Content library

Jun
2015

Luxury cruising

5527010_212222290125_2

With the rapid improvement in national living standards and the increased demand for tourism, joining a cruise has become a new vacation choice and way to relax that is increasingly favoured by Chinese nationals; currently demonstrating a 30% -50% annual growth. According to government data, in 2013, ports in Mainland China handled 422 cruise ships and 620,000 cruise passengers, an increase of 48% and 87% respectively over the previous year.

Taking Shanghai which is China’s first cruise homeport city as an example, in 2013, approximately 600 passenger ships either departed from or sailed to Shanghai (including ships from Hong Kong), an overall increase of 33%, of the total nearly 400 were cruise liners, representing a substantial increase of 61%. A total number of 1.18 million ship passengers and staff passed through the Shanghai Entry-Exit frontier inspection point to either go aboard or enter China, an increase of 122% over 2012.

In addition to Shanghai Port International Cruise Terminal, the city also has the Wusong Passenger Transport Center, another international cruise homeport. The two cruise terminals together make Shanghai China’s largest and busiest cruise port. Royal Caribbean Cruises, Costa Crociere, Star Cruises and Princess Cruises have invested here and moved six cruise liners to Shanghai and set Shanghai as their homeport to provide cruising tourism to Chinese consumers.

The attraction of a cruising vacation has changed the way many Chinese view the way they spend their holidays, and the cruise companies have spotted this popularity and introduced more cruise routes to retain the consumer interest.

According to the Shanghai immigration authorities, during the 2013 spring festival period, the Sino-Japanese passenger liner ‘New Jianzhen’ was the only ship to leave the country from Shanghai and was carrying about 100 passengers and crew to Japan during that period. By contrast during the same period in 2014 the cruising market was booming. 4 cruises including ‘Ms.Deutschland’ from Germany, ‘Costa Atlantic’ from Italy, ‘Explorer’ from the Bahamas and ‘Suzhou’ from China. Over 9,000 passengers and crew travelled from Shanghai, 90 times that of the previous year creating a new record for Shanghai.

The attraction of cruising is not only in the south of China, in north people also enjoy this type of holiday. Tianjin port developed rapidly in 2013, handling a total of 70 cruise ships and 250,000 passengers, an increase of nearly 100% over 2012.

A history of cruising in China

Shanghai was the first Mainland Chinese city that received international cruise ships in the 1980s. Since 2000, with China’s economic development, the number of international cruise ship arriving in Mainland ports started to increased. By 2005, international cruise ships docked in Shanghai, Tianjin, Qingdao, Dalian, Ningbo and Xiamen ports 40 times.
In 2006, 15 international cruise ships docked more than 70 times in Mainland ports, and the developing China cruise market started to attract the attention of international cruise companies. In July that year, Costa Crociere became the first international cruise company to establish a homeport in China, operating its first cruise route from Shanghai as its homeport and establishing an important milestone of China’s modern cruise industry.

In April 2008, Royal Caribbean Cruises established the homeport for its ‘MS Rhapsody of the Seas’ as Shanghai offering six cruise routes traveling between China, Japan and South Korea.

In May 2014, Princess Cruises, which belongs to the world’s largest tourist company Carnival, started business in China bringing its ‘Sapphire Princess’ cruise liner to China, aiming taking a strong position in the Shanghai market and offering routes from China to Japan and South Korea.

In order to develop this emerging market, many other international cruise companies have turned their focus to China by setting Shanghai, Sanya or other Mainland coastal cities as one of the destinations on its cruise routes. Predictions by the World Tourism Organization claim that Mainland China will become one of the world’s largest tourism destinations and attract more international cruise ships than any other by 2020.

Market trends

The modern cruise industry in China can be broadly divided into the following three development periods

Stage 1

  • Time: 2006 – 2010
  • Main business: Serving cruises arriving from overseas international ports
  • International cruise handling expanded continuously. The influence of the Beijing Olympic Games and the World Expo, meant many large foreign cruise companies started to increase ports in China on their routes.
  • During this period, most of China’s major coastal cruise terminals were planned. Some were built rapidly and have been put into use, and as a result, the port reception capacity for international tourists and respective service levels have improved. The domestic consumer demand for cruising was still in its infancy and the individual cruising market has just started to be noticed.

Stage 2

  • Time: 2011 – 2015
  • Main business: Arrival cruise services and Chinese outbound cruise services.
  • At this stage, the number of international cruise ships arriving in China continues to increase, and the passenger handling quality continues to improve. More and more large international cruises companies enter China and start to open up more Chinese homeport routes.
  • Driven by the increasing popularity of cruise tourism and the relaxation of immigration approval policies, more and more Chinese people begin to accept and to choose a luxury cruise to travel abroad particularly in the Asia-Pacific region. The first outbound cruising rush may be about to happen and we expect to see an increase in round the world cruises for the Chinese.

