In the life of COSTA CRUISES 🚢 CEO Mario Zanetti

The Chief Commercial Officer asked for someone to go to Japan in person to understand the market, to understand what was happening, the potential, and in the end, they asked me to move and take on the responsibility of general manager for that business unit. The pandemic was a moment of shock for us. I remember in China, I stopped our ships before the Chinese government even declared the pandemic open. The Costa Asia business unit was reabsorbed into a single one and I returned with the same role on a global level. I became the boss of someone who used to be my boss, so it's not simple. We are about 1,500 people on shore, but altogether there are fifteen thousand people on board.

I was born near Genoa, I studied in Genoa, both high school and university. I was never exactly a model student. Then at some point, I found, I think it was the first university in Italy, this focus on transport and the maritime sector, which was something of a rarity. It interested me. An engaging journey began for me, a path that wasn't just: 'okay, I need to graduate.'

I played sports until I was fourteen; when time permitted, I played competitively both rugby and basketball. Then at some point, I had to choose, partly because time was objectively becoming difficult to manage, partly because playing rugby, the opponents were getting bigger and tougher, so I switched, specializing a bit in basketball, still at a minor league level.

Yes, yes, yes, yes.

I've remained a Virtus Bologna fan.

No, I realized that after the first two years of more general exams, this thing gripped me, I liked it, I started studying with passion and so I also started to speed things up a bit. And from there, the next step was applying to a company like Costa, which in Genoa was and is an icon, a brand that represents the city, that also physically represents a vision of entrepreneurship, of doing business through technological innovation, because in the port of Genoa you saw these ships that were becoming more and more beautiful, aesthetically too, to product innovation. The history of Costa that we studied in books, which we still carry forward today, is the story of a company that transformed what it was. It transformed itself from the maritime transport of oil to passenger transport, to holidays. So it was an evolution, it was one of those less sensational but no less important or innovative cases of many companies that have launched new products. Well, for Genoa, Costa represented exactly this journey, so trying to get in was one of my goals. My luck was having a degree that was quite focused on that. Plus, I've always really liked to travel, so compared to many of my peers, I was a bit more familiar with English, which allowed me to have my first two years with the work-training contract that existed at the time.

Yes, more or less. Those were still the years of military service, so to try and end up in a location fairly close to home, I had kept one exam, the thesis, for later. In fact, I was lucky enough to do it at the military district of Genoa because I had to defend my thesis.

The East has always played an important role in my journey. The first time the East knocked on what were my sliding doors was in 2000, when the Japanese market started to gain a certain importance. The chief commercial officer of that time, one of the legendary figures within Costa, asked for someone to go to Japan in person to understand the market, to understand what was happening, its potential.

Two thousand.

A year and a half.

As a junior analyst, as they would say now. It was a much more technical role in the sales optimization part. Let's say it's a role that's halfway; for finance people, you were too commercial, for commercial people, too much analysis. But it was an excellent viewpoint on the company, because to optimize sales, you must understand the commercial dynamics, but at the same time, you need to have a vision of the financial impact of what is happening in the market. And so, since I had written everything under the sun on my resume, as there was nothing, so I listed all my interests, I talked about my passion for travel, about a trip I took right after graduating high school in '91 to Tibet. I seemed curious enough, bright, junior enough to have little to lose, and they sent me to Japan for a month, where I managed to do a pretty thorough job and I wrote a report that was quite impressive, and that was one of the first accelerators in my career.

Exactly. What the potential could be, the distribution system.

Yes, how to be more present directly instead of through a GSA. And then Asia returned forcefully in 2016 when the market, which, however, had shifted much more towards China in terms of predominance, and in the meantime, Costa had decided that market was so strategic that it would be a separate business unit with a brand that we here have always translated as Costa Asia; the reality is that it had an unpronounceable Chinese name.

Various turbulences, geopolitical issues: China, Korea... So it was a perfect storm of a year. Within my career path, I had continued to work on the analytical side, and I was first asked to extend my area of responsibility to that region of the world as well, which was actually a separate brand from the Costa we had here in Europe, and in the end, the inevitable happened, and they asked me to move and take on the responsibility of general manager for that business unit.

