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.

New Seabourn Odyssey-class ship to accommodate more passengers

By Tom Stieghorst

Seabourn said it signed a contract with Fincantieri for its fourth Odyssey-class ship, to be delivered in mid-2016.

The ship, which had previously been announced, will be 40,350 gross tons and have capacity for 602 passengers.

That’s more than the previous three Odyssey-class vessels, which are rated for 450 passengers. Compared with those ships, the newbuild will have an additional deck and new, expanded public areas.

The vessel will replace capacity that will be reduced when the Seabourn Pride, Seabourn Spirit, and Seabourn Legend are transferred to Windstar Cruises in April 2014, April 2015 and May 2015, respectively.

Cruise Holidays survey: Quantum the most anticipated ship

By Tom Stieghorst

Quantum-NorthStarPod-Render.jpgCruise Holidays said Royal Caribbean International’s Quantum of the Seas is the most anticipated cruise ship due in 2014.

In a survey of 133 of its franchisees about trends in cruising next year, Cruise Holidays found that when asked which ship they are anticipating the most, the “overwhelming response” was Quantum.

Other cruise ships entering service in 2014 include the Costa Diadema, Regal Princess and Norwegian Getaway.

Cruise Holidays said that the Quantum, which debuts in November 2014, accounts for 20% of its 2015 bookings so far in 2015.

Quantum, the first in a new class of ships for Royal Caribbean, will carry 4,100 passengers and will sail year-round from Bayonne, N.J., on seven- to 12-day cruises to the Bahamas and the eastern and southern Caribbean.

The survey said the Caribbean continues to command the most bookings of any cruise region by a wide margin, with 54.8% of the total for next year. Europe as a whole remains second with 10.4%, with Alaska third at 9.1% and Bermuda next at 3.5%

River cruises were included for comparison in the list for the first time. They account for 5.7% of all Cruise Holidays bookings in 2014.