Stage 3

  • Time: 2016 and beyond
  • The Chinese cruise industry matures.
  • At this stage, luxury cruise ship services in China will approach current international levels, and international cruising for Chinese consumers will become a part of their lives. The number of domestic cruise tourists will increase substantially, and regional and universal cruising markets will grow gradually. Chinese crew at all levels will work on cruise liners, and domestic cruise fleets will also begin to develop.

Chinese home-ports

In 2006, the first Chinese cruise homeport, the Shanghai Port International Cruise Terminal was built on the North Bund in Shanghai, currently there are four Chinese international cruise homeport cities: Shanghai, Tianjin, Xiamen and Sanya, which serve as originating cruise ports. In addition, Qingdao, Ningbo, Zhoushan, Shenzhen, Guangzhou, Zhuhai, Dalian and other cities have also announced cruise terminal construction planning, the plan to capture the cruise market when it is in full swing.

sf

Government policy

Policies that support the industry

The Ministry of Transportation published the ‘Guiding opinions on promoting the sustainable and healthy development of China’s cruise transportation’ on March 18th 2014. According to opinion, cruise transportation development 5-year planning is as follows:

By 2020, there will be a significant increase in number of cruise routes in Northeast Asia, Southeast Asia, the Taiwan Straits and South China Sea islands.
By 2020, the coastal cruise transportation market will be in its initial development stage and the number of cruises passengers will grow rapidly.

In 2020, the total number of Chinese cruise passengers is expected to reach 4.5 million, with an average annual growth of 33%compared to 2013.

In 2020, China is expected to become the most dynamic and largest cruise market Asia-Pacific region.

It is expected that China will establish 2 or 3 globally influential cruise homeports by 2020.

A cruise management EMBA

Xiao Guiyu, the Deputy Secretary-General of the Shanghai Government, announced on February 27th 2014 that because of the development and sustainability of the international cruise industry, the development of the cruise economy is becoming an important factor for Shanghai as an international shipping center. He also stated that the government will promote cruising personnel training, as part of the development.

In response to the government, Shanghai Advanced International Maritime College has started to offer Cruise Management EMBA classes, aimed at promoting the cruise industry and training, and to deliver professional management personnel for both domestic and foreign cruise companies.

It is believed that there will be increasing numbers of education academies in China that will establish courses for cruise related major degrees in order to tap into the development of China’s cruise industry in future.

72 hours Visa-free

A 72 hour visa-free stay for international tourists policy took effect at Shanghai airport in 2013 and it is rumored that the policy is expected to be extended to cover the 2 cruise terminals in Shanghai during the second half of 2014. If this policy is actually implemented, it will bring more cruise ships to Shanghai in future.

Cruise competition

Costa Cruises

In 2006, after the Shanghai Port International Cruise Terminal was put into use, Costa became the first international cruise company to enter China, and it brought the ‘Costa Allegra’ to China, set Shanghai as its homeport sailing from Shanghai to Korea and Japan.

In 2009, their second ship, the ‘Costa Classica’ arrived in China and started sailing from Shanghai, Tianjin and Hong Kong.

In 2010, the ‘Costa Romantica’ took its maiden voyage by sailing from Tianjin to celebrate the official opening of the Tianjin International Cruise home port. Costa Cruises operated 68 voyages that year.

In 2012, the ‘Costa Concordia’ ran aground in Italy which triggered fears of cruising amongst Chinese tourists.

In 2014, Costa launched the first round the world cruise departing from Shanghai, on March 1st 2015.

Royal Caribbean Cruises

In 2008, Royal Caribbean International Cruises officially entered China, providing originating cruise vacation routes from Shanghai and Hong Kong.

In 2010, the ‘Legends of the Seas’ started to sail from Tianjin for the first time. The company expanded and invested in the North China tourism market. 25,000 Mainland Chinese consumers took Royal Caribbean cruises that year.

In 2011, the ‘Legends of the Seas’ returned to China and set Shanghai, Tianjin and Hong Kong as its homeport completing 35 voyages to Japan, Korea, Taiwan, Vietnam, Singapore and Russia.

In 2012, the ‘Voyage of the Seas’ arrived in China. The company received a total number of 100,000 Mainland tourists.

In 2013, the ‘Mariner of the Seas’ arrived in China and established homeport routes. On September 6th 2013, the company received its 300,000th Mainland consumer since entering China in 2010.

