There comes a time in your life when you will find that you are caught neck deep in debt. Look at all the cash you can easily borrow and spend - there are credit cards for the asking, personal loans, home loans, you ask for it and the money is bang on the table. And, given the ease of so much available money, anyone can get carried away and go on a spending binge. Even you. And then debt piles up. And troubles begin.
Once money has been spent, the payback clock starts ticking and if you have taken multiple loans, then you will naturally have to pay multiple installments. And there's a high chance of anyone with multiple loans getting into a situation where he cannot pay back his loans. And, if you can't pay back your loans comfortably, your credit ratings will be downgraded and when that happens, no one will be willing to lend money to you at a lower rate of interest.
And that is where personal debt consolidation loans come in. They get rid of your burden by giving you a low interest loan that sets you free from your debt trap and helps you get a grip on your finances.
Personal debt consolidation loans are loans that consolidate all your high interest debts (credit card, personal loans, etc.) and give you a loan - at a lower rate of interest - to pay them off, thereby reducing your monthly cash outflow and leaving you with enough cash for running your house.
Advantages of personal debt consolidation loans
1. These loans put your mind at ease because they replace a higher outflow with a lower, more manageable one.
2. They simplify your debt by reducing the number of bills you have to pay every month to just one.
3. These loans are given for a longer period of time and hence the payouts are small and in tune with what you earn every month.
4. If your personal debt consolidation loan is secured by your home, then the rate of interest is much lower than an unsecured consolidation loan.
5. They help you rebuild your credit history, if you pay their installments in time.
6. The biggest advantage of these loans is that they kind of get you out of a mess: out of a hole you have dug for yourself. And that's worth a lot in both monetary and non-monetary terms.
Sure, a personal debt consolidation loan will help you reduce your debt and make life hassle-free (financially), but you need discipline and commitment when it comes to paying back the loan - you just cannot afford to go back to your old ways of being a spendthrift.
There are a whole lot of companies who offer personal debt consolidation loans and it is up to you to choose the loan that is right for you. If you already have a financial advisor, then it would help things if you could take his opinion about the loan you are planning to take. So, if you are stuck in debt, go right ahead and take a personal debt consolidation loan and get rid of all the financial irritants that are causing you a pain in the neck.
Thursday, August 9, 2007
Manage Your Finances - Get a Low Debt Consolidation Loan Rate
No one wants to see their family hurt by their own mistakes and parents in particular, tend to do everything to avoid causing their children grief. Unfortunately, when debt spirals out of control and the monthly payments become increasingly difficult to make, radical measures are often considered. However, rather than selling up and moving to a cheaper neighborhood, pulling your children out of school or college or doing anything else to disturb your family's equilibrium, you can consolidate your debts into one loan at a low debt consolidation loan rate. This one action could free up enough money every month to make a significant difference.
You can save a lot of money on interest charges simply by combining your current debts into a loan that has a low debt consolidation loan rate. Not only will your monthly payments decrease (possibly very substantially), you will save thousands of dollars over the loan term, have the convenience of only one payment, and have the guarantee of being debt free at the end of the term of the loan (if you use a fixed term loan to consolidate).
There are different ways you can solve your financial problems by benefiting from low debt consolidation loan rates. Home equity loans can give you highly competitive interest rates if you have adequate equity in your home. The only risk is that your home is security for the loan and if you default the lender can foreclose. You need to be honest with yourself about your payment history and likelihood of paying late. If you are consolidating debt to avoid family upheaval, you certainly don’t want to lose your house because of a missed payment.
An unsecured personal loan is the most popular consolidation option, offering a lower debt consolidation loan rate than the average credit card and line of credit. Most family debt problems are caused by high credit card balances and lines of credit, both at high commercial rates. Multiple monthly payments on different loans can add up to a lot of money and place a lot of stress on every member of your family, but particularly you and your partner.
