Royal Caribbean sails into uncharted waters of mainland China cruise market
Royal Caribbean's Richard Fain plans to introduce mainland China's burgeoning middle classes to the little-known concept of cruise ship travel
Chinese holidaymakers may be heading overseas at an ever increasing rate, but the holidays are heading towards them too.
Although the concept of cruising is likely to elicit a puzzled look from most Chinese, the world's biggest cruise liners are racing to get their ships to the mainland to persuade the growing middle class to come aboard.
Royal Caribbean International, the Norwegian-founded, but Miami-based cruise company set industry tongues wagging last April with the announcement that its ship Quantum of the Seas - one of its largest in the world and the newest in its fleet - would make Shanghai its home port from May this year.
It was a bold move given that the ships that call in Chinese cities, a still new and emerging market, tended to be of older stock.
Meanwhile, rival cruise firm Carnival, also keen to demonstrate its commitment to the region, moved its chief operating officer from the company's headquarters in Miami to Shanghai last September and signed an agreement with a Chinese partner to move some of its shipbuilding to the mainland.
"There's no question," Fain told the on a visit to Hong Kong last week. "You're talking about an industry that didn't even exist here five years ago that is not well known and about which there are a large number of myths. We have to educate them."
Quantum of the Seas, so named because it is "a quantum leap from any ship in the world" is a behemoth that will be sailing three- to eight-night itineraries to Korea and Japan. The vessel can carry more than 4,000 passengers, includes 22 dining options and novelty experiences such as a North Star pod that takes guests 300 feet above the ocean, a skydiving simulator and a surfing machine.
It is the first from the company's fleet to be tailor-made for the Chinese market. Food offerings include traditional Shanghainese favourite dumplings, there's an enclosed pool to provide shade for the sunlight-averse, a plethora of shopping outlets and, although the company is somewhat reluctant to highlight it, a casino floor too.
"The entertainment has to cater to Chinese tastes. We have designed the ship to meet the tastes of the Chinese consumer, but it still remains an international ship," Fain insists. "We want to provide choices. While we have the very top end retail names, we also have the next level down. The beauty of the cruise is this is not one size fits all. You can mix and match."
"In mainland China the growth of the middle class is exploding. There will soon be more middle class Chinese than the entire population of the United States - not the middle class of the US, but the entire population. We wanted to get in early and establish early and show that we're here for the long term - show that this is not temporary that we'll come here for a short period of time and leave."
Last year, the company saw 45 per cent growth compared to the year before in greater China.
"We sail from Tianjin, Shanghai, Xiamen and Hong Kong," Fain says. "One of the things we have found is that we are already carrying more Chinese guests than Royal Caribbean carried altogether when I joined."
Although all the big names in cruising are eyeing the mainland, Fain says he is really competing with every other kind of holiday or leisure activity in the market.
"Our primary competition isn't Carnival or MSC Cruises, it's other vacations or even TV sets. It's other expenditures. We need to do a better job of making people understand how good a time they will have on cruises."
Being an almost entirely new concept does have its advantages. The cruise industry doesn't bear the staid old image of retirees and crowded buffet lines that burdens it in the west, something it is collectively trying to address.
Royal Caribbean's average customer age is 44 years old globally. In China, Fain says the guests are more likely to travel as a family. "Sometimes an extended family or what I call multigenerational travelling," he says. "This is for middle class - this isn't for the super rich or very poor."
The firm is not neglecting Hong Kong either. It is sending its Voyager of the Seas, a slightly smaller but still significant ship with capacity for 3,000 people. And while Kai Tak cruise terminal has been much maligned in the press, Fain diagnoses that as mere teething problems.
"In the short term, it's been an issue and I know it's got some bad coverage, but I think a lot of that is a bad rap. Any time you make a big transformation, you're talking about something that was the central airport hub and is now essentially doing the opposite of that. It's quite normal that things go wrong in the beginning but we're working with the port and the government and I think that they are going to get those things straightened out very quickly.
"It's an enormous facility…it has all the infrastructure that used to support the airport so it's a question of bringing that altogether. I think it will be one of the more popular ports. We go to 450 ports. It's not unusual for a port to have start up problems. I'm absolutely confident it will be a jewel in our crown."
