Report shows Asia as the fastest growing cruise market

0

clia-asia-report

You haven’t seen anything yet.

That was the message Sean Treacy, Regional Vice President Asia Pacific for Royal Caribbean, had for the industry following the release of record cruise figures for the Asia region last week.

The report confirms Asia as the world’s fastest growing source of cruise passengers, with a 24 per cent increase in numbers across the region last year and more in China.

Capacity grew 51 per cent, and overall capacity on ocean ships will reach 3.2 million throughout the region in 2016.

Mr Treacy’s line has Asia’s largest fleet of ships.

His view: “Despite these impressive figures, we are just scratching the surface of the potential for the region where the combination of a growing middle class and low cruise penetration rate allows for much more cruise capacity in the years to come.

“In South East Asia, Royal Caribbean International is tapping into this potential by offering its longest season ever for the 2016/2017 cruise season with a record 55 cruises from Singapore.”

The report reveals most new passengers cruise within the region – eight out of ten chose to stay in Asia, with only 16 per cent travelled to Europe and other areas.

They are younger than their American and European counterparts, with 40 per cent under 40 years old.

But as more capacity heads for Asia – and, in particular, China – there are concerns about maintaining prices.

Carnival, the world’s largest cruise line, recently reported operations in China were profitable for the first fiscal quarter, with returns higher than the fleet average.

But chief financial officer David Bernstein said results in the country for the quarter were “behind on pricing and not surprisingly behind on percentage occupancy, given our over 60 percent increase in China capacity.”

The 2016 Asia Cruise Trends study, released by Cruise Lines International Association (CLIA) last week, shows no signs of the market slowing.

Indeed, most believe as there is more promotion, things will speed up!

The data for the report, compiled by Chart Management Consultants’ Ted Blamey, came from 31 international and regional cruise lines.

Asia experienced the most growth from cruisers – tens of thousands of new cruise passengers decided to give cruise holidays a try.

Ocean cruising was the most popular between 2014 and 2015.

More than 2.08 million passengers sailed in the region last year.

“Even we were surprised by 24 percent growth and that is unprecedented,” CLIA head Cindy D’Aoust emphasizes. “We see no signs of slowing down.”

CLIA North Asia chair Dr Zinan Liu said: “While we expected Asia to experience record-breaking growth in cruise travel, we are astonished at the rate at which the region is emerging as one of the most significant cruise destinations and cruise source markets in the world.”

  • More than 1,560 sailings are scheduled throughout Asia for 2016 – up 43 percent from last year.
  • The number of days that cruise ships operate in Asia has risen from 4,307 in 2013 to 7,918 in 2016.
  • Sixty ocean cruise ships will sail throughout Asia this year, eight more than in 2015.
  • Fourteen operate year-round while another 12 have extended deployment in Asia.

Asia can now boast 204 cruise destinations across 17 countries, with Japan no 1.

Japan 1,526 port calls in 2016.

China had 850 calls

South Korea had 745

Vietnam had 466

Malaysia had 422

Singapore at 391

Ms D’Aoust told American travel agent websites the growth in port destinations is a big opportunity. She urged agents to talk to clients about the new port options.

“It [Asian cruising] also provides a very easy and comfortable environment for travelers to check off their bucket list,” D’Aoust tells Travel Agent. “For experienced cruisers who’ve never had that opportunity [to visit some Asian bucket-list ports], there’s an entirely new market.”

Jeju Island, South Korea, is the most visited port in 2016 with 460 calls, beating China’s monolithic port Shanghai with 437 calls, Singapore at 391 calls, and Fukuoka, Japan, at 258 visits.

After enormous numbers of ships calling there, China’s passenger numbers have grown at an annual compounded rate of 66 percent – growing an amazing 40 per cent last year alone.

Last year, 986,000 passengers were from mainland China, representing close to half of the Asian volume, compared to 703,000 in 2014.

But the concerns over whether capacity might outstrip demand, leading to a fall in yield, continue amongst cruise lines – though most are optimistic.

Executives from the world’s second-largest cruise company, Royal Caribbean, said Shanghai in particular was struggling.

According to Skift, a travel analysis site, Chief financial officer Jason Liberty would not say how much yields — or revenues per berth per day — had declined year-over-year in China, but did concede the drop was “a little bit worse” than anticipated.

CEO Richard Fain, according to the site, sought to reassure analysts and investors that the company was confident in the long-term prospects for the market.

“In China, we’ve been growing at 40 and 50 percent growth rates without any difficulty; those are pretty extraordinary levels,” Fain said.

He added the problem did not appear to be faltering demand. It was more to do with increased capacity.

Royal Caribbean maintained agents and tour operato4s were continuing to move into cruise.

Norwegian Cruise Line’s president Frank Del Rio, who has been slowest to move into China and is sending a new-build shortly, maintained the market now needed to convince Chinese retirees to take longer cruises to stimulate growth.

Almost three out of ten Asian cruisers choose two to three night journeys, with 50 percent taking four to six night cruises.

Just under 20 per cent took extended cruises of seven to 13 nights.

Commenting on the study, CLIA Australasia Managing Director Neil Linwood said the strong growth in the Asian region was good news for the local Australasian cruise industry.

“The growing number of people in Asia discovering the joys of a cruise holiday, means more potential customers for cruise ships sailing in our waters. It also opens the way for more ships, including newer and larger ships, to be deployed in Australia seasonally, complementing their Asian deployments,” Mr Linwood said.

American site Travel Agent asked Ms D’Aoust if exposing more Asians to cruising will have the effect — as has been the case in the U.S. – of people taking regional cruises first, but then as they become more experienced and more exposed to cruising as a vacation choice, going farther out – say to the Caribbean or Europe.