Posts Tagged ‘CruiseShip’

More Chinese to Go on Caribbean Cruise? What The Emerging Middle Class in China Means to Global Cruise Industry

Flickr Chinese Dragon Year Statue

Flickr Chinese Dragon Year Statue (Photo credit:

Chinese grooms did not traditionally purchase diamond engagement rings for their prospective brides. It was only 20 years ago that diamonds begin to appear in engagement ceremonies among the Chinese elite. But smart marketing campaigns and the increasing purchasing power of China’s middle class have reshaped luxury spending over the last two decades. While the United States still leads the world in diamond demand they will eventually be replaced by China (not unlike the current Olympic medal count battle). Experts in the diamond industry put that timeframe in less than 10 years.

There is a strong analogy for the cruise industry.  Consider each cruise ship as a diamond, each seeking to discover new lucrative source markets to drive growth.

Most Chinese still think of cruise ships solely as a means of transportation and favor train and airplane. But as more and more Chinese open up to the idea that “a cruise ship is actually a floating five-star resort" (aka getting there is half the fun) their perceptions of cruising are also changing. "Cruise travel is becoming the new form of tourism favored by Chinese." Last year’s cruise statistics validate this claim (made during a cruise forum in northern China’s Tianjin): International cruise destinations from mainland China in 2011 increased by around 50% compared to 2010. This means the Chinese no longer just take river cruises on Yangtze, but are looking at more exotic and sunny destinations. A Mediterranean or Caribbean cruise is likely to arouse their fancy, if their recent exodus to Maldives and Guam are a leading indicator.

Global statistics show the bulk of cruise travelers come from North America followed in (far) second place by Europe, and then the rest of the world. Between 2008 and 2012, for example, North Americans outnumber Europeans by as much as 120%, and Europeans outnumber passengers from other countries by as much as 200%. But just as Cruise Market Watch brought to readers attention back in 2008, cruise line executives are looking east and the prospects are astonishing.

Even with conservative forecasts, the implications are far-reaching. In 2009, there were only 365,000 Chinese who went cruising (compared to 110,000 in 2008), a mere fraction of North America’s 12 million plus. But the world totals are likely to begin to skew in favor of the Chinese in coming decades if their luxury spending trends and evolving perception of cruise travel is any indication.

Forecasts on the high end have placed China’s outbound tourists to 300 million (all modes of travel).  This is roughly equivalent to an entire continent’s (North America or Western Europe) population.

Despite the glimmerings of economic recovery felt in leading source markets, the cruise industry as a whole will only see a relatively modest jump in cruise passengers in the next five years. Analysts predict that the economies of North America and Europe are likely to remain sluggish, and this translates to slower growth in consumer spending, especially on non-essential goods and services.

Looking at present statistics (20,135,000), the compound annual growth rate (just a little below 8%) will only result in about 28 million passengers in 2018, a mere 9.3% of China’s potential cruise passengers of 300 million.

The rough stone is ready to be cut into a faceted gem.  Cruise traffic going to China, which was only 750,000 in 2011, is also likely to increase. The Seatrade All Asia Cruise Convention descended on Shanghai in 2010 for the second time to open up Asia to international itineraries. China tops the list because of its touristic appeal: It has varied geography, a 4,000-thousand-year-old history, staggering archaeological discoveries and a huge population with immensely diverse regional customs and beliefs.

All these exciting developments mean one thing: China’s dragon is ready to breathe new fire into the cruise industry. All the cruise industry has to do is fan the flames.


Are small ports the new Saint Graal for the cruise lines?

The Port of New Orleans has a cruise line term...

The Port of New Orleans has a cruise line terminal that accommodates cruise lines such as Carnival, Norwegian, and ACCL. (Photo credit: Wikipedia)

The cruise industry is often defined as a niche to the global tourism industry. The reason is that, in contrast with other branches of the tourism sector, the cruise industry is mostly driven by supply and not by demand. In fact, cruise lines make profit by providing more capacity (ships) and itineraries.

However, these are only two of the marketing strategies that cruise lines use to increase profits. Experts in this industry know that the cruise prices fall when too many ships are positioned in the same port/area. How to overcome this problem?

In recent years, an interest has arisen in small/local ports as a possible way to attract a new typology of cruisers. “Off beat” ports are synonym of “new”, “less crowded” and “interesting”, and everyone wants to feel special, even when choosing a mass type of vacation such as a cruise.

This is evidenced by comparing 2011 and 2012 PortPulse rankings.  Notice in the table below the percentage of unique sailings has increased by double digits in smaller ports (ranked 101 and higher) compared to the low single digits in the largest ports (ranked 1-100).

But why is it problematic for cruise lines to add small/local ports to their itineraries?

Features of ship ports and problems concerning small ports

Experts in the cruise industry claim that this business is not about destinations but about itineraries and routes. Hence, it’s understandable that, to be taken into consideration, small ports have to be in the right circle route. Given that cruise ships can cover 200 nautical miles per night, the small ports need to be within this distance parameter from other big and known ports.

Moreover, small ports are required to present a not very deep draft, which is a necessary condition for the cruise ships’ mooring, together with other specific technical features.

From the point of view of the port profile, small ports often don’t offer the same quantity of local amenities of bigger ports. When booking a cruise, cruisers not only look at the on-board activities, but also and mostly at the excursions available on the locations of the cruise itinerary.

However, the most challenging of the issues are the concerns that can arise as regards to the impact of cruise tourism on the existing economic and environmental resources. Even when economic projections confirm a potential economic growth of the sea area, strong protests can be held against the cruise companies. This is often the case in areas where most of the citizens work in the fishermen industries. Concerns range from water pollution, which may affect the fishing activity, to the changes to the historical and cultural assets of the area.

A new era for the cruise industry?

Even though little-known ports require a challenging plan of promotion, many cruise lines have focused on this aspect to increase their profits.

2011 saw some interesting statistics as regards to the cruise lines that have added less-explored ports to their itineraries, especially in North America.

Would this strategy also be applied to other areas of the world? For example, refer to the table below focused on the port of Benoa, Bali.  As illustrated by passengers sailed, it has moved up the PortPulse rankings from 623rd in the world in 2011 to 394th in the world in 2012.

And which cruise companies would mainly adopt this strategy? The answer is in the cruisers’ hands.