Pandas and Beauty Queens Lure Chinese Groups to Cruise Ships

Ovation of the Seas arrives in Hong Kong in June 2016. Photo: Royal Caribbean International

By Bloomberg News (Bloomberg) — Liu Jing wakes at 7, feeds her 84-year-old mother and two-year-old grandson and then spends the day watching the boy play in the playground, with breaks for meals and his afternoon nap and perhaps a little TV in the evening.

That’s not unusual for a Chinese retiree, many of whom play an instrumental role in raising grandkids, but Liu, 57, is on board the Costa Atlantica, a luxury cruise ship packed with activities and events that she largely ignores.

“I just don’t have time to do all these,” said Liu, 57, a Beijing resident who sailed with her husband, grandson and mother from Tianjin port late last year. “Everywhere you look on the cruise, you see middle-aged people like me, with small kids.”

Lines including Royal Caribbean Cruises Ltd. and Carnival Corp. have sent an armada of luxury vessels to China to tap the world’s fastest-growing market, but they face turbulent waters. In addition to satisfying the tastes of Chinese passengers, they sail in the shadow of the region’s increasingly volatile politics. And soon, a new threat will emerge: Chinese companies are building their own big ships.

“Right now it’s a learning process,” said Ken Muskat, chief executive officer at SkySea Holding International Ltd., a Shanghai-based cruise operator. “Everybody is adapting and learning more about what the Chinese market is looking for.”

The number of passengers in China has risen tenfold in five years, to around 2 million in 2016, and the government expects 4.5 million by the end of the decade. Most make shorter trips — five days on average — and call in South Korea and Japan, the top two destinations in Asia outside of China, according to industry body Cruise Lines International Association.

With so much potential — China is still nowhere close to the 11 million plus Americans who cruise each year — companies are bringing bigger and better ships to the Yellow Sea, tailoring their offerings and seeking new destinations in an effort to persuade Chinese travelers that a cruise is more than just a form of transportation.

Royal Caribbean’s latest mega-ship, the 4,905-passenger “ Ovation of the Seas,” complete with indoor sky-diving and robot bartenders arrived at its new home port of Tianjin on May 4 for the summer season after being christened in China last year by actress Fan Bingbing. On deck, a sculpture of a mother panda reaches out to her cub on the deck below.

“We have still a huge challenge ahead of us to create more consumer awareness of what a cruise is, what that experience is like,” said Adam Goldstein, president of Royal Caribbean.

But before China’s newbie cruisers adapt to life on the ocean, the cruise lines first have to adapt to local tastes. And that starts in the kitchen.

“Whether it’s rice and congee for breakfast or different types of seafood for lunch or dinner, they’re sticklers for the authenticity of Chinese cooking,” Goldstein said.

Then there’s the entertainment. Out go the Broadway-style shows beloved in the Caribbean and in come flashy Chinese song-and-dance hits and local celebrities. SkySea invited candidates from the Voice of China reality TV singing contest to perform and staged the Miss World China Final beauty pageant on its ship Golden Era, which can carry 1,814 people.

Royal Caribbean in 2016 invited cross-talk artist Guo Degang to perform on “Ovation of the Seas” during the ship’s inaugural visit to China last year.

“There’s much more of an emphasis on shopping,” Goldstein said, adding that Chinese passengers spend two or three times as much in the on-board stores. “Plus we know that they’re shopping energetically in the ports of call.”

But perhaps the biggest difference in China is that cruises are often a mutigenerational holiday.

“Chinese cruise travelers are very family oriented” said Muskat at SkySea, which counts Royal Caribbean and Chinese online travel service Ctrip.com International Ltd. as major backers. “They like to spend a lot of time with their family whereas in North America you can put the kids in the youth program for seven days and not see them again.”

Liu said she barely tried any of the swimming pool, mahjong, shows, casino, bars and gym on her cruise ship, owned by Italy’s Costa Crociere SpA, because her grandson and 84-year-old mother required her constant attention. Costa said it invites local chefs for its China cruises and adds more extensive retail space. The company, which still keeps an Italian flavor to its voyages, said about 85 percent of its passenger accommodation is in family cabins for China cruises.