However, as soon as you have combined all your credit cards and debts into one loan at a lower debt consolidation rate, you will be relieved of an enormous amount of stress. You will be finally in a position to move out of the red and into the black. The monthly and long term savings from debt consolidation will help you take back control of your finances. If you are wise and cancel all your credit cards and any lines of credit once you have paid out their balances, you will be out of debt at the end of the loan term and the whole process will have been painless.
You can save a lot of money on interest charges simply by combining your current debts into a loan that has a low debt consolidation loan rate. Not only will your monthly payments decrease (possibly very substantially), you will save thousands of dollars over the loan term, have the convenience of only one payment, and have the guarantee of being debt free at the end of the term of the loan (if you use a fixed term loan to consolidate).
There are different ways you can solve your financial problems by benefiting from low debt consolidation loan rates. Home equity loans can give you highly competitive interest rates if you have adequate equity in your home. The only risk is that your home is security for the loan and if you default the lender can foreclose. You need to be honest with yourself about your payment history and likelihood of paying late. If you are consolidating debt to avoid family upheaval, you certainly don’t want to lose your house because of a missed payment.
An unsecured personal loan is the most popular consolidation option, offering a lower debt consolidation loan rate than the average credit card and line of credit. Most family debt problems are caused by high credit card balances and lines of credit, both at high commercial rates. Multiple monthly payments on different loans can add up to a lot of money and place a lot of stress on every member of your family, but particularly you and your partner.
However, as soon as you have combined all your credit cards and debts into one loan at a lower debt consolidation rate, you will be relieved of an enormous amount of stress. You will be finally in a position to move out of the red and into the black. The monthly and long term savings from debt consolidation will help you take back control of your finances. If you are wise and cancel all your credit cards and any lines of credit once you have paid out their balances, you will be out of debt at the end of the loan term and the whole process will have been painless.
Compare Debt Consolidation Quotes
If you are juggling a variety of small loan repayments, loan repayments at different interest rates or you just need the convenience of one monthly loan repayment bill, a debt consolidation loan could be the right choice for you.
All Loan Repayments in One Monthly Bill
A debt consolidation loan allows you to make one loan repayment a month that covers all your eligible loan repayments. Your credit cards or medical bills are examples of unsecured loans that are suitable for coverage under a debt consolidation loan.
Secured and Unsecured Consolidation Loans
The interest rate can be lower for a secured debt consolidation loan than for an unsecured consolidation loan. You can also borrow more money with a secured loan because you put your house up as collateral.
An unsecured consolidation loan is seen as more of a risk for the loan company, which means you have a higher interest rate and shorter repayment schedule for a lower amount of money than the secured consolidation loan.
Low Credit Scores Eligible for Consolidation Loan
Even if you have a low credit score, you will still be able to secure a consolidation loan. Your current situation and loan terms will determine whether a secured or unsecured plan is right for you. You may have to sign over your house as collateral in the case of a low credit rating.
Learn about Consolidation Loans Online
Your best way to understand about debt consolidation loans is to search the internet for information about loan consolidation lenders. Ask for quotes from lenders and note each company's interest rates, their terms and the types of loan payments that are eligible for coverage.
Calculate the Total Repayment Amount
Add up the total repayment amount for your eligible loan bills, as this amount would be before you secured a debt consolidation loan. Compare your current repayment amount with the total repayment amount for each quote that you receive. To get the best consolidation loan, you must also understand and compare the different terms of the loan from each company.
All Loan Repayments in One Monthly Bill
A debt consolidation loan allows you to make one loan repayment a month that covers all your eligible loan repayments. Your credit cards or medical bills are examples of unsecured loans that are suitable for coverage under a debt consolidation loan.
Secured and Unsecured Consolidation Loans
The interest rate can be lower for a secured debt consolidation loan than for an unsecured consolidation loan. You can also borrow more money with a secured loan because you put your house up as collateral.
An unsecured consolidation loan is seen as more of a risk for the loan company, which means you have a higher interest rate and shorter repayment schedule for a lower amount of money than the secured consolidation loan.
