Posts Tagged ‘United States’

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.


Cruiseology 101

The Cruise Ship In Miami

The Cruise Ship In Miami (Photo credit: Stuart Herbert)

Seatrade's Cruise Shipping Miami conference is awesome!  Got some great feedback from the State of the Industry and Luxury Cruise conferences which certainly will find its way (cruise value) into this blog (cruise value).

I was introducing myself today as a "cruiseologist."  Why?  What is more memorable, "Hi I'm Dave" or "Hi, I'm Dave, Cruiseologist"?  Silly? Not really.  The marketing point is, when you have less than 1 minute to meet someone and make an impression, make it memorable.

Relax – Cruise lines can go after the spa business

In December, I posted Cruise Market Watch’s three New Year's resolutions.  One of which was to look at one specific market niche each month where cruise lines can increase penetration, grow market share and revenue.  This post is the first installment of that series.

Why look for opportunities to grow revenue from within the larger travel industry?

The cruise industry has only a 2% market share of the total vacation industry.  While ships are still going out full, the portion of repeat cruisers is up (i.e. former customers are taking advantage of the price discounts from what they paid last time).  But you can only increase past cruiser frequency so much.  That is not a sustainable model – there is a limit to the number of cruises one can take.

Nor is the best approach cannibalizing business from other cruise lines.  Or even worse, customers trading down within your own company brands from luxury to premium, or premium to contemporary.  And where will our industry be when fuel prices start to increase, severely limiting the ability to discount?

With more cruise ship capacity coming online, it is not why, but must.  Must prompt non-cruisers to try something different, of a greater perceived value than other related activities they are engaged in today.  Cruise lines have to change the game.

Ok, lets get to the meat.  Where and how?  The niche segment takeaway for the month is spa.  As the chart below illustrates, the more cruise lines can improve the perceived spa experience, the more they can enhance the price/value relationship relative to the competition, the more they will acquire share.

How much is out there?  The 18,100 spas in United States generate more annual revenue than ski resorts and nearly as much as movie box office receipts.  Of these, 77 percent are day spas, 8 percent are resort/hotel spas, 7 percent are club spas, 5 percent are destination spas, 3 percent are medical spas, 3 percent are mineral springs spas and just .3 percent are cruise ship spas.

  • The number of spa locations in the U.S. has grown at an annual average of 20% in the last eight years.

Spa Visits

  • There are more than 32 million active spa-goers
  • In 2007, there were 138 million spa visits
  • In 2006, there were 110 million spa visits


  • In 2007, $10.9 billion of revenue was generated by the U.S. spa industry
  • In 2006, $9.4 billion of revenue was generated by the U.S. spa industry

Got your attention?  My blog posts over the next several weeks will be about how to get the “spa pod” chirping. To wet your appetite: about 60% of adult men’s bodies are water; babies are born at about 78%. Its not a cruise’s spa, its a spa on a cruise and like our bodies it is in water 24/7 – seems like the most holistic, natural and organic approach to healing.

Source: International Spa Association