TOKYO -- Maritime shipper Nippon Yusen will order a second cruise ship, Nikkei has learned, as luxury travel demand grows among affluent seniors in Japan, with plans to put it in service as early as the mid-2020s.
Construction costs are expected to reach up to 60 billion yen ($541 million). Nippon Yusen's well-known cruise ship, the Asuka II, will be taken out of service temporarily for repairs but will continue to operate after the new vessel sets sail.
Nippon Yusen considered expanding its cruise ship fleet before, but a slump in its mainstay freight operations scuttled those plans. Now, with the high-end travel market picking up in Japan, the Tokyo-based company is moving ahead.
The number of Japanese guests on overnight cruises jumped 27% in 2017 to a record 315,000, according to the tourism ministry. Foreign players like Princess Cruises of the U.S. operate megaships out of the country.
An increase in affluent consumers is brightening the market outlook. Japan had 1.26 million households with net financial assets of at least 100 million yen in 2017, up 26% in four years, according to the Nomura Research Institute.
Railways are adding more luxury sleeper trains. East Japan Railway rolled out the Train Suite Shiki-Shima, an opulent sleeper, in 2017, and West Japan Railway brought its luxury sleeper, the Twilight Express Mizukaze, into service the same year. Despite costing over $4,500 per traveler, the services are popular and hard to book.
Against this backdrop, Nippon Yusen decided to expand its cruise fleet. The cost of construction varies depending on how crowded shipyards are. In the current market, the cost to build a cruise ship is estimated at between 50 billion yen and 60 billion yen. The company is closely monitoring market trends for the best time to place the order.
The Asuka II was built in 1990 by Mitsubishi Heavy Industries. Nippon Yusen is now considering foreign builders as well.
The plan is to make travel on the older ship cheaper so as to set the new ship apart. The company will target young families in addition to the wealthy.