Low Credit Scores Eligible for Consolidation Loan
Even if you have a low credit score, you will still be able to secure a consolidation loan. Your current situation and loan terms will determine whether a secured or unsecured plan is right for you. You may have to sign over your house as collateral in the case of a low credit rating.
Learn about Consolidation Loans Online
Your best way to understand about debt consolidation loans is to search the internet for information about loan consolidation lenders. Ask for quotes from lenders and note each company's interest rates, their terms and the types of loan payments that are eligible for coverage.
Calculate the Total Repayment Amount
Add up the total repayment amount for your eligible loan bills, as this amount would be before you secured a debt consolidation loan. Compare your current repayment amount with the total repayment amount for each quote that you receive. To get the best consolidation loan, you must also understand and compare the different terms of the loan from each company.
Global Merger Activity Sets Record Pace
The volume of mergers and acquisitions announced worldwide so far this year reached $1.65 trillion as of June 7, up 38% from the same period a year earlier and the highest year-to-date total on record, just slightly ahead of the previous record for the same period in 2000, according to Dealogic.
A record of 25 deals with a value of $10 billion or more have been announced so tar in 2006, up from 15 such deals in the same period of 2005.The top-five targeted industries tor acquisitions this year are telecommunications, finance, utility and energy, real estate and healthcare, Dealogic says.
Although Europe and the United States are running neck and neck in overall M&A activity, the largest single deal so far this year was in the US: AT&T's $67 billion offer for BellSouth.
The biggest deals in Europe announced in May involved competing bids for Luxembourg-based steel company Arcelor and Amsterdam-based Euronext, which runs the Paris, Amsterdam, Brussels and Lisbon bourses.
Manfred Weber, chief executive of the Association ot German Banks, said in Berlin on June 12 that Euronext shareholders could still decide m favor of a merger with the Deutsche Bourse rather than with the New York Stock Exchange. "I believe chat Euronext's shareholders will give it another thought," Weber said. The management of Euronext has agreed to a nearly $10 billion cash-and-stock takeover by the NYSE to create a business worth about $20 billion.
"We will pass up on a great chance it we don't use consolidation of the European stock exchange landscape to create a counterweight to Wall Street," Weber said. If the NYSE succeeds in acquiring Euronext, it plans to create a single platform where traders could deal in stocks, options, futures, commodities and corporate bonds across the US and Europe for up to 12 hours a day.
Meanwhile, steel company Arcelor on June 12 rejected a revised takeover offer by Mittal Steel, based in the Netherlands, but agreed to hold a special vote that could block its plan to merge with Russia's Severstal. Arcelor rejected Mittal Steel's $27 billion bid as inadequate but said it would consider an improved offer. As Global Finance went to press, shareholders were to vote on June 28 whether to approve a hostile takeover from Mittal or a plan to merge Arcelor with Severstal, which is playing the role of a white knight favored by Arcelor's board.
On June 14 Paris-based AXA agreed to buy insurer Wimerthur from Credit Suisse for about $10 billion in cash. In addition, AXA will refinance S 1.25 billion of Winterthur's outstanding debt. Winterthur operates in 17 countries and has 13 million clients.
In the US, Charlotte, North Carolina-based Wachovia's $25.5 billion acquisition of Californiabased Golden West Financial was the biggest M&A deal announced in May. It was followed by a planned leveraged buyout of pipeline operator Kinder Morgan by an investor group advised by Goldman Sachs.
Richard Kinder, chairman and CEO of Kinder Morgan, joined with senior managers and outside investors to buy the company and take it private. Including $8 billion of liabilities, the offer valued the company at about $24 billion, according to Thomson Financial. The acquisition would be structured as a merger between Kinder Morgan and the group ot investors that includes Kinder and co-founder Bill Morgan, board members Payez Sarofim and Mike Morgan, Goldman Sachs Capital Partners, AIB Global Asset Management Holdings, the Carlyle Group and Riverstone Holdings.
