Comment: Cruise industry must take China’s rise on board

Comment: Cruise industry must take China's rise on boardFollowing the announcement of the deployment of Royal Caribbean’s newest ship year-round from Shanghai next year, David Selby assesses the significance of the decision and the impact on established markets

China is vast – it has a population over 20 times that of the UK and is the world’s second largest country by land mass.

Between 2007 and 2011, its economy grew at the rate of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States combined – and while we dither in the UK about where the next commercial airport capacity will be situated, around two-thirds of the world’s airports are being built in China, with 55 planned between 2013 and 2015!

Shanghai is China’s biggest city, with a population of over 22 million, according to the last National Population Census in 2010. While a significant number of residents still have insufficient income or interest in cruising, it was perhaps only a matter of time before a major international cruise line would announce year-round deployment from the city, as Royal Caribbean has done.

The fact that it is its newest and “shiniest” ship, Quantum of the Seas, does make it interesting. It goes against the traditional idea of growing “new to cruise” markets typically using older tonnage, and keeping the key markets fresh with the newest innovation hardware.

During last week’s announcement, Adam Goldstein, Royal Caribbean’s president and chief operating officer, said: “Every trend we are seeing in China tells us we can achieve real long-term competitive advantage and appealing returns on our investments in this fast-growing market by accelerating our presence there. We will have to be nimble, but the ability to move fast is one of our strengths.”

I agree! It comes from having – in my view – the strongest single international cruise brand in the world.

Meanwhile, analysis commissioned last year by the Asia Cruise Association predicts a market size in Asia by 2020 of 3.8m, of which China will be 1.7m – just below what the UK is today. Cruises are typically of short duration and to serve 3.8m cruisers on 5 night voyages, the region will need the equivalent of eighteen 3,000 berth ships sailing in the region year round. It is unlikely to stop there.

Where will they come from, and what of traditional core markets?

Well, Royal Caribbean points out that the ports of Florida (with ships sailing to the Caribbean – the most popular cruising destination), will be operating with record levels, while from New York passengers will have the chance to cruise on ships not previously deployed from there.

In the UK of course, we look forward to seeing Anthem of the Seas – Quantum’s sister-ship – sailing from Southampton after she is launched next year. Longer term however, we could see a general shift away from current core markets unless there is an acceleration of new-build activity.

For the remainder of this year, apart from Quantum, there are just three ships over 2000 berths being launched worldwide – for Princess, Costa and Tui in Germany. Next year there are five, in 2016 there are six and in 2017 there are so far just three. While this may increase, it is barely enough to cover the Asian growth over the next six years.

Therefore, the challenge is on for the industry in traditional markets to keep the product and marketing fresh, to drive value and deliver exceptional levels of customer service – and the same goes for the destinations the ships visit.

Looking even further ahead – once the Chinese have tried cruising at a local level, they will without doubt be cruising further afield and coming to Europe.

So while we sort out the runway problem, it would be a good idea to sort out the UK Visa situation at the same time.

18 Viking ships named this week

By Rebecca Tobin

Viking Longships christeningONBOARD THE VIKING HEIMDAL — Viking River Cruises is christening 18 ships in four days — and 18 ships means 18 godmothers, including seven representing the travel industry.

Nine ships were named Monday in Amsterdam, and seven were christened on Tuesday: three in Avignon and four in Rostock, Germany.

“I think it’s quite a week for some of us,” Viking Cruises Chairman Torstein Hagen said at the start of the ceremony in Avignon, where he was flanked onstage on the top deck of the Heimdal by seven godmothers and the captains of their ships.

A giant screen behind them displayed video of the four ships in Germany, and as the godmothers blessed their vessels by pressing red buttons on either side of the stage, mechanical arms holding bottles of Veuve Cliquot swung down and smashed them against each ship (windy conditions at the yard in Germany caused a little trouble with two of the bottles, but the bottles broke without incident under sunny skies in Avignon).

In the audience on the Heimdal were godmothers for seven of the nine Viking ships named in Amsterdam: Vicky Garcia, COO of Cruise Planners; Sarah Henshall, vice president of travel and branch operations for AAA Carolinas; Kathryn Mazza-Burney, executive vice president of Travelsavers; Geraldine Ree, senior vice president of sales and marketing for Expedia CruiseShipCenters; Anne Morgan Scully, president of McCabe World Travel; Pam Young, vice president of industry relations for Travel Leaders Franchise Group; and Hanh Haley, the partner of Travel Leaders Group Chairman Michael Batt.

Viking namingTwo ships, the Viking Hemming and the Viking Torgil, will be christened in Portugal on Friday.

The total includes 14 of Viking’s 190-passenger Longships delivered this year. Two delivered last year are being christened this week, as well. The two ships sailing in Portugal are 106-passenger vessels built to operate on the Duoro River.

The ship introductions means that Viking will operate 52 vessels in 2014.

Will CroisiEurope’s pricing, diversity resonate with U.S. passengers?

By Michelle Baran

InsightFrench river cruise line CroisiEurope is making a run at an already pretty crowded U.S. market with a simple concept: low-cost river cruises with a multicultural mix of passengers.

“The founder of the company had the philosophy to make this product available for the mass market,” said Michel Grimm, international sales director for CroisiEurope, which after 38 years in business recently unveiled a new website and call center devoted to the U.S. source market.

“Our pricing is very aggressive,” Grimm said, adding that an eight-day CroisiEurope river cruise including meals, open bar and excursions won’t run more than $2,400 per person.

“With these kinds of prices, we come with an offer that is very interesting,” he said.

For anyone who knows the river cruising market, that’s actually quite a deal.MichelleBaran
As a European river cruise operator, CroisiEurope hosts a mix of nationalities onboard, but the company’s executives said that for the right customer, that should be seen as an asset, not a drawback.

“This is not for people who want the safety of being with all other English speakers,” said John McGlade, director of CroisiEurope’s U.S. reservation center. “For people who want the international experience, it’s the perfect marriage.”

CroisiEurope, which is still run by the founder’s children, builds all its vessels in the same shipyard in Belgium. Building, owning and operating all its own vessels is how the company claims it can keep its pricing so competitive, a concept it is bringing to the canal barge market, as well.

CroisiEurope is also building up its own fleet of barge vessels that have a capacity of 24 guests, in contrast with many of the existing canal barges that can often only host six to 12 passengers onboard, rendering them an expensive vacation option.

One other differentiator? Building ships of different sizes that can navigate lesser-sailed inland waterways, including the Guadalquivir and Guadiana rivers in Spain, the Tisza River in Hungary and some of the smaller estuaries off of the Danube and Rhine rivers.

CroisiEurope is based in Strasbourg, France, and has a fleet of 30 ships, including several barges and coastal cruisers, which sail in France, Italy, Spain, Portugal, Germany, Belgium, Eastern Europe, the Mediterranean, Vietnam and Cambodia.