Tailoring ships to win over Chinese seafarers may provide an advantage to local cruise lines that can adapt quickly to the rapidly changing tastes of Chinese consumers, said Yu Dunde, CEO of Chinese online travel booking service Tuniu Corp.

China has “too many similar offerings,” said Yu. “To win the market, you’ll have to differentiate through activities, you have to give people something that other cruises can’t.”

Companies are trying to diversify, with more ships departing from southern ports like Guangzhou and Xiamen into the warmer waters of the South China Sea for the winter market.

China’s own operators and shipyards are also entering the market for big cruise ships. Shanghai Waigaoqiao Shipbuilding Co., a subsidiary of China State Shipbuilding Corp., is working with Italian cruise shipbuilder Fincantieri SpA to build two vessels, worth approximately $1.5 billion, according to a memorandum signed in February. The ships will be delivered to a new China-based joint venture between Carnival, CSSC and CIC Capital, and will be tailored for the Chinese market. The first, carrying about 4,000 passengers, is expected to be delivered around 2023 and the operator also has an option for four more.

The Shanghai shipyard said the order is a substantial step forward that brings local builders closer to their dream of having a cruise vessel made in China.

But for both local and foreign operators, the waters around China have become increasingly risky due to the region’s politics. Both Royal Caribbean Cruises and Costa scrapped calls to South Korean ports in March for their cruises departing from China amid escalating tensions between the two countries over the deployment of a U.S. Thaad missile defense system.

China has had similar brushes with Japan and its Southeast Asian neighbors over disputed islands.

Those risks aren’t deterring the expansion of the industry. Cruise lines are already looking to the largely untapped market of potential cruisers in China’s inland cities, a market that is becoming more accessible as the nation builds more airports and high-speed railways.

“They just can’t ignore a broader market beyond the coastal regions” Yu said. “If they can extend the market to the hinterland, then the number of cruise travelers could grow from millions to tens of millions.”

Cruise lines praised for environmental measures in Clia study

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The overall environmental impact and performance of cruise ships is improving through continuous development of technology, alternative fuels and mandatory industry environmental policies, a new study claims.

Although cruise ships represent less than 1% of the global commercial maritime fleet, the industry’s actions have substantially contributed to the maritime community’s initiatives in environmental stewardship.

The analysis was conducted by independent maritime environmental experts for industry body Clia.

The study by Energy and Environmental Research Associates analysed the practices and performance of the Clia cruise line members’ global fleet of nearly 300 ocean-going ships as well as the industry’s investment in technology on new build vessels.

The study found that the emissions of cruise ships account for only 3% and 1.2% of all emissions within ports in the US and Europe, respectively.

Clia cruise line members were found to meet or exceed international air emission requirements.

The study also concluded that Clia members are leaders in the maritime sector in adopting cleaner fuels, controlling air emissions, and preparing vessels to connect to shore-based energy systems.

Technologies and best practices identified in the report include:

• Systems to reduce air emissions from exhaust stacks, including, as one example, advanced exhaust gas cleaning systems (EGCS) to reduce sulfur oxide (SOx) and particulate matter.

• The use of shore power where available, while noting that Clia cruise line member use of advancements in alternative fuels and emissions abatement technologies could reduce the need for investment in additional shore power in the future.

• Fuel switching to lower sulfur fuel before entering an Emission Control Area, if other methods of emissions abatement are not otherwise available on a cruise ship.

• Investment in the use of alternative fuels such as Liquefied Natural Gas, with the number of new build orders for LNG-fuelled ships increasing.

Wastewater effluents of members’ ocean-going vessels meet or exceed the standards prescribed by the International Maritime Organisation for international shipping.

Clia’s mandatory wastewater discharge policy, which prohibits the discharge of untreated sewage from ocean-going cruise ships anywhere into the sea, goes well beyond international wastewater regulations that allow commercial vessels to discharge untreated sewage into the ocean provided a ship is 12 nautical miles from shore and moving at designated speeds.

Cruise line members are also leaders in the development and deployment of Advanced Waste Water Treatment Systems.

At least 26 new builds will use AWTS, and an estimated 50% of new cruise ships over the next decade will utilise AWTS, which goes beyond already stringent and effective wastewater regulatory requirements.