A record of 25 deals with a value of $10 billion or more have been announced so tar in 2006, up from 15 such deals in the same period of 2005.The top-five targeted industries tor acquisitions this year are telecommunications, finance, utility and energy, real estate and healthcare, Dealogic says.
Although Europe and the United States are running neck and neck in overall M&A activity, the largest single deal so far this year was in the US: AT&T's $67 billion offer for BellSouth.
The biggest deals in Europe announced in May involved competing bids for Luxembourg-based steel company Arcelor and Amsterdam-based Euronext, which runs the Paris, Amsterdam, Brussels and Lisbon bourses.
Manfred Weber, chief executive of the Association ot German Banks, said in Berlin on June 12 that Euronext shareholders could still decide m favor of a merger with the Deutsche Bourse rather than with the New York Stock Exchange. "I believe chat Euronext's shareholders will give it another thought," Weber said. The management of Euronext has agreed to a nearly $10 billion cash-and-stock takeover by the NYSE to create a business worth about $20 billion.
"We will pass up on a great chance it we don't use consolidation of the European stock exchange landscape to create a counterweight to Wall Street," Weber said. If the NYSE succeeds in acquiring Euronext, it plans to create a single platform where traders could deal in stocks, options, futures, commodities and corporate bonds across the US and Europe for up to 12 hours a day.
Meanwhile, steel company Arcelor on June 12 rejected a revised takeover offer by Mittal Steel, based in the Netherlands, but agreed to hold a special vote that could block its plan to merge with Russia's Severstal. Arcelor rejected Mittal Steel's $27 billion bid as inadequate but said it would consider an improved offer. As Global Finance went to press, shareholders were to vote on June 28 whether to approve a hostile takeover from Mittal or a plan to merge Arcelor with Severstal, which is playing the role of a white knight favored by Arcelor's board.
On June 14 Paris-based AXA agreed to buy insurer Wimerthur from Credit Suisse for about $10 billion in cash. In addition, AXA will refinance S 1.25 billion of Winterthur's outstanding debt. Winterthur operates in 17 countries and has 13 million clients.
In the US, Charlotte, North Carolina-based Wachovia's $25.5 billion acquisition of Californiabased Golden West Financial was the biggest M&A deal announced in May. It was followed by a planned leveraged buyout of pipeline operator Kinder Morgan by an investor group advised by Goldman Sachs.
Richard Kinder, chairman and CEO of Kinder Morgan, joined with senior managers and outside investors to buy the company and take it private. Including $8 billion of liabilities, the offer valued the company at about $24 billion, according to Thomson Financial. The acquisition would be structured as a merger between Kinder Morgan and the group ot investors that includes Kinder and co-founder Bill Morgan, board members Payez Sarofim and Mike Morgan, Goldman Sachs Capital Partners, AIB Global Asset Management Holdings, the Carlyle Group and Riverstone Holdings.
Toast of the Towns
Canada Bread offers rising fortunes in baked goods
We first featured Canada Bread as a Stock to Study in July/Aug. 1988 issue, and did so again in Nov./Dec. 1993, In both, the company was known as Corporate Foods Limited. Between the first two features the stock's price rose from $7 to $15, providing owners with a 16% compound rate of price appreciation. It has since traded as high as $61 (May 2006) for annual gains averaging 12%.
CANADA Bread Co. Ltd., a leading producer and distributor of breads and other baked goods, serves grocery stores, restaurant, and institutional markets. The company is the largest bakery products manufacturer in Canada, and has expanded into the United States and the U.K. through acquisitions. Currently, the company employs 7,300 people; including more than 6,000 at 30 facilities across Canada.
The company markets its products under different consumer brand names. Dempster's, the national brand, is strongest in Ontario. Strong regional brands include McGavin's in the West, POM in Quebec, and Ben's in Atlantic Canada.
Canada Bread is headquartered in Toronto. Its stock is thinly traded because Maple Leaf Foods (see growth chart on following page) owns 87.5% of the company's shares.