Shanghai. A fantastic experience.

It was the main port; actually, we had three ports: Shanghai, Tianjin, and Shenzhen as main ports. Then we had an operation in Japan because the common thread remained anyway. I spent about one week a month in Japan. This was our base of operations. Roughly 90% of the traffic originated in China with Chinese passengers, and there was ten percent...

There was another important moment, which was the cultural shift in the company, or rather in the industry, from sales optimization to what is revenue management, which means having a function in the company that not only optimizes but also guides, influences demand through advanced analytics and pricing. Following the post-Japan acceleration, I was part of the company's core group that built this department, and I remember the first Advanced Analytics models came from endless data entry on stacks of paper like this to build the databases that in the meantime IT, which was also starting to take a different shape there, from making systems work to building databases and models that could support Advanced Analytics. So being at the center of this new path allowed me to then take full responsibility for this new department.

The core is easily summarized. Sales forecasts, market flow forecasts, demand forecasts and, depending on the demand and your supply, defining price strategies, defining price levels, and along the way was clearly how technology could support all this.

Exactly.

You have to do it for all markets. You do it for the markets; you have to understand which market has more demand at a certain moment and therefore better trends.

Yes, yes, Advanced Analytics, statistical models.

The evolution has been crazy, from data entry to artificial intelligence.

So the scope then became quite broad, and above all, I believe, the contribution to the company's managerial life, for which the next step was having responsibility for an entire business unit. The support from Costa in my training also helped me in this. In the meantime, I participated in a general management program at one of the world's leading business schools, I would say, which is INSEAD, and this was a further accelerator for my training, but what I also found is that these schools help you gain more knowledge, but above all, they help you see things differently.

Yes, yes, it was part of a plan that they had tailored for me in the meantime.

Costa Asia was coming from this year where geopolitics had prevented us from going, for example, to Korea, which was one of the key destinations for the Chinese market. This had generated turbulence at the distribution level. In China, distribution is one of the key factors, not only in tourism, but for any sector. Having success in distribution is as key as being able to generate solid demand.

Distribution means the points of sale. Both direct, but especially the point of sale, the physical or online shop of intermediaries, so in our case, the travel agencies.

To people at the moment they need to make the purchase. Also because, especially in China, it was perhaps still important to have a widespread physical network. Actually, I discovered a hyper-digitized China back in 2017. One of the habits I took with me is that I walk around without cash because it was totally useless. There was WeChat, even people on the street asking for help had a QR code, they didn't ask for coins. And distribution was hyper-digitized. Even through opaque channels, because WeChat, which is this social media, Chinese payment tool, a super app, also allows for peer-to-peer business, which can then evolve into opaque channels, but very simple. And so this digitization had to be, on one hand, embraced, and on the other, controlled. This was also a further learning accelerator. From going to the other side of the world to trying to understand a completely different business model, not to mention dealing with passengers who have completely different needs, wants, and expectations from what we were used to in Europe.

The choice of the cruise and therefore the shore excursion. In Europe, you typically choose a trip for the destination. And the destination is chosen for the experience you can have on shore. The Chinese passenger, first of all, chooses the vessel, they choose which ship I'm going on. You go to these terminals in China and it feels like you're in a car rental station. You have all the cruise lines that show which ship you can depart on. And then when you get off the ship it's: okay, where can I go shopping? And then it evolved with social media becoming a real part of everyday life, even in China, even more deeply than what we see, where can I take the picture that gives me the most status. This, for example, is a big difference between the Chinese and the Japanese traveler. The Japanese traveler takes a photo to have a memory of a trip they might take once in a lifetime. The Chinese traveler, from my experience, takes the photo to say they've been there and to be able to show it off.

2016, back and forth.

August 2017 with the family.

August 2020, return.

Returning to a locked-down Genoa, let's say, was not exactly the easiest situation to manage.

Meanwhile, the pandemic led to a review of company strategies. The Costa Asia business unit was reabsorbed into a single one. I returned with the same role globally, so as general manager until 2023, when I joined the board and then... Chief Executive Officer.

By the way, I was also in China, the first time for a month in 2017 and the second time in 2019, also for a month. So maybe we met in Shanghai, who knows?

