Quantum’s China deployment reflects a new economic reality

By Tom Stieghorst
Shanghai, future homeport for QuantumThe decision to make Shanghai the home for Royal Caribbean’s Quantum of the Seas has immediate implications for U.S. travel agents who had been looking forward to selling the ship’s originally scheduled cruises from South Florida and New Jersey.

The Shanghai deployment is the clearest sign yet that the U.S. and Europe will have to compete for the future attention of a cruise industry they’ve grown accustomed to thinking of as their own.

“We were in a two-theaters-of-operation mode for the last 20 years,” said Adam Goldstein, president of Royal’s parent company, Royal Caribbean Cruises Ltd. “Now, its North America, Europe and Asia-Pacific.”

In addition to China, Australia is getting strong support from North American cruise companies.

Lisa Lutoff-Perlo, Royal Caribbean’s senior vice president for operations, said the plan had always been an Asia deployment for one of its upcoming ships.

“We have clearly accelerated that with the decision to send Quantum to Asia,” she said.

In its announcement, Royal Caribbean said Quantum would sail year-round from Shanghai on three- to eight-day cruises to Korea and Japan.

Details about the itineraries will be available in a month or two, said Christopher Allen, Royal Caribbean’s assistant vice president of global deployment and itinerary planning.

Goldstein said the Chinese market has evolved from being in research-and-development mode to one that is contributing to the company’s profitability.

He said that even without the ability to sail to Japan from China, due to political tensions between the two countries, 2013 was a profitable year for China-sourced business.

Royal Caribbean has been sailing the Voyager of the Seas and Mariner of the Seas from China. Although the addition of the 4,200-passenger Quantum will increase Royal Caribbean’s capacity in the market by 66%, Goldstein said he’s confident it will sell.

“This year, there’s more of a desire by [Chinese] travel agents and tour operators to go to Japan,” he said.

China has grown at a blistering pace, as has its outbound tourism, Goldstein said. “The Chinese have a very strong belief that they have emerged as an economic powerhouse,” he said, adding that the feeling they should be at the forefront of every industry comes along with that.

Goldstein said that the tourist experience in Singapore, Hong Kong, Macau and Shanghai is world-class, so the positioning of a top-of-the-line ship there is seen as only natural.

Although he has said several times that Caribbean countries need to take heed of the global competition for ship calls, Goldstein said the Quantum announcement was less a reflection on the Caribbean market than a sign of the new world economic order.

Quantum of the Seas under constructionThat order might not be good news for U.S. travel agents, who typically profited from the power of a line’s newest ship to fill fast and command premium prices.

U.S. agents, particularly those in South Florida, benefited from that effect when Royal Caribbean introduced its last new Oasis-class vessels, the Oasis of the Seas and Allure of the Seas, based in Fort Lauderdale.

The move of the Quantum to Asia means a new lineup of Royal Caribbean ships in important East Coast ports.

After the Quantum leaves New Jersey in May 2015, it will be succeeded by the Liberty of the Seas until November.

The Anthem of the Seas, which will debut in the summer of 2015 doing European cruises from Southampton, England, will then take up the New Jersey routes to Bermuda and the Caribbean.

Vicki Freed, senior vice president of sales, trade support and service, said she had already heard from some agents in the Northeast U.S. who want to have clients sail on all three New Jersey-based ships in one year.

“They feel like they’re getting the trifecta,” Freed said.

But Fort Lauderdale, which had announced itself as the winter home of the Anthem, will have to make do with the Navigator of the Seas, along with its monopoly on the Oasis-class ships.

Royal Caribbean officials took pains to say that New York, South Florida and China are all important markets. As Royal Caribbean becomes more global in its deployment, the key will be to strike the proper balance, said Lutoff-Perlo.

“North America is always at the forefront of everything we think about because it is such an important market for us now. Always has been and always will be,” Lutoff-Perlo said.

One area that has lagged in Royal Caribbean’s deployment is the U.S. West Coast, particularly Los Angeles. Freed said that the line hoped to be back one day, but noted that itinerary options were somewhat limited.

Allen added: “I think that that’s a market we will continue to review and continue to look at the opportunities, and when the time is right we’ll be excited to come back to the West Coast.”

The decision to move the Quantum to China shed new light on the announcement of “Dynamic Dining,” which eliminates the main dining room on the Quantum for five smaller, alternate dining venues, a style more in tune with Asian preferences.

Lutoff-Perlo said that during a 50-day repositioning cruise from New Jersey to Shanghai in 2015, workers would modify the retail, gaming and galley areas of the ship to adjust for Chinese tastes.

She said that a press conference in Shanghai to announce the Quantum’s commitment to China was heavily attended and lasted a long time.

“The world is changing. How our ships are sourced is changing,” Lutoff-Perlo said. “The fact that these ships are popular all over the world is much different now than it has been in the past.”

Quakes Spark Volcano Alert in Canaries

Quakes Spark Volcano Alert in Canaries

The Spanish government have issued a yellow alert following an increased level of persistent seismic activity, described as an “earthquake swarm”. The epicentre is on the island of El Hierro – the smallest of the Canary Islands, to the west of Tenerife and Gran Canaria. The island, popular with tourists, has seen over 8,000 tremors in two months, 150 since yesterday and experts fear an eruption could happen imminently.

Around 10,000 people live on the 108-square mile island and 53 people have been evacuated from their homes so far following landslide fears. However, a mass emergency evacuation is now possible with the army on standby for helping out in such an event and residents preparing to flee.

The British Foreign Office advises: “The local government authorities have raised the risk level of a volcanic eruption from green to yellow and taken preventative measures in case of a volcanic disruption, deploying extra resources from the military and emergency services to the island. Local authorities are also on stand-by to effect an evacuation should this become necessary.”

Fortunately, no cruise ships are due to call at El Hierro, but there are several scheduled to call at neighbouring islands over the next few weeks.

Ships visiting include Independence of the Seas, Adventure of the Seas and Mariner of the Seas, Silver Spirit, Ventura, Queen Mary 2, Costa Deliziosa, MSC Melody, HAL’s Ryndam and Boudicca, Black Watch and Balmoral.

A volcanic eruption has not taken place on any of the Canary Islands since Las Palmas in 1971 but an expert has warned that an eruption on El Hierro could take place in, “days, weeks or months,” according to Tom Worden of the Mail Online. Juan Carlos Carrecedo said, “There is a ball of magma rising to the surface producing a series of ruptures which generate seismic activity. We don’t know if that ball of magma will break through the crust and cause an eruption.”

A spokeswoman for Royal Caribbean said: “We are currently monitoring the volcanic activity on El Hierro to ensure guests enjoy a safe and comfortable cruise. At this time, Independence of the Seas and Adventure of the Seas are still scheduled to make all of their ports of calls. The safety of our guests and crew is always our foremost concern.”