Historical Growth
Revenues
Chart 1 indicates that during the entire study period, Canada Bread's revenues grew at an average compound rate of about 13%. Since 2000, average growth accelerated to about 21%, largely as the result of acquisitions in 2001-02. Those expansions added the Multi-Marques brands and facilities in Eastern Canada (2001), and the U.S./U.K. bakery assets of parent Maple Leaf Foods (2002). In all, the acquisitions added 20 bakeries, 3,000 employees, and 10,000 customers.
Recently, revenue growth has slowed significantly, to about 2% in fiscal 2005 (ending December), for total revenues of $1.3 billion. First-quarter 2006 revenues declined by about 5%.
EPS
Growth in EPS (earnings per share before discontinued, extraordinary, and special items) of 12% has generally tracked revenue growth throughout the study period. However, EPS growth since 1999, at 30%, has significantly outpaced revenues. Following the 2001-02 acquisitions, growth averaged about 23%, with EPS up 19% in 2005. EPS for the first quarter of 2006 were up by 28%.
Successful consolidation of operations following acquisitions can produce superior earnings growth even while revenue growth slows.
Reasons for Historical Growth
Important Products
Canada Bread's revenues are derived principally from freshly baked and frozen products.
Fresh Bakery Products (71% of 2005 revenues vs. 70% in 2003)
The company is the Canadian leader in the fresh-bakery market. It manufactures and distributes a wide range of bakery products, including sliced breads, bagels, sweet goods (cakes and pies), and flatbreads, such as tortillas and pita sandwich pouches.
Fresh products have a limited shelf life (two to three weeks total for most breads), and extensive shipping can impair quality and appearance. Accordingly, production facilities must be located close to local consumer markets. For Canada Bread, that requires a network of 22 bakeries across the country.
In addition, the company maintains a large fleet of trucks for direct-to-storedelivery to most grocery accounts. Together, facilities and transportation represent high fixed costs. Another important cost arises from the return of unsold goods that have gone stale.
Frozen Bakery Products (29% of 2005 revenues vs. 30% in 2003)
This segment involves the production and distribution of various partially baked frozen breads and rolls. These products are "par-baked" - which involves baking breads to within 90% of completion, and then flash-freezing and shipping to both grocery stores and restaurants.
The par-baked market is one of the fastest-growing segments of the bakery industry, as it offers the opportunity for in-store bakeries, fast-food outlets, and cafeterias to produce small quantities of hot breads in a matter of minutes.
As well, the use of frozen products permits consistent product quality, lower product wastage, and reduced in-store labour costs, as higher-paid bakers are no longer required to prepare breads "from scratch.'
Important Markets
An estimated 70% of revenues originate in Canada from the sale of both fresh and frozen products. Only frozen products are sold in the United States. Canada Bread is the largest manufacturer of bagels in the U.K., where it also sells specialty breads.
Important Customers
Canada Bread is known to be a key Fresh Bakery supplier to major grocery chains, such as Sobey's, Safeway, Metro/A&P and large food-service operators across Canada. In the United States, Canada Bread primarily sells its frozen, par-baked products to sandwich shop chains and grocery stores.
Important Competitors
In Canada, Canada Bread faces another large, mainstream competitor in Weston Bakeries, owned by the same parent company as Loblaw's. Both companies compete vigorously in the fresh and parbaked categories nationally.
We first featured Canada Bread as a Stock to Study in July/Aug. 1988 issue, and did so again in Nov./Dec. 1993, In both, the company was known as Corporate Foods Limited. Between the first two features the stock's price rose from $7 to $15, providing owners with a 16% compound rate of price appreciation. It has since traded as high as $61 (May 2006) for annual gains averaging 12%.
CANADA Bread Co. Ltd., a leading producer and distributor of breads and other baked goods, serves grocery stores, restaurant, and institutional markets. The company is the largest bakery products manufacturer in Canada, and has expanded into the United States and the U.K. through acquisitions. Currently, the company employs 7,300 people; including more than 6,000 at 30 facilities across Canada.
