from the competition. dynamic timing is the tip of the iceberg. backrd: we even track your spirit you can look on your iphone and say that my suitcase is in the elevator or it is in the hallway towards going to security, and these can kinds of capabilities i think are things that we probably were always look back on in a very short time and say, can you imagine what this was like before quantum of the seas?

over topr all the attractions, is dropping a billion dollars on a single ship the key to raising profit. arnold donald is not convinced. arnold: there will be a lot of people who will not want to sell -- sale on quantum of the seas. that's not how they want to spend your time. betty: you don't see it as a game changer. i see it as a game changer in certain features on board our ship. as a game changer for the industry, every new ship is a game changer. quantum of the seas in the contemporary category, where people are looking for lots of activities in the kind of stuff, a mall of america type of experience, is a game changer for that type of experience. betty: arnold called quantum of the seas the mall of america of ships.

richard: i am not going to comment on what he said. i think you will have trouble finding a mall on board. betty: the one thing both ceos believe, the incident the cast a shadow over the industry is a thing of the past, and the bargain ticket that convince passengers to set sail, a discount of 80%, make the sin cast away. richard: the discounting due to those incidences was serious, and i think we are now moving quickly away from that. i think you will see a lot less discounting. in fact, i think our focus needs to be not on offering the cheapest cruise, and if you look around, you will see why does not make sense for us to try to sell the cheapest cruise, but the best cruise. in fact, one of the other things is we are saying that as we get 2015, past the first quarter, quiet a solid year.

we are seeing the opportunity to raise her prices, even if it means we have empty staterooms. i would say book as soon as you can. the probability that prices will go lower is not very high. they don't need to. prices will still make it the best vacation value by far verses of land-based vacation. betty: are you willing to give up market share to keep your prices above the discounted rates? arnold: it's not market share. the question is occupancy. how many cabins are left on field, or how many cabins have one guest verses three or four guests. we are absolutely willing to trade off occupancy to get the price up from a business standpoint. up, there is one demographic that both companies have a hard time cracking, millennial's. they me be the key to sailing towards higher profits.

later, it is full speed ahead to a place that may just push the entire industry into bold new waters. ♪ betty: this is ship rock, norwegian cruise lines solution to younger cruisers millennial's have a lot of money to spend. $1.3 trillion of it. and a piece of that demographic

could help the industry sale back into double-digit profit margins. the cruising industry group, out that theers and say average cruiser is about 50 years old, makes over $100,000, white, and generally an affluent traveler, but they are essentially that demographic. it's not very diverse. richard: that is part of what we need to help explain because the diversity is growing dramatically. both in ethnicity, age. betty: some of the reports say that the reason why it is such a game changer, or at least something that people are excited about, is that it's catering towards the millennial's, the younger travelers. is this an attempt to essentially, a very big attempt, to get to 20-year-olds and 30-year-olds on your ship? richard: it is directed to

expanding our market. the millennial's are a prime market for us, and a growing one. royal caribbean has managed to tackle the one thing almost every millennial wants, which happens to be one of the hardest things to do on the water, providing wi-fi. richard: bandwidth on this ship is 250 times the next best ship. betty: wow. bandwidthn fact, the on the ship is better than the combined bandwidth of every other crucial than the world. betty: o'connell -- according to arnold donald, the millennial generation defies stereotypes, and providing wi-fi is far from the only magical bullet to get them to cruise more. millennial's all over the place like every other generation. some millennial's like heavy social exchange and interaction, in terms of parties.

some like doing it on the internet. somewhat more private time. a lot of them are adventure seekers. a lot of them want to give back. they like impact travel, travel with a can go do something and help a local community or help an individual. betty: you need to get millennial's more cruising. is that a misperception of the industry? arnold: it is a little bit of a misperception. ships, weddings on our and there are often young people getting married and chose a cruise as their honeymoon experience and their wedding reception experience. so we have millennial's on our ships around the world. betty: but the cruising industry does not live and die by getting millennial's on their cruise. arnold: they do not live and die, but you want to build your base for the future. betty: still to come, the one destination that every cruising

company is ready to court. how big is china going to be? >> it will eventually be the largest cruise market in the world. ♪ betty: the cruising industry has built its success in the west, but halfway around the world, there is another market on the horizon they could change the game completely. the demographic shift in china and the growth of the middle class is one of the biggest single demographic explosions in history, one of willig demographic shifts we have gone through has been

the baby boomer generation. what's happening in china today makes that look insignificant. betty: royal caribbean ceo richard fain says that in a few years, the middle class in china will not only be bigger than the middle class in america, but bigger than america. consumer spending in china is expected to increase of about 7% every year. $5.720, the total could be trillion. remember the quantum of the seas , the ship with every bell and whistle you can think of. it is setting sail to its new home port of shanghai. one big advantage of expanding in china, not having to deal with the stodgy old images of a typical cruiser. in china, the cruise liners can start with a clean slate. richard: this whole concept is new and exciting. there is no old-fashioned myths about cruising.

there is none of this cruising is for old people. if you are a family traveler, you can enjoy together. how many vacations can you have where a 70-year-old and a 20 are all can go together and both rave about it? so, we have that, and it is extraordinary. there are not many places you can do that. china, the family bond is stronger it is than in the western world. to offer multi traveling in china is even more viable. betty: carnival ceo arnold donald has no intention of being left in royal caribbean's wake when it comes to china. he says it is a market that they are ready have both feet in since 2006. arnold: we sail to over 700 ports in the world every year. we source from everywhere. home ported ships in china, for in shanghai. betty: carnival carries chinese

passengers to japan and south korea. chiefear, donald put his operating officer in shanghai and signed a deal to develop the cruise industry with a local operator. china merchants group. arnold: there is a lot of work to be done in china. we have to develop ports. the reality is that it is a good market today. we have four ships there. both brands are profitable. the chinese government has declared through their advisory -- five your economic plan their intention to develop the cruise industry. that means a lot of things will happen relatively quickly. we want to be there to help make it happen in a way that we think will help the chinese government established the cruise industry they want, that will be sustainable for years to come. betty: how often are you there now? arnold: i have been on the job a year and a half or so and have made five trips to china. under very active market

development. it will take some time. we are very happy with what we have today. we see it someday being as large as any cruise market in the world. betty: donald says carnival is poking -- focusing on one thing the chinese can never get enough of, luxury shopping. arnold: the chinese guests really like high-end retail, luxury brands. betty: they want louis vuitton, product. arnold: they really like high-end stuff, and so we have to reconfigure our retail there for the very high in. each ship is different. a lot of americans are shoppers. they want great quality of really great prices. they are not as hung up in general on big luxury brands. that: is there one brand you would like to get on board that you haven't gotten yet? arnold: in terms of a retail brand? bit.ly,love to get

rolls-royce automobiles -- bentley, rolls-royce automobiles. it is the promise of the emerging chinese market or the appeal of arching in the next generation of millennial cruisers, these two titans are laying all on the line and moving. it ahead to shake off the negative news of the past. real caribbean's a normal's flagship vessel, quantum of the seas, won't be top dog for alarm. in 2016, they're rolling out a bigger, better, boulder cruise ,hip, the harmony of the seas with the ability to carry 5000 passengers, the loses -- largest cruise up on the ocean. donald is pulling out all the stops. his goal is to see the rest of the world climb aboard. cruising is the greatest

vacation value there is. it is one of the greatest vacations you could possibly have. when people

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