Cruise cools to China

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By Tom Stieghorst
The cruise industry’s gold rush to China, if not over, has entered a new phase: For the first time in at least four years, cruise capacity in China will not grow in 2018.

That means that the focus and management attention that has been lavished on the world’s most populous country may now be turning elsewhere.

To hear evidence of that, listen to the list of places that Norwegian Cruise Line Holdings CEO Frank Del Rio reeled off when asked if he’s ready to put the second ship in China.

“We have many other either unserved or underserved markets that we would also consider in the mix, should ships become available to us,” Del Rio said in response to a question from a Wells Fargo analyst. “We don’t have a presence in the mid-Atlantic states. We’re not in Baltimore. We’re not in Charleston. We don’t have a presence at all in the world’s second-largest port, which is Fort Lauderdale. We don’t have a presence in the Gulf States of Texas or Alabama. We don’t have a year-round presence in Tampa or New Orleans or in Los Angeles.”

Del Rio went on to say that the Norwegian Cruise Line brand will have three ships in Alaska this summer, where some competitors have as many as eight.

“So, given our fleet size today and the fact that we will only be taking one ship per year, it could be a couple of years before we consider adding more tonnage to China, if the conditions in the rest of the world remain as robust as they are today,” Del Rio said.

The Chinese boom really got going in 2014 when Royal Caribbean Cruises Ltd. announced it would devote its brand-new Quantum of the Seas, the first of a new class of ship, to the Chinese market.

In a world full of supposedly bold moves, that one really was. And it prompted other lines for the first time to put brand new ships in China, as everyone feared being left behind in the scramble to impress the Chinese.

Being the preferred brand in a market that was projected to be the biggest in the world in a decade or so was worth the gamble of putting brand new tonnage in an unproven and opaque market.

So when Princess Cruises sent the Majestic Princess to Shanghai last year and Norwegian sent the Norwegian Joy, in addition to the Quantum and ships from Costa Cruises and others, the result was a crowded field.

Throw into the mix the spat between China and South Korea that limited itineraries out of northern China, and China became a much weaker cruise market last year.

While cruise lines insist that they’re in it for the long haul, and even in the short term it has been profitable, the sense that China is going to deliver a big increase in global cruise revenues has been tempered.

Already Norwegian’s focus for 2018 has turned to introducing Norwegian Bliss to the North American market, and in particular the U.S. West Coast. Who knows where else in the U.S. Norwegian ships might be coming next?


World Dream to Debut in China in November

World Dream
Genting World Dream sistership to the Genting Dream

Genting Cruise Lines is set to launch World Dream, the newest ship for Dream Cruises, this November at her dual homeports in Hong Kong and Guangzhou (Nansha) to continue to grow the Pearl River Delta cruise industry and provide fly/cruise options for the region with new itineraries to Vietnam and the Philippines.

Genting said in a prepared statement that the World Dream has been conceived as a floating high-end, integrated resort at sea leveraging on the parent company Genting Hong Kong’s core expertise in both land and sea based businesses. The debut of World Dream will further enhance the brand’s capacity to offer a broad spectrum of multi-generational programs and facilities for guests, highlighted by Asian hospitality and a market leading crew-to-guest ratio.

“Genting Cruise Lines is reinforcing our position in the Pearl River Delta Region by welcoming the World Dream to begin her service with dual homeports in Guangzhou (Nansha) and Hong Kong, following in the footsteps of the Genting Dream,” said Kent Zhu, president of Genting Cruise Lines. “Designed to cater to the growing Chinese market with tailor-made facilities, including quad occupancy staterooms to accommodate families, the World Dream will further build upon our ongoing commitment to this region, which has seen Guangzhou (Nansha) evolve into China’s second busiest port and the strengthening of Hong Kong as a premier fly/cruise hub.”

Six-day/five-night cruises will call at Manila and Boracay in the Philippines from Nov. 17 through March 31, alternating with same length sailings to Ho Chi Minh and Nha Trang in Vietnam from Dec. 3 to October 2018, targeting both local and international guests.

The twin sister ship the Genting Dream, meanwhile, will be deployed at her new homeport in Singapore with new itineraries to North Bali and Surabaya in Indonesia, as well as Kuala Lumpur and Penang in Malaysia and Phuket in Thailand.

“By doubling Dream Cruises Fleet with the addition of World Dream, we are delighted to be offering our guests and valued travel partners diverse itineraries featuring new, authentic destination experiences,” commented Thatcher Brown, President of Dream Cruises.

China’s ban leaves cruise lines scrambling

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Majestic Princess

Cruise lines have started to tear up their northern China itineraries following an order from the Chinese government to the country’s travel agencies to stop selling itineraries that include South Korea.

The Chinese directive follows the announcement late last month by the South Korean and U.S. governments that components for a new U.S.-developed anti-missile system were to arrive in South Korea last week for installation.

Known as the Terminal High Altitude Area Defense system, it is designed to intercept missiles up to 125 miles away as a means of protecting South Korea from missile strikes by North Korea, which has undertaken a series of long-range missile tests in recent months and tested a nuclear weapon as recently as last September.

The Chinese and Russian governments have objected to the installation of the missile-defense system because it employs powerful radar technology that the two countries assert can see into their territories.

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Genting Dream

Japan and South Korea are the main cruise destinations reachable from northern China on the four- and five-day itineraries preferred by most Chinese. With Korea suddenly off limits, cruises operated for Chinese passengers out of ports such as Tianjin and Shanghai will now focus primarily on visiting Japan, experts said.

In a statement, Costa Cruises said it would “remove calls to South Korean ports for our upcoming cruises homeported out of China, replacing them with cruising at sea or calls to destinations in Japan.”

Royal Caribbean International also said it will curtail visits to South Korean ports due to “recent developments regarding the situation in South Korea.”

Delivery of the parts for the missile-defense system came as North Korea tested four missiles launched in the direction of Japan that fell into the sea.

Dwain Wall, an executive at and a consultant familiar with the Chinese market, said there is no question that the Chinese government has the authority to order Chinese travel companies to stop selling cruises to Korea.

“There is a very tight licensing and regulatory control over travel agencies” in China, Wall said. “It does impact cruise, but it’s low season, thank God, and [the cruise lines have] been sort of able to regroup and change the ports to Japanese ports.”

If China’s ban persists into the busier summer months it could both overwhelm the port capacity in Japan and reduce demand for cruises in China because of the lack of destination variety.

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Richard Fain, chairman of Royal Caribbean Cruises Ltd., said he could not predict how long the chill in China-Korea relations might last.

Stock analysts blamed news of the Korea tiff for a pull-back in cruise shares last week but said that it was excessive.

As a share of cruise lines’ global capacity, the analysts said China accounts for 9% of RCCL’s, 6% of Carnival Corp.’s and 4% to 5% of Norwegian Cruise Line Holdings’. Further, they pointed out, not all of that capacity is sailing from north China.