The pandemic was a moment of shock for us. I remember in China, I stopped our ships on January 22, 2020, before the Chinese government declared the pandemic open. I remember the evening the government declared the Wuhan area closed, with all sorts of news. Then there were many moments where, in fact, the transition always gave me that sense of inadequacy for the next role, which was perhaps also what pushed me to work to overcome it. But, let's say, it happened more or less every time.

Yes, I thought: sooner or later they'll realize it's all fake.

Clearly, the transition from a situation where I was comfortable, like that of my role before going to Asia, because I was doing a job I had built for almost 15 years. I had seen everything, I had chosen every person I worked with, so I had a team I completely trusted. To pick up and, initially alone, go to the other side of the world with people you didn't know, an organization to redesign completely, that was a moment when my sense of inadequacy was really put to the test.

The team helped me a lot by building in vitro, so through research, available data, what the market was, but especially the Chinese consumer in terms of the service they wanted to use. And then for me, the key is always twofold, which is to study but ultimately, to see things for yourself. And so I spent a lot of time on board the ships, observing with those who worked with me and who had that direct responsibility.

Very few full ones. I more or less set a goal each year to spend about fifty days on board our ships.

Well, if you add it all up...

It was difficult because of the timing. Clearly, it was about restarting an organization in a difficult moment like that, of redesigning our presence in the market as well, but also of financially rebuilding, strategically, a path from scratch, almost as if we were a startup.

Exactly. Returning again with a team that in the meantime was different from the one I had left. I became the boss of many of my colleagues.

I became the boss of someone who was my boss before, so not simple. I must say I found extraordinary collaboration and openness because we all had to understand what our strengths were, but especially in the new context, what we needed to bring in that we didn't have as skills.

We worked on all the digital skills.

The day starts early, I'm not particularly good at sleeping. Wake up, coffee, gym. This is... A little dopamine helps me...

Yes, yes. Numbers, because that has remained. The first thing I look at is, okay, how are the sales numbers from the previous day and thus for the week. Then I get on the phone for a bit, I have my three or four favorite victims for my calls depending on the overnight emails and the numbers, and then the work begins.

Absolutely.

Do I sleep soundly? Mostly yes, but if I don't sleep, it's not because of the emails I'm expecting, in the sense that one of our characteristics, perhaps one of the elements we've built in recent years, is having a very strong, very solid team. There's an excellent level of trust among us.

I'd say nine. Chief Commercial, so Marketing, Sales, Chief Corporate who in turn has Finance, IT, Procurement reporting to them. Then I have HR as a direct report, I have Revenue Management as a direct report, I kept that one, obviously. The entire Executive Communication part. This is one of the new things we've introduced at the organizational level, that is, having someone who helps all of us, not just me, in having a consistent narrative with our strategy. Then I have quality control. I like to have an idea about our product, I like to get feedback, but above all, I believe it's essential for those who do this job to have the empowerment of a direct report to the CEO, because it's a very strong message to the rest of the organization about how much quality matters to us. This department represents the eyes of the consumer, it represents how the product is received, regardless of what our intentions are. In the end, we talk a lot about strategy and it's fundamental. We have a very clear three to five-year vision, we work to achieve it, but I'll use a quote from someone much better than me: in the end, the only strategy the consumer perceives is how you execute it. The rest are PowerPoint battles.

Exactly.

I believe and hope that the main part of my job is to put the many high-level people with whom I have the opportunity to work in the best conditions to make their contribution. And we have tried to make this a cultural mantra in the company. Having a strong brand, having the opportunity to attract talent, having many talents within, the limit we can build for ourselves is not allowing these talents to have an impact and therefore also to be able to achieve their ambitions.

Exactly. And this then translates, is translating into company culture, because this can be the subject of a cascading effect throughout the company. Especially, for example, regarding what happens on board the ships. We have about fifteen hundred people on shore, but in total, between those on board and those on leave with rotations, there are fifteen thousand people on board. And by the way, that's where things happen. And this part is very important, because many companies have, maybe if you think of B2B companies, they have little contact with the customer, and so it's very easy to have control over how people behave. But when you have tens of thousands of people, all of whom have contact with the customer, it's crucial that they are aligned on how to behave, because otherwise, everyone does as they please. Culture is fundamental.