Compared against the global commercial maritime fleet, EERA found that Clia cruise line members have demonstrated leadership in wastewater management in several areas.

James Corbett, a professor at the University of Delaware School of Marine and Science Policy and one of the authors of the study, said:

“Our technical analysis of the cruise industry’s leadership and performance in working to protect the environment found that Clia’s ocean-going member cruise lines often go beyond the protective environmental measures required by regulation.

“The cruise industry also demonstrates continued leadership in the development of responsible environmental policies and investment in technological innovations to further protect oceans and air.”

Association president and chief executive, Cindy D’Aoust, said: “I am proud of the performance of Clia cruise line members and their commitment to the protection of the environment.

“Safe-guarding and preserving the world’s precious natural resources is not only the right thing to do, but it is essential to the cruise experience for generations to come.

“Clia cruise line members take environmental commitment very seriously, and this research provides not only the first-ever authoritative baseline of the cruise industry’s environmental performance, but it also provides a foundation for Clia and our members as we continually focus on improvement and measuring the outcomes of best practices and policies.”

Norwegian Cruise Line Holdings’ Frank Del Rio

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Norwegian Sky will cruise from Cuba.

Norwegian Cruise Line Holdings CEO Frank Del Rio has been seeking permission for his U.S.-based cruise ships to dock in Cuba for over a year. On Dec. 7, the Cuban-born Del Rio was called to Havana to sign agreements that finally enable all three of the company’s brands to sail there next year. He spoke with senior editor Tom Stieghorst about the process.

Q: Were you aware when you were down there that the other cruise lines had also been approved?

Frank Del Rio
Frank Del Rio

A: I was pulling into the terminal building where the signing ceremony was taking place, and as I was pulling up with my driver and my team, [Royal Caribbean Cruises Ltd. president and COO] Adam Goldstein was walking out with his team and we exchanged pleasantries as we always do, congratulated each other and had a good laugh about it.

Q: So you almost had a CLIA quorum?

A: Adam even mentioned that. He said, “Frank, I understand there’s a CLIA meeting today,” so that was one of the reasons we had a good laugh.

Q: What building were you in and who were your Cuban counterparts?

A: Oh, there’s too many to mention, and they may not want us to mention them, but the ceremony took place at the terminal building where the cruise ships actually tie up. It’s a very nice building. As I told the officials there, I think that terminal facility is as nice a facility as any in the world, certainly the premier one in the Caribbean basin and Central America that I’ve been to, at least.

Q: Do you plan to visit other ports besides Havana?

A: We do, but not in this first round that covered 10 sailings of the three brands through May 31.

Q: Do you have any insight as to why the Cubans acted now? 

A: I don’t. I think one could speculate. Is it because Fathom pulled out? Is it because of the rhetoric around president-elect Trump’s views on Cuba? It could hypothetically mean that after some time Cuban authorities felt comfortable with additional cruise lines. I didn’t ask. I don’t really care. I’m just happy as all can be that we’re finally in.

Q: Will this be too much at once? Is there anything that concerns you about the infrastructure arrangements?

A: No, on both counts. Because of the infrastructure limitations, the maximum number of vessels in Havana at any given point in time are two: a mid-size vessel like a Sky or a Marina, for example in our case, and one smaller ship, like an Oceania R ship or Regent Mariner. So the number of cruise guests who can be in Havana at any given time is in the 2,500 to 2,700 range. Havana’s a large city. Cuba handles over 3 million tourists a year. So I don’t see that as a burden whatsoever.

Q: Will your shore-excursion department plan the people-to-people program? Do you have someone in Cuba that can help?

A: Both. I don’t see the shore excursions that we would offer in Cuba to be significantly different than the ones we provide when we go to any major historical metropolitan area. Whether it’s Rome or Istanbul or St. Petersburg, Russia, our target customer, especially for the upscale brands, isn’t going to the beach when they go to the Greek islands; they aren’t necessarily going to the beach when they go to Hawaii. They’re looking for experiences, they’re looking for cultural exchanges, they’re looking to visit museums and things of that nature. That’s a lot of what Havana has to offer.