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enticed America's newly thriving middle class to take winter vacations in the sun. Cruise
ships appealed immediately to the retired folks in Miami who had moved south from the
snowy north. They had time on their hands and money to spend, and they filled the first
cruise ships, creating the impression that cruises were vacations for old fogies.
Arison first tried charter cruises, but they did poorly. He changed course and started a
vacation cruise business with a new partner, using remodeled ferries sailing from Florida
to Jamaica. The firm advertised their Caribbean cruises nationally, betting that they could
fill their 3,000 berths every week by convincing Americans that a Caribbean cruise was a
natural part of the American lifestyle. Things went well until Arison's partnership exploded
in mutual incriminations and lawsuits.
Once again he was on his own, but this time he had salvaged 1 million dollars from
that blow-up. He turned to Meshulam Riklis, an old friend from Israel who had become a
successful and wealthy businessman. Together they created a very small business in 1972
and named it Carnival Cruise Lines. Arison then bought an old passenger liner that had
been dry-docked after airlines took over the role of carrying passengers across the Atlantic.
Arison, former owner of two shipping companies, saw the opportunity in these sidelined
ocean liners. He refitted the old Canadian passenger liner and rechristened it the
Mardi
Gras
to remain true to the carnival spirit.
This was the ship that ran aground on the tip of Miami Beach. It recovered, and sailed
on that maiden voyage. After two years the fledgling Carnival company was $5 million in
debt. Riklis bailed out. He sold his share of the company, and the debt, to Arison for one
dollar—the second event in the legend.
From this rough beginning, Arison took the company from debt to profits in five years.
He practiced tight cost controls and economy of scale, packing as many people as possible
into a ship. He had two basic and radical concepts: redesign a cruise ship to become a ves-
sel of entertainment, rather than a form of transportation; and achieve his high volume at
low cost by operating inside the United States as a foreign company, thereby skirting many
of the rules, laws and regulations that applied to his land-based competition. Arison played
the game that Asians describe as “neither tiger nor horse.” By shape-shifting, claiming in
one instance to be a resort and in another a ship, the new floating hotels escaped paying
billions of dollars in taxes and wages and implementing systems required under environ-
mental regulations.
These ideas evolved slowly. Arison's Carnival Cruise and his chief competitor, Royal
Caribbean, were retrofitting cruise ships for Caribbean cruises to include space for shows:
live entertainment with comedians; live musical productions; movies; bands playing in
the ballroom for late-night dancing; and game shows with audience participation. Food
and drink were heavily promoted. The decks became adult playgrounds. Activity sched-
ules promoted nonstop fun.
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