U.S. cruise company Carnival Corp. is going all out to woo Chinese travelers, having relocated its CEO to Shanghai, moved several ships to Asian routes, and announced plans to build ships in China.
Carnival already boasts a 55 to 60 percent market share in China’s cruise industry, and by 2020, the company expects the market to be half the size of the the industry’s largest market, the United States, according to The Wall Street Journal.
Since its beginning in 2006, the Chinese cruise industry has had explosive growth. In 2011, 87,000 Chinese went on a cruise. Last year, approximately 700,000 Chinese went on a cruise, and Carnival expects that number to top 1 million this year and over 5 million by 2020. The market still has a long way to go to catch up to the world’s largest cruise market though, as more than 10 million people in the United States took a cruise last year.
Coming on the heels of Royal Caribbean’s joint venture with travel agency Ctrip to operate the 1,814 person Celebrity Century cruise ship in China, Carnival signed a memorandum of understanding with China State Shipbuilding Corp. to convert one of its shipyards for shipbuilding and to create a joint venture involving one of the world’s largest shipbuilders, Italy’s Fincantieri, to build ships in China. Carnival is also about to add a fourth ship to its China fleet, up from just one in 2011.
“We are looking at double-digit growth in China—20%, 30% annually—over the next few years while overall growth [in the industry] is around 3% and 4%,” said Carnival CEO Alan Buckelew.
However, the expansion into the Chinese cruise market hasn’t been without growing pains for Carnival.
First, there is the huge expense of advertising to Chinese travelers who may not be familiar with the concept of the cruise. Second, all of the menus, spa treatments, and entertainment must be adjusted to Chinese tastes and preferences. For example, Chinese people prefer entertainment such as gambling parlors over the elaborate shows popular in the West.
Mr. Buckelew also pointed out another difficulty, noting that Chinese travelers expect that any “minor deviations” from the itinerary, such as bad-weather delays, merit a refund.
The demographics of Chinese cruise travelers is also different than in the West. Whereas the average age of cruise passengers in Europe and North America ranges from 45 to 70 years old, “in China, the 25- to 45-year-olds are buying the cruises,” according to the Carnival CEO. “That is where the wealth is in China. They often bring along their parents. Extended-family cruises are common.”
Furthermore, with shorter vacations in China, the average cruise lasts 4 days compared to 7 days in the West.
image source: evan leeson