February 14, 2017 6:00 pm JST

Cruise line operators see gold in China

Chinese tourists on lookout for experiences other than shopping

SHINYA ABE, Nikkei staff writer

The Hong Kong-based Genting Dream began operating in November.

HONG KONG -- The world's leading cruise line operators hope China becomes a major revenue source.

So they are focusing on the country's growing middle class, looking for customers who can make up for the stagnant and mature American and European markets.

Carnival, the leading cruise operator, last fall placed an order for two 130,000-ton cruise ships. The order went through a joint venture set up by China State Shipbuilding (CSSC) and China Investment Corp., both state-owned. A joint venture between CSSC and Italian shipbuilder Fincantieri will build the ships, with the first one scheduled to be handed over to Carnival in 2022.

The ships are intended to meet demand for domestic trips by Chinese tourgoers. Chinese cruise lines mostly cater to tourists who want to go on overseas trips. 

Carnival, based in the U.S., hopes to attract new customers by establishing a Chinese cruise ship brand that is accessible to the middle class and incorporates Chinese companies' know-how.

Carnival also plans to expand its mainstay overseas trips. The Majestic Princess, a 140,000-ton cruise ship built for the Chinese market, is to make its debut in April. The luxury ship will be able to carry some 3,600 passengers and is designed to suit Chinese tastes. One attraction will be a famous Chinese restaurant.

Alan Buckelew, Carnival's chief information officer, said the company hopes to also attract wealthy Chinese cruisegoers.

In November, Malaysian resort operator Genting launched Genting Dream, a 150,000-ton cruise ship based in Hong Kong. The ship has a large theater, swimming pool and casino, among other attractions. It takes Chinese passengers on tours of Vietnam. It also offers weekend cruises around Hong Kong.

It is the first large cruise line based in Hong Kong. The company expects residents of Guangzhou and elsewhere in southern China to take its tours.

Genting plans to invest 3.5 billion euros ($3.7 billion) on 10 more cruise ships and take on Western rivals by boosting the number of Asia tours.

Royal Caribbean Cruises, the world's second-largest cruise operator, is also trying to cash in on growing Chinese demand. Since 2015, the American cruise company has been operating a large ship on a regular basis out of Shanghai. Last year, it launched another liner, Ovation of the Seas, which counts Tianjin among its major bases. Ovation of the Seas is one of the largest cruise ships in Asia, weighing 160,000 tons. Passengers are kept entertained by Las Vegas and Broadway shows.

Michael Bayley, president of Royal Caribbean International, the subsidiary responsible for the ships' operations, pointed out that it is necessary for cruise operators to continue offering new value to Chinese customers.

According to Cruise Lines International Association, some 986,000 Chinese took cruises in 2015, 4.6 times as many as in 2012. They accounted for about half of all Asian cruise passengers in 2015.

Chinese tourist habits seem to be changing. Once known for their bulk buying binges in Japan, vacationing Chinese now seem to be looking for experiences.

Cruise operators, meanwhile, are in something of a war to offer the best facilities, the latest entertainment and world-famous restaurants.

Japan receives the highest number of port calls by cruise lines in Asia. Most of the boats carry Chinese travelers. As more cruise ships include Japan in their tours, local economies will likely benefit.

However, most Japanese ports are designed for cargo ships; few can welcome cruise ships. Japan will have to work to develop passenger terminals and other infrastructure to meet the expected demand.

Asia300

Genting Bhd.

Malaysia

Market(Ticker): KLS(3182)
Sector:
Industry:
Consumer Services
Casinos/Gaming
Market cap(USD): 8,641.32M
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