The company markets its products under different consumer brand names. Dempster's, the national brand, is strongest in Ontario. Strong regional brands include McGavin's in the West, POM in Quebec, and Ben's in Atlantic Canada.
Canada Bread is headquartered in Toronto. Its stock is thinly traded because Maple Leaf Foods (see growth chart on following page) owns 87.5% of the company's shares.
Historical Growth
Revenues
Chart 1 indicates that during the entire study period, Canada Bread's revenues grew at an average compound rate of about 13%. Since 2000, average growth accelerated to about 21%, largely as the result of acquisitions in 2001-02. Those expansions added the Multi-Marques brands and facilities in Eastern Canada (2001), and the U.S./U.K. bakery assets of parent Maple Leaf Foods (2002). In all, the acquisitions added 20 bakeries, 3,000 employees, and 10,000 customers.
Recently, revenue growth has slowed significantly, to about 2% in fiscal 2005 (ending December), for total revenues of $1.3 billion. First-quarter 2006 revenues declined by about 5%.
EPS
Growth in EPS (earnings per share before discontinued, extraordinary, and special items) of 12% has generally tracked revenue growth throughout the study period. However, EPS growth since 1999, at 30%, has significantly outpaced revenues. Following the 2001-02 acquisitions, growth averaged about 23%, with EPS up 19% in 2005. EPS for the first quarter of 2006 were up by 28%.
Successful consolidation of operations following acquisitions can produce superior earnings growth even while revenue growth slows.
Reasons for Historical Growth
Important Products
Canada Bread's revenues are derived principally from freshly baked and frozen products.
Fresh Bakery Products (71% of 2005 revenues vs. 70% in 2003)
The company is the Canadian leader in the fresh-bakery market. It manufactures and distributes a wide range of bakery products, including sliced breads, bagels, sweet goods (cakes and pies), and flatbreads, such as tortillas and pita sandwich pouches.
Fresh products have a limited shelf life (two to three weeks total for most breads), and extensive shipping can impair quality and appearance. Accordingly, production facilities must be located close to local consumer markets. For Canada Bread, that requires a network of 22 bakeries across the country.
In addition, the company maintains a large fleet of trucks for direct-to-storedelivery to most grocery accounts. Together, facilities and transportation represent high fixed costs. Another important cost arises from the return of unsold goods that have gone stale.
Frozen Bakery Products (29% of 2005 revenues vs. 30% in 2003)
This segment involves the production and distribution of various partially baked frozen breads and rolls. These products are "par-baked" - which involves baking breads to within 90% of completion, and then flash-freezing and shipping to both grocery stores and restaurants.
The par-baked market is one of the fastest-growing segments of the bakery industry, as it offers the opportunity for in-store bakeries, fast-food outlets, and cafeterias to produce small quantities of hot breads in a matter of minutes.
As well, the use of frozen products permits consistent product quality, lower product wastage, and reduced in-store labour costs, as higher-paid bakers are no longer required to prepare breads "from scratch.'
Important Markets
An estimated 70% of revenues originate in Canada from the sale of both fresh and frozen products. Only frozen products are sold in the United States. Canada Bread is the largest manufacturer of bagels in the U.K., where it also sells specialty breads.
Important Customers
Canada Bread is known to be a key Fresh Bakery supplier to major grocery chains, such as Sobey's, Safeway, Metro/A&P and large food-service operators across Canada. In the United States, Canada Bread primarily sells its frozen, par-baked products to sandwich shop chains and grocery stores.
Important Competitors
In Canada, Canada Bread faces another large, mainstream competitor in Weston Bakeries, owned by the same parent company as Loblaw's. Both companies compete vigorously in the fresh and parbaked categories nationally.
Time to take risk topside: fires, disappearances, ghastly viruses—you'll find them all aboard cruise ships. That makes reputation management quite a c
Managing reputational risk in the cruise industry has never been smooth sailing. Consider that the world's most well-known luxury cruise of all time is the one that struck an iceberg and claimed the lives of 1,523 passengers and crew.