In 2014, Liu Zinan, Vice President of Royal Caribbean Asia expected the company to take 70% of the China cruise market and announced that the company planned to move the ‘Quantum of the Seas’, one of the world’s top 10 luxury cruise liners to Shanghai in 2015 and establish Shanghai as its homeport.

Star Cruises

In 2002, Star Cruises operated the first passenger liner from Xiamen to Hong Kong and the second passenger liner from Shanghai to Hong Kong.

To take the advantage of its Hong Kong base, Star Cruises set Hong Kong as the homeport for most of its ships and cooperated with a Mainland travel agency to bring consumers to Hong Kong via plane before boarding them on a cruise tour.

Since 2011, Star Cruises has started seeking homeports in Mainland China the company has operated a variety of routes from Mainland city homeports such as Shanghai, Xiamen and Sanya, but these have not been permanent.

Princess Cruises

In 2014, Princess Cruises entered the China market and bring the ‘Sapphire Princess’ that operates from Shanghai as its homeport providing a 3 to 5 day voyage to Korea and Japan, aiming at capitalize on the high-end cruising market in China.

High-end cruises that set cities in China as its homeport in 2014, price and schedule

sf1

Consumer attitudes

To Chinese people, Cruising is a new way of travelling. Although more and more of them are willing to experience cruising over the past few years, a change in general travel habits can only be nurtured slowly. In the west, European and American tourists may take a cruise travel 3 to 4 times per year, but Chinese tourists are cruising once every 3 to 4 years in general.

Attracting Chinese tourists after the first novel cruise experience becomes a challenge for many cruises operators.

The first thing that should be noted is the difference in culture, consumer behavior and preferences between Chinese and Western consumers.

In the general design of a western cruise, there will be a lot of small, but exclusive restaurants and bars on board. The number of free buffet type restaurants that just aim to fill one’s stomach is limited.

Chinese people like free buffet restaurants! Cruise travel is expensive compared to taking cars, trains or flights, and consumers are reluctant to spend more during the cruise. As a result, it might not unexpected that free restaurants will be full of Chinese consumers other than mealtimes, even at midnight. In fact it’s quite the opposite, expense restaurants are almost empty and the free buffet restaurants are packed.

The cruise companies that don’t understand the culture and haven’t made the necessary changes suffer, the result is a bad experience for consumers which will impact on the next voyage booking.

In terms of spending habits, apart from buying tickets, the Chinese guests rarely spend on board. Bars, playgrounds and other PAYG facilities that are popular from a western perspective hardly ever cater for Chinese people. However compared to the culture of the west, the Chinese are very willing to exhaust their budget in the duty-free stores on the ship.

By way of example, the cruise liner ‘Henna’, operated by the Carnival Group and recently purchased by China HNA Group, boasts seven bars on board but only one duty-free shop, which is small and not well stocked. Many passengers complained about this issue after the cruise and created poor PR for the operator. They don’t want to spend more money in the bars, and would rather buy gifts.

The cruise voyage design is also an important factor needs to be carefully considered. The most common complaint from Chinese passengers is that the time from when the liner docks and then leaves is too short.

Sapphire Princess is sailing from its homeport Shanghai to South Korea in 2014. Over the five-day voyage, the ship will visit 3 ports, the average docking time for each port is about 8 hours and the shortest is only 5 hours.

European and American travelers may be to take a cruise to enjoy leisure time throughout the voyage, but for Chinese passengers who hope to rush to more places in every country the ship visites to make a best value of the ticket!

Most cruise companies are European or American, and language is a major issue. Although more and more of the crew are able to speak some Chinese these days and the operators are making greater efforts in the recruitment of Chinese staff, the number of Chinese speaking crew still can’t meet the explosive needs in China market.

Chinese travel habits are a further problem. A cruise usually takes a long time, and most of the time the tech savvy and chatty Chinese have no mobile phone signal. They are also reluctant to pay to participate in entertainment on board. Therefore, operators face a challenge of how to provide a free appropriate entertainment for Chinese tourists, and avoid them becoming homesick and bored?

Adapting to the preferences of Chinese tourists, most brands have made modest reforms and upgraded their ships. Within the ‘Mariner of the Seas’ belonging to Royal Caribbean, the company turned 2 bars into 2 duty-free stores and built several private VIP boxes in some of the amusement areas. After the refurbishment, passengers can now buy Burberry, IWC and other luxury brands along a 100 meter shopping street.

Taking advantage of their Hong Kong base, Star Cruises are providing different authentic Chinese food choices in their restaurant, cafeteria and via room service while still maintaining the authentic Western food. The company also hired a large number of Chinese speaking staff.


Top