Jul 13, 2015 · News

The Siren call of China

A market with double-digit growth is irresistible to companies that want to enjoy the same.

It’s why Royal Caribbean is bullish on Asia and, in particular, China.

The cruise line has opened offices in Shanghai, Beijing, Guangzhou and Hong Kong. By mid-2016, five of its ships – including two of its newest and most technologically advanced vessels – will call Chinese ports home.

Already the largest cruise industry presence in China, Royal Caribbean is staking its claim on the business potential of a growing middle class that, Chairman and CEO Richard D. Fain has noted, makes the American Baby Boom “pale” by comparison.

A recent study commissioned by Cruise Line International Association (CLIA), the industry’s largest trade group, found double-digit growth in the number of cruise ships, passengers and ports in Asia since 2012.

Specifically, 1.4 million Asians vacationed on cruise ships in 2014, a compound annual growth rate of 34 percent since 2012.

From then until 2014, the number of Chinese cruise guests grew 79 percent per year, with 697,000 passengers from mainland China in 2014, just shy of the total from all other Asian markets combined.

Most of those engaged in outbound travel were from China’s acquisitive and inquisitive Generation Y, those younger than 35. The study found this trend to be largely true in Asia on the whole, where in four of the largest cruise markets – China, Malaysia, Indonesia and the Philippines – 4 out of 10 passengers were under age 40.

Cruise industry capacity in Asia was found to have grown at a 20 percent compound annual rate since 2013, with a total of 2.2 million passengers projected for this year.

The study also noted that while “Asian outbound tourism is exploding around the world,” by far most Asian cruise passengers – 9 out of 10 – chose Asian destinations.

“It is exciting that, for the first time, we know the true size of Asian source markets and have been able to extend our understanding of Asia’s cruise industry growth and potential,” says Adam Goldstein, president and COO of Royal Caribbean Cruises Ltd., who also serves as CLIA global chairman. “2015 will be a record-breaking year in Asia with more travelers cruising the region than ever before.

“The cruise industry is responding by offering more cruises with experiences tailored to Asian travelers as well as enticing international travelers with an easy way to visit Asia’s array of fascinating destinations.”

That tailoring includes more short cruises. The CLIA study also found that, because many Asian guests have limited vacation time, 48 percent chose 4- to 6-day cruises in 2014, 38 percent cruised for 2 to 3 nights, and only 12 percent spent 7 to 13 nights at sea before returning to their jobs.