Shipboard risk management, of course, is far more sophisticated an enterprise than it was in the days of White Star Line's RMS Titanic. Risk managers in the cruise industry, however, still navigate through decidedly choppy waters. Just within the past decade or so, cruise lines have taken more than their fair share of high-profile hits.
* In 2002, an apparent rise in gastrointestinal illnesses aboard cruise ships caught the attention of the media--most notably Holland America's Amsterdam and Carnival's Fascination, which collectively had 700 sick passengers over the course of several cruises. Reports of Norwalk virus, or norovirus, outbreaks are currently still a favorite target of media and cruise critics.
* Exacerbating the illness stigma, news broke two years ago citing eight cases of Legionnaire's disease among cruise passengers between November 2003 and May 2004--two of them fatal.
* The industry took a further lashing in July 2005, when a young honeymooner disappeared from a Royal Caribbean ship traveling off the Turkish coast. Journalists dug up the details of every cruise passenger disappearance they could find, and soon the incident metamorphasized into an epidemic. Senate hearings on cruise passenger safety began in early 2006.
* Fires plague cruise lines regularly. As recently as March of this year, a stray cigarette was the alleged cause of a blaze aboard Princess Cruises' Star Princess, injuring 11 passengers and contributing to the death of another, who suffered a cardiac arrest.
Suffice to say that life is never dull for risk managers in the cruise industry.
Some of the group's most serious woes date back to 1998, when Royal Caribbean Cruise International pied guilty to federal charges that included oil dumping, falsification of records, obstruction of justice and witness tampering, related to five years' worth of incidents. The cruise line agreed to pay $9 million in fines--one of the largest settlements ever involving a cruise line accused of intentionally polluting the environment.
Fallout from the ease hurt more than Royal Caribbean. Data from CoreBrand Communications shows that other top cruise lines such as Carnival and Royal Olympic took a reputational hit from 1998 to 1999, as did the cruise industry as a whole, based on detailed surveys and other measurements that the branding firm uses to assess the familiarity and favorability ratings of companies' brand names. CoreBrand's data reveals that the favorability and overall reputation ratings of cruise lines dropped off around 1998, even as the leisure industry as a whole was enjoying increased favorability.
"People hear of an event and they don't think 'Disney,' they don't think 'Carnival.' They hear 'cruises,'" says Brad Puckey, brand intelligence director at CoreBrand. "That's a real danger to this industry."
THE PRICE OF SILENCE
CoreBrand's favorability ratings, however, show a steady comeback since 1999. In spite of the continued barrage of negative events, the industry has consistently increased its share of the leisure market--no small accomplishment.
So how do they do it? "It's always preparing, always operating above regulatory standards," says Bill Fay, who's been with Royal Caribbean since 2000 as an insurance manager in risk management. "We recognize the value of our guests, and when situations occur, we do the right thing."
Critics believe there's a little more to it, noting that reps pay weekly visits to local editorial boards in popular port cities to offer the industry's side of any issues that might arise. Skeptics may call that undue influence, but it's a tactic that some public relations experts recommend as part of an overall strategy for managing reputational risk.
"The media are not your enemy," said Michael Hatcliffe during a session on the subject at the recent Risk and Insurance Management Society Inc. conference. Chicago-based Hatcliffe, executive vice president, U.S. corporate practice, at Ogilvy Public Relations, tells clients to make nice with the media on sunny days, so that they'll have friends when the stormy days roll in.
Individual cruise lines, though, don't always toe the p.r. line. Many critics, for example, felt that cruise lines were slow to react when reports of widespread norovirus outbreaks began to surface. Not so, says Fay. Just cautious and avoiding a knee-jerk reaction.
"The media tends to sensationalize a lot of things," says Fay. "The norovirus and other issues that have occurred over the years were wrongly attributed to the cruise industry. I think whenever anything happens we basically just have to ... do the homework, find out what the real issue is and go to the media with the real story."
