Those damned cruise ship spreadsheets

I remember the first desktop computer spreadsheet. It was called VisiCalc and I first saw it running on a CP/M card stuck in an Apple IIe back somewhere in the early 1980s. Computers were powered by pedals and cranks in those days. Yes, I’m that old.

There was VisiCalc, then SuperCalc, then Lotus 1-2-3, Excel, and a few others. Microsoft’s Excel spreadsheet has been the most used spreadsheet software since the early 1990s.

Spreadsheets have become the staple financial tool of business. They’re used to track data, display data, and even project data. Few successful business ventures these days come without a spreadsheet stuck somewhere in the business plan. It’s funny, but all the unsuccessful business ventures also have a spreadsheet in their business plans. Go figure.

Now we hear that Norwegian Cruise Lines will pull their second cruise ship from Hawaii. What went wrong with the NCL financial spreadsheets for their Hawaii cruise business? Surely, Norwegian Cruise Lines had a spreadsheet somewhere in their business plan for Hawaii. Surely those spreadsheets projected great profits if the company invested a few hundred million dollars in new cruise ships for Hawaii. Surely.

So, what happened?

It’s a case of ‘what if?‘ That’s what spreadsheets do best. They provide an easy way to say, ‘What if?‘ Financial projections are based on a number of variables, all of which can be manipulated at will, adnauseum, and the spreadsheet does variables better than any other common financial tool. In other words, a spreadsheet can be doctored with various ‘what if‘ variables to provide an endless array of scenarios, some of which look great on paper (what happens to a spreadsheet when it gets printed) and in proposals, from which financial decisions are made.

For example, I envision this scene which probably took place at an NCL office somewhere: “What if we had a million customers a year who paid $5,000 each to stay in one of our floating hotels in Hawaii for a week. We’d be rich beyond our wildest dreams.”

Based upon a spreadsheet which said the same thing, but in numerical terms, NCL brought three cruise ships to Hawaiian waters. It would appear that NCL’s plans, their ‘what if‘ scenario, was foiled by just two variables. NCL couldn’t get a million customers to cruise around on their ships. And, of those that did, they refused to pay the aforementioned $5,000 each.

That resulted in huge losses for NCL over the past few years, then an exit of two of their three ships from Hawaiian waters, and now a threat to remove the third ship from Hawaii for financial reasons, or just for spite, or because some spreadsheet told them it would be good for the company.

It’s still possible that NCL will keep the last ship in Hawaii because now the average price to cruise Hawaii’s islands on an NCL ship, or any other cruise line, is closer than ever to that magical, mystical and highly profitable $5,000 number.

If you can’t afford to cruise Hawaii with NCL just blame it on spreadsheets.