These roles don't allow you to say: perfect, when something happens, you must behave like this. The only thing you can try to do is give them the context.

Let's talk about shipping in general. We're talking about passengers and cargo. Eighty percent of the world's goods travel by sea. The impact of greenhouse gases emitted by sea transport is two percent. Of this two percent, cruises are clearly a very small part, so numerically the impact is actually very limited. Then it's also true that, by the way, the cruise world has always been at the forefront in its sensitivity to environmental issues. I'll give you our example. Costa prepared its first certified sustainability report in 2007, when sustainability wasn't even fashionable. Nobody was talking about these topics. We started that journey from there. And even within a world like shipping, where the numbers say the impact is of a certain type, the cruise world has actually always been at the forefront of technological innovation. Today's cruise ship is large, it carries many passengers, but inside it's a city that has standards that are unmatched on land, and almost unrepeatable. Let me give you some examples here too. Our ships have about 90% water independence, meaning they produce the drinking water they use almost entirely, and when this water is released, it undergoes purification processes that make it potable even before it's returned. On board the ships, there is 100% waste separation. We know that the most virtuous cities in Italy, for example, reach about 70%. Another major topic that is a perception different from reality concerns food. Food waste per person on board a ship is about 20% lower than what we all produce on land. It may seem surprising, but the reality is that it's obvious. When we go grocery shopping, we don't have predictive models that tell us what we should cook and what we will eat next month. Here we have them. We don't have machines that eliminate waste in food processing, here we have them. Over the years, this has become a world that has made efficiency and therefore sustainability practices part of our business. Then there is clearly propulsion, which is one of the elements that receives the most attention, but also the most investment. Right now we are on board a ship that was the first in an order of ships that Carnival Corporation placed for liquefied natural gas, which is currently a transition technology, not yet a final destination technology, but it's the one that allows for the reduction of particulate matter and a whole series of pollutants better than any other. This is a ship that is ready to receive bio or e-fuels, which come from biological or synthetic processes. These are ships that, like all ships, not only in our fleet but in the global cruise fleet, one in two ships is ready to connect when in port to the shore power grid. Of the world's ports, about 3% are ready; of the Mediterranean ports, there is one ready. So for our world, sustainability has become a business model. Technology is normally adopted on cruise ships and then it moves to the rest of the ships. All our ships are equipped with exhaust gas cleaning systems. We have technologies that work on the hydrodynamics of the ships, from special paints that reduce friction, and thus by reducing friction, they reduce emissions, to systems of air bubbles that are produced, that surround the hull and dramatically cut down friction and therefore consumption. We are working hard. Our ambition is to reach 2050 with a zero-emission ship. And this will be the result of a combination of technologies. As of today, there is no zero-emission technology. Those in research and development currently see it as a combination of batteries, it will be a combination of connecting to shore power when in port, to the shore grid, alternative fuels. And all of this is already being tested today so that this whole set of technologies can then be combined, and we can meet our ambition of having the first zero-emission ship.

My boss, if we want to call him that, is the CEO of Carnival Corporation, who is therefore part of the board. Then there's a fairly direct relationship with the chairman Micky Arison, who is also, along with his father, the founder of Carnival Corporation, along with Ted Arison, who is the one who actually founded Carnival Corporation. And then there are moments of interaction with the board, which is a larger group of people to whom you present your strategy, explain how you are following the direction that you designed and that they approved for you. You clearly have to explain how the investments they allocate to you create a return, create value for the investors. So this part is not very simple, as you can imagine, but it is equally interesting and enriching.

Let's say we do a great job as a team. The balance, I believe, is linked to how much I like what I do, how much it grips me, how much it involves me, so I definitely carve out moments where you are obviously not at work, that's also part of mental hygiene. These moments are just as important as fully living your work life every day. Then, working across multiple time zones, as you can imagine, is complicated, but the good fortune of being engaged in what I do means that the daily need for balance is actually overcome by the engagement I have in the work and by how much I like what I do.

I definitely would have played basketball. My physique and talent had other ideas for my future.