Shipboard risk management, of course, is far more sophisticated an enterprise than it was in the days of White Star Line's RMS Titanic. Risk managers in the cruise industry, however, still navigate through decidedly choppy waters. Just within the past decade or so, cruise lines have taken more than their fair share of high-profile hits.
* In 2002, an apparent rise in gastrointestinal illnesses aboard cruise ships caught the attention of the media--most notably Holland America's Amsterdam and Carnival's Fascination, which collectively had 700 sick passengers over the course of several cruises. Reports of Norwalk virus, or norovirus, outbreaks are currently still a favorite target of media and cruise critics.
* Exacerbating the illness stigma, news broke two years ago citing eight cases of Legionnaire's disease among cruise passengers between November 2003 and May 2004--two of them fatal.
* The industry took a further lashing in July 2005, when a young honeymooner disappeared from a Royal Caribbean ship traveling off the Turkish coast. Journalists dug up the details of every cruise passenger disappearance they could find, and soon the incident metamorphasized into an epidemic. Senate hearings on cruise passenger safety began in early 2006.
* Fires plague cruise lines regularly. As recently as March of this year, a stray cigarette was the alleged cause of a blaze aboard Princess Cruises' Star Princess, injuring 11 passengers and contributing to the death of another, who suffered a cardiac arrest.
Suffice to say that life is never dull for risk managers in the cruise industry.
Some of the group's most serious woes date back to 1998, when Royal Caribbean Cruise International pied guilty to federal charges that included oil dumping, falsification of records, obstruction of justice and witness tampering, related to five years' worth of incidents. The cruise line agreed to pay $9 million in fines--one of the largest settlements ever involving a cruise line accused of intentionally polluting the environment.
Fallout from the ease hurt more than Royal Caribbean. Data from CoreBrand Communications shows that other top cruise lines such as Carnival and Royal Olympic took a reputational hit from 1998 to 1999, as did the cruise industry as a whole, based on detailed surveys and other measurements that the branding firm uses to assess the familiarity and favorability ratings of companies' brand names. CoreBrand's data reveals that the favorability and overall reputation ratings of cruise lines dropped off around 1998, even as the leisure industry as a whole was enjoying increased favorability.
"People hear of an event and they don't think 'Disney,' they don't think 'Carnival.' They hear 'cruises,'" says Brad Puckey, brand intelligence director at CoreBrand. "That's a real danger to this industry."
THE PRICE OF SILENCE
CoreBrand's favorability ratings, however, show a steady comeback since 1999. In spite of the continued barrage of negative events, the industry has consistently increased its share of the leisure market--no small accomplishment.
So how do they do it? "It's always preparing, always operating above regulatory standards," says Bill Fay, who's been with Royal Caribbean since 2000 as an insurance manager in risk management. "We recognize the value of our guests, and when situations occur, we do the right thing."
Critics believe there's a little more to it, noting that reps pay weekly visits to local editorial boards in popular port cities to offer the industry's side of any issues that might arise. Skeptics may call that undue influence, but it's a tactic that some public relations experts recommend as part of an overall strategy for managing reputational risk.
"The media are not your enemy," said Michael Hatcliffe during a session on the subject at the recent Risk and Insurance Management Society Inc. conference. Chicago-based Hatcliffe, executive vice president, U.S. corporate practice, at Ogilvy Public Relations, tells clients to make nice with the media on sunny days, so that they'll have friends when the stormy days roll in.
Individual cruise lines, though, don't always toe the p.r. line. Many critics, for example, felt that cruise lines were slow to react when reports of widespread norovirus outbreaks began to surface. Not so, says Fay. Just cautious and avoiding a knee-jerk reaction.
"The media tends to sensationalize a lot of things," says Fay. "The norovirus and other issues that have occurred over the years were wrongly attributed to the cruise industry. I think whenever anything happens we basically just have to ... do the homework, find out what the real issue is and go to the media with the real story."
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