Global cruise liners target China market
Royal Caribbean’s newest ship has attractions not usually seen on cruise liners, including bumper cars, a skydiving simulator and a glass observation capsule on a mechanical arm that lifts its passengers high into the air.
Royal Caribbean’s newest ship has attractions not usually seen on cruise liners, including bumper cars, a skydiving simulator and a glass observation capsule on a mechanical arm that lifts its passengers high into the air.
What’s also a surprise is the vessel’s intended home port: Shanghai.
After floating out of a German shipyard last week, the US$935 million Quantum of the Seas will spend the winter running between New York and the Caribbean before moving to its new base next summer in mainland China’s financial centre.
It is a gutsy move for the world’s second-biggest cruise company.
Cruise operators have traditionally sent older vessels to developing countries but surging growth in China means it is a market operators can no longer ignore.
Carnival, the world’s No 1 cruise company, will become the first global cruise operator to have four ships based in China when it deploys its Costa Serena to Shanghai in April.
Executives are confident about China’s prospects even as its economy struggles with a prolonged slowdown from double-digit rates of expansion, saying that growth is still strong when compared with developed markets. Carnival expects to carry 500,000 Chinese cruise passengers in 2015, up from 350,000 this year.
“We know that’s just a drop in the bucket to what lies ahead in terms of the market in China, which we believe is going to someday represent more than half of all cruise guests,” Carnival chief executive Arnold Donald said.
The Asian Cruise Association estimated last year that the overall Asian market, which totalled 1.3 million passengers in 2012, could nearly triple to 3.8 million in 2020, including 1.6 million from China. Carnival is even more optimistic, predicting it will grow to seven million by 2020 or about a fifth of the global market.
“For the next five to 10 years, greater China including Hong Kong will play a critical role to the global cruise industry’s development,” said Zinan Liu, Royal Caribbean Cruises’ managing director for China.
While companies are salivating over the growth potential of China’s newly wealthy middle class, hurdles remain.
One factor complicating efforts to pitch cruises to mainland Chinese is that “the vast majority of the population have no concept of a cruise,” Donald said.
Unlike American or European cruise passengers, Chinese cruise travellers are younger and have less holiday time. That limits the itineraries and presents a challenge in cultivating repeat travel.
Hong Kong christened a new US$1.2 billion cruise terminal last year, but the Norman Foster-designed facility has so far been infrequently used. Visitors have criticised the terminal, built at the end of the old Kai Tak airport’s runway jutting into the harbour, for being hard to access by bus or taxi.
China’s “lack of infrastructure is the biggest impediment to growth”, a report for the World Travel Market annual industry conference said last year.