Asia cruise market prediction: 7M passengers a year by 2020

By Tom Stieghorst

HONG KONG -- By the end of the decade, Asian passengers will account for one in every five cruisers, about double the ratio today, Carnival Asia head Pier Luigi Foschi predicted at a cruise forum here.

Foschi said the snowballing growth in Asia will deliver about 3.7 million passengers a year by 2017 and about 7 million by 2020.
By comparison, the Asia Cruise Association said that about 1.7 million Asian passengers cruised in 2011, or about 10% of CLIA's estimate of 16.4 million passengers globally for that year.

Foschi's forecast quantifies Carnival's view of the oft-discussed "potential" in cruising from China and other Asian countries. "The bulk of the real growth will be from China," Foschi said.

Carnival Corp. Chairman Micky Arison said in December that new Asia deployments for one or more Carnival brands will be announced by April.

Carnival last week announced plans to open a sales office for Princess Cruises in Hong Kong, where officials are getting ready to open a large cruise terminal in June.

Princess also announced it will deploy a second ship in Japan in 2014 to offer summer cruises. The 2,670-passenger Diamond Princess and the 2,022-passenger Sun Princess will offer 42 cruises to 20 Asian ports next year.

The Seatrade Hong Kong Cruise Forum, held here, and where Foschi delivered his remarks, gathered several hundred Asian port directors, cruise line deployment executives, and shore excursion managers. The four-day conference explored cruise prospects for Hong Kong in light of China's growth and the opening of a new cruise terminal in Hong Kong later this year.

Zinan Liu, chairman of the Asia Cruise Association and a regional vice president for Royal Caribbean, said Royal Caribbean International currently has the most tonnage dedicated to Asia.

In a chart presented at the Seatrade Hong Kong Cruise Forum, Liu put Royal at 276,000 gross tons, followed by Star Cruises at 259,749 tons and Costa Cruises at 160,785 tons.

Having determined to put bigger ships in Asia, the question for the cruise lines is how to precisely tailor a cruise that satisfies Asian tastes, said John Tercek, vice president for commercial development at Royal Caribbean.

"We are in a bit of an experimental stage," Tercek said."The potential is fantastic, but it's a question of what do the local clients want to do, and can we accommodate it?"

One clear preference in Asia is for shorter cruises of five days or less. That makes cruises offered to Asians distinct from cruises offered in Asia to North Americans and Europeans, which tend to be 12 to 14 days or longer.

Other differences are more subtle. For example, Tercek said beach-going is a core interest for North American cruisers. But on cruises from China, Royal is skipping beautiful beaches in Vietnam because Chinese guests tend not to enjoy harsh sunlight.

Other cruise lines are also making trial-and-error discoveries. Princess Cruises expected its cruises in Japan later this year to draw mainly Japanese guests. But enough Americans and Europeans have booked the cruises that Princess has added English-speaking tour guides for its shore excursions, said Bruce Krumrine, a Princess vice president.
Foschi said challenges to growth in Asia include misperceptions about what cruises are, lack of distribution, late booking, competition from cheap land vacations and a strong seasonality that causes swings in net revenue yields.

Regional disputes are also a threat. Last year, China granted a permit to extend cruises between Hong Kong and Taiwan to Japan, making them much more attractive.

But the current tension over an island in the East China Sea that China and Japan both claim is making it hard for Royal Caribbean to take advantage of the permit, Liu said.

"These are ongoing business problems that unfortunately will come to us again and again," he said.

The lack of destination ports with the capability to handle big ships may be the biggest challenge. Liu said there are some 80 potential cruise ports in Asia.

But most lack the capacity to dock large cruise ships. Royal's decision to add the 3,100-passenger Voyager of the Seas to Asia should begin to change that, Tercek said.

"Wherever we take that ship, others follow because we cause the infrastructure to be built," he said.

If not, cruise lines could become partners in port developments as they have occasionally in the Caribbean, Tercek said. But to make it work, he said a port has to have the potential to attract several hundred thousand guests and be unable to proceed without outside help.

"It really isn't our first option ever," he said.


 

For itinerary planners, Hong Kong is a challenge

HONG KONG -- Cruise deployments in Asia tend to be seasonal. In the summer months, ships sail from northern China ports such as Shanghai and Tianjin to a cluster of destinations in Northeast Asia, mainly South Korea and Japan.

In the winter, cruises operate in Southeast Asia, especially from Singapore, which has just opened a new cruise terminal. From there, itineraries to Thailand, Vietnam, Indonesia, Malaysia and Myanmar are possible, along with cruises south to Australia and New Zealand.

A port such as Hong Kong, which plans to open a large new cruise terminal later this year, falls in between.

Participants at the Seatrade Hong Kong Cruise Forum said that until now, Hong Kong has been primarily a place for transitional cruises as ships migrate from north to south in the fall and back the opposite way in the spring.

Hong Kong is within easy reach of Taiwan and Vietnam, but other destinations are hard to serve on the short, four- and five-day itineraries that tend to be most appealing to Chinese and Asian tourists.

"In terms of where can we take the guests and where can we visit, it's fairly limited," said John Tercek, vice president of commercial development for Royal Caribbean International.

Another issue for cruises is the distant spacing of ports in Asia at a time when cruise lines want to cruise slowly to save fuel. "We're trying to bring down our average speed," said Mike Pawlus, director of itinerary planning at Silversea Cruises.

That makes it harder to design itineraries that meet the Asian need for short vacations.

"It's a big ocean, there are large seas here and great distances between ports," Pawlus said. -- T.S.