Carnival Corporation just reported record quarterly earnings, beating analyst expectations with $2.8 billion in revenue and its highest-ever booking levels. The stock immediately dropped 7%. Wall Street analysts cited concerns about fuel costs and Mediterranean demand, but there’s a deeper problem hidden beneath those stellar numbers. the insensitive loyalty program overhaul at its flagship Carnival brand showed the company doesn’t understand what drives true customer loyalty, and why breaking trust with your most loyal customers can’t be fixed with priority tender boarding.
The Betrayal That Sparked a Revolt
Back in June, Carnival announced it was scrapping its decades-old lifetime loyalty program in favor of a spend-based system requiring customers to shell out roughly $33,000 every two years to maintain elite status. The reaction was swift and brutal.
“37 years, 31 cruises gone down the drain. Felt that slap on the face,” one longtime cruiser wrote on YouTube.
The fury wasn’t just about losing perks. It was about betrayal. These customers had spent decades building what they thought was lifetime status—something they had earned and owned. Behavioral economists call this the “endowment effect”—we value things more once we possess them. Taking away something people believe they own feels far worse than never giving it to them in the first place.
One poignant email I received noted, “My wife and I are 30-year cruisers with Carnival, 62 cruises, 345 cruise nights, and achieved lifetime Diamond status 11 years ago. We have never sailed on another cruise line… Now, Carnival is reneging on their ‘lifetime’ promise… Carnival has revealed their true ($$) colors and there is nothing the brand can do to regain our loyalty.”
Carnival’s Partial Retreat: Diamonds Win, Others Lose
Encountering this unexpected backlash, in mid-September Carnival announced “enhancements” to placate angry loyalists. Diamond members, the highest tier, will keep their lifetime status. Platinum and Gold members? They’re still losing theirs after a grace period. Platinum members get extended until 2028 and both tiers will receive priority tender boat boarding and unspecified “additional exclusive benefits” to be announced later.
This selective protection lets Diamond members breathe a sigh of relief, but Platinum members who spent years building toward Diamond status now face a different kind of betrayal. They’re not quite loyal enough to save.
Research on goal pursuit shows that “almost making it” creates stronger negative emotions than never being close at all. A Platinum member with 180 days at sea (Diamond requires 200) doesn’t see Carnival’s partial retreat as generous—they see it as proof that their years, or even decades, of loyalty meant nothing. The message seems to be, “You’re loyal, just not loyal enough to matter.”
Why Token Gestures Fail
Carnival’s “enhancements” reveal a fundamental misunderstanding of customer psychology. Priority tender boarding—getting on those small boats that ferry passengers to shore a few minutes earlier—is a minimal benefit. Indeed, too many priority guests was one reason for the progam changes. What customers lost was emotional: recognition, achievement, and identity as valued members of the Carnival family.
The vagueness of promising “additional exclusive benefits” without specifics suggests even Carnival knows their current offerings aren’t enough.
This mirrors what airlines discovered when they shifted from miles-flown to dollars-spent loyalty programs. Frequent business travelers stayed because they had to fly and might qualify for at least some of the benefits. But leisure cruisers? Many choose their vacations based on emotional connections. When you make loyalty purely transactional, you risk turning devoted customers into comparison shoppers.
The real damage isn’t in online complaints, it’s how previous Carnival devotees are booking 2026 and 2027 cruises. While Carnival celebrates record bookings from new-to-cruise customers attracted by promotions, some of their most profitable customers are exploring other options.
The CMO’s Dilemma: When Too Many Customers Are ‘Elite’
Every CMO facing loyalty program bloat should study Carnival’s missteps carefully. The problem the brand faced was real. They already had a surplus of elite members on many cruises, and were minting new ones at a fast pace. On some cruises, they had to suspend some benefits because the number of cruisers eligible made them logistically impractical. That’s not good for the brand or the customers.
When you have too many elite members, the temptation is to raise the bar or completely reset the system. But there’s a critical difference between evolving a program and breaking a promise.
Why Recognition Beats Rewards
The solution isn’t complicated, just counterintuitive. Recognition costs nothing but means everything, at least to some customers. Carnival could have kept lifetime recognition while adjusting benefits. Special boarding group announcements, welcome letters from the captain, even those little pins and luggage tags they’re eliminating cost virtually nothing but maintain emotional connection.
Even the Diamond members recognized that something had to give. But Carnival’s revised program made them feel betrayed and rejected.
The Airline Model Mistake
Carnival imported the airline model without recognizing a crucial difference: airlines reset status annually and use spending, not miles, as the metric because business travel is cyclical and company-funded. By switching their model to a spend-based approach, airlines decided to focus on the more lucrative business segment and not worry about attracting casual travelers with their rewards program. The programs became transactional. Spend more, get status. Even frequent business travelers who flew mainly domestic economy class would find it impossible to hit the top loyalty tiers.
Cruising, on the other hand, is consumer discretionary spending. Choice of cruise line is often driven by emotional attachment and a feeling of connection to the brand. Different psychology requires different approaches.
Carnival’s Long-Term Revenue Risk
As Carnival’s stock price suggests, sometimes record profits aren’t enough when you’ve damaged the emotional bonds that drive long-term value. The new rewards program means few customers will be motivated to stay with the brand year after year. The high biennial spending target will be attainable only by guests who either cruise many days per year and/or book the most expensive suites. And, if one’s biennial cruising budget exceeds $33,000, is an entry-level cruise brand like Carnival the most appealing choice? Typically, as cruisers become more affluent, they move up the luxury ladder, perhaps to other Carnival brands like Princess, Seabourn, or Cunard.
It seems likely that Carnival’s non-Diamond members, unconstrained by accumulating status points, will now feel free to experiment with other brands, including those outside the Carnival family. Even some Diamond members’ feeling of betrayal won’t be eliminated by Carnival’s about-face on lifetime status.
Notably, the airline model rewards approach has been applied only to the Carnival brand, not the parent corporation’s other brands. No doubt management will evaluate how well it works at Carnival before rolling out similar changes elsewhere.
The question for every CMO: Are you solving loyalty problems with operational tweaks when what customers really want is to feel valued? Are you conflating transactional benefits with emotional recognition? The distinction might be worth more than you think.