Two weeks ago I wrote about Frank Del Rio’s take on China and the obstacles he saw to further growth there, but the Norwegian Cruise Line Holdings CEO is clearly not the only cruise chief thinking a lot about development in Asia.
Royal Caribbean Cruises Ltd. chairman Richard Fain delivered some insights into his thinking on China on a recent conference call with investors. He listed four areas in which China is similar to the industry in North America and Europe, at a comparable stage of maturity.
China has troubled cruise investors, most recently because of price softness in Shanghai.
Drawing on 30 years of decision-making experience, Fain said he’s seen it before. “It is striking how many parallels there are in China’s evolution today compared to other places in other times where we have developed a market for cruising,” Fain said.
Cruising in North America in the 1980s looked much like China does today, according to Fain’s analysis.
“It was poorly known to the population at large,” Fain said. “Distribution was through a small number of specialist agencies. There was little choice of itineraries, and growth was episodic and dictated by the arrival of new ships.”
In addition, favorable word of mouth was the main way people found out about cruising, he said.
Fain characterized travel agencies specializing in cruises in the 1980s as a “niche” business and said China’s embryonic cruise travel agency system will evolve with time, as in the U.S.
He said worries about the paucity of destinations in China parallel the same concerns in the U.S market years ago. When Royal Caribbean was trying to decide on a fourth ship, there was “a great deal of hand wringing” about whether there would be interest “beyond the established group of then popular destinations.
“Today we all look back on that concern and find it laughable, but then it was a real concern. Similarly in China, our attachment area today for customers is small and our itineraries are limited, but a quick look at the map shows just how enormous the potential really is.”
HOLLYWOOD, Fla. — Whenever Royal Caribbean Cruises Ltd. starts a new project, CEO Richard Fain said the company likes to start with history.
Celebrity Cruises is currently working on Project Edge, which will bring a new class of ships in the fall of 2018, and the line has been considering milestones in cruise ship design leading up to that project — the key innovations in cruising that have changed the way ships are built.
Fain shared some of those milestones with travel agents at Vacation.com’s annual conference at the Diplomat Resort and Spa this week.
“The pace of change has been growing very quickly,” Fain said.
He started his history of milestones in 1962 with the S.S. France, which he called “a remarkable ship.”
“It was designed for transportation,” Fain said, and everything about the Compagnie Generale Transatlantique ship (like its long, sleek design) was aimed at transportation.
Fain jumped next to 1970 and the “transformational change” that Royal Caribbean International’s Song of Norway brought to the industry.
“This was a ship that was really built for cruising,” he said. Decks were open and cabins were designed differently than those on the France — instead of keeping the passengers in them while being transported, Song of Norway’s cabins were designed to get passengers out of their cabins and into public spaces.
“A fundamental shift was taking place,” Fain said, in what the purpose of the vessel was.
Then, in 1975, another influencer came into play, this time in the form of a television show: “The Love Boat.” Fain said cruising was shifting in how it presented itself to the world, becoming open to mass markets.
Then Carnival Cruise Lines came out with Kathy Lee Gifford’s “Fun Ship” commercials in the 1980s. Cruising was no longer something limited to an older, wealthier clientele. It was becoming something for everyone.
https://www.youtube-nocookie.com/embed/xS5rUgRAzDc?rel=0Princess Cruises’ Royal Princess in 1984 brought the concept of more outside cabins and more balconies.
The Sovereign of the Seas, “a dramatic new vessel,” arrived in 1988. The Royal Caribbean ship introduced an atrium and more activity choices onboard, and was the largest ship in the world when it was built.
In 1999, Royal Caribbean again introduced a ship that was the largest built at the time: Voyager of the Seas. It had an ice-skating rink and rock-climbing walls, a promenade and a plethora of other activities.
“You wanted things that helped convey that this [cruising] was an unusual activity, that you could do what you wanted,” Fain said. He said Voyager of the Seas was instrumental in continuing to shift the idea that cruising was for everyone.
Fain considered the Celebrity Solstice, which started sailing in 2008, as the next innovative vessel because it brought a level of elegance to a large ship.
And the next year, 2009, Royal Caribbean’s Oasis of the Seas arrived, offering even more choices to cruisers. The model in the days of the Song of Norway was dinner, show, bed, Fain said. But with Oasis of the Seas, “that evolved to the point where you have 28 places to eat on board this ship,” he said. It offered specialty dining rooms and suites that appeal to a different crowd, and activities like the FlowRider surf machine for yet another.
The Disney Dream started sailing for Disney Cruise Line in 2011 with a focus on the outdoor decks, and making children the center of many offerings. It introduced all kinds of activities, like waterslides, that many would go on to follow, according to Fain.
Three years later, Royal Caribbean’s Quantum of the Seas added more unexpected amenities to a cruise ship: a gondola-like ball that raises passengers in the air for a bird’s-eye view, a skydiving simulator and the Bionic Bar with its robotic bartenders.
Fain said he believes Celebrity’s Edge-class ships will bring the next milestone to cruising, but was tight-lipped on the details.
Fain’s history lesson was well-received by agents, who largely agreed with his sentiments of game-changers in the industry.
Sandra Cleary is the CEO of CruCon Cruise Outlet Plus in New Hampshire. She started her cruise-only agency 20 years ago, and in her mind, the Voyager of the Seas was one of the biggest milestones in the cruise world.
“We want the ship with the rock-climbing wall,” was a frequent call she got in the late 1990s.
Customers didn’t even know the ship’s name, but were attracted by the many activities it offered, she said. She also pointed to the Allure of the Seas and Oasis of the Seas as game-changers.
Mark Comfort, owner of Cruise Holidays in Kansas City, Mo., said Fain and Royal Caribbean are “arguably the biggest innovators in the cruise industry.”
Comfort says Sovereign of the Seas was the greatest game-changer.
“The design was unthinkable — undoable,” he said. Most predicted it wouldn’t work, Comfort said, but it did, and the “unthinkable” ship went on to change the industry.