Cruise industry set for full steam ahead as nation's tourism booms

Updated: 2015-03-06 07:19

By Shi Jing(China Daily USA)

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As China's middle class continues to grow, so too does its appetite for taking a short vacation on the ocean waves, reports Shi Jing in Shanghai.

The surging growth of the Chinese cruise industry, in what is a remarkably short time, has attracted not only a rising number of local companies, but also interest from global industry leaders who are expressing their full confidence in the sector continuing to burgeon.

It was only in late 2012 that HNA Tourism Cruise and Yacht Management Co Ltd was created to become the first of its kind in the Chinese mainland. It now owns the largest cruise ship operating in the country.

In March last year, Yantai-based Bohai Ferry Co Ltd in Shandong province bought a vessel from the Italian company Costa Crociere SpA, and entered that into the Chinese market five months later.

The two companies are the highest-profile of a growing local fleet of firms now vying for business.

China's largest online travel agency International Ltd has even got in on the act, after buying its own cruise ship from Royal Caribbean International, the Miami-based firm that controls around 17 percent of the global market, in September last year - a move that changed its role from pure travel agency, to cruise line manager practically overnight.

According to the China Cruise Industry Development Report, released last year by the China Cruise and Yacht Industry Association, 466 cruise ships were operating in the country at the end of last year, a 14.78 percent rise on the previous year.

The number of individual customers walking onboard surged 43.36 percent to 860,000, a huge proportion (739,600) of which were Chinese travelers boarding ships at Chinese ports.

Shanghai Port International Cruise Terminal received 576,000 tourists last year, meaning it has already overtaken Singapore as the largest terminal in Asia, and the word's ninth-largest.

Experts said this growing confidence in the Chinese cruise industry is very much in parallel with the rise of the country's middle class.

According to the China Tourism Academy, China's middle class now makes up around 20 percent of the total working population, and that is expected to double over the next 20 years. And that growing middle class increasingly likes to travel, said Dai Bin, director of the academy.

"Outbound travel has become a lifestyle for many," he said, adding the academy recorded a 16 percent rise in the number of overseas trips made by Chinese last year, to around 114 million.

The total spending of those international Chinese travelers rose even more, by 18 percent to $140 billion, said Dai.

Clearly aware of the surging numbers involved, overseas companies have been showing unprecedented interest in the Chinese cruise market.

Drawing cruise lines to China is the prospect of $11.5 billion in sales in 2018 compared with $6.8 billion last year, the researcher Euromonitor told Reuters recently.

US provider Royal Caribbean Cruises Ltd, which operates 37 ships under the Celebrity Cruises, Royal Caribbean International, Pullmantur, Azamara Cruises and CDF Croisieres de France brands, plans to launch a service using its massive Quantum of the Seas - the world's largest and newest ship - from Shanghai in June this year, a powerful illustration if any was needed of its confidence in the market.

Last year its business in China grew more than 40 percent, after a 45 percent growth the year before. Its chairman and chief executive officer now predicts the Chinese market will contribute 10 percent to its total revenue this year, well ahead of previous estimates.

"We are thrilled, for as a company, we make profits by exceeding the expectations of our guests," said Richard D. Fain, adding he would probably consider most of its customers worldwide as very much "middle class".

"The fact that there has been such a good reception to what we do, and our guests have enjoyed that, means we expect to continue to grow."

Fain said the Chinese market is exploding like no other, and thinks that "soon there will be more middle class in China than that in US".

"We have found that Chinese people are willing to pay for something better," he said.

"Therefore, we want to make sure that our brand and the products we offer are the very best in the industry. That's why we are bringing our newest ship here."

One particularly telling observation of the global market as a whole, offered by Fain, is that cruises are very much designed to appeal a lot more to families.

The days when trips were targeted at older customers, or singles, or couples, are fast disappearing over the horizon, he said - cruising has very much become a family affair.

In China, he is also aware of the growing economic impact the industry is having. Companies are investing heavily in training, for instance, meaning more jobs being filled by better-qualified workers.

Royal Caribbean, for instance, hopes to train around 1,500 new staff in China this year, a fact that he - at a time of slowing national economic growth in the country - is delighted about. "After 45 years in the business, the secret to Royal Caribbean's success is the men and women who provide the services," Fain said.

Zheng Weihang, executive vice-president of the China Cruise and Yacht Industry Association, fully admits that a shortage of talent could create a worrying bottleneck in the development of the Chinese cruise ship industry, as it steams ahead at such a pace.

Professional staff members, specializing in management, operations, technology, navigation, services and sales are all in hot demand, he said.

Fain agreed that staffing could become a serious issue for the Chinese cruise industry, but he insisted it is far too early in its development to call it a crisis.

The Chinese market, he said, is still in its "embryonic" stages, after all. "We are planning to expand first along the coastline, and then spread inland to attract customers," he said.

"Our biggest challenge remains explaining to people here what exactly a great cruise vacation is all about, but the market is huge, and still has a long way to grow - so we are still well off worrying about the market becoming anything like full."

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(China Daily USA 03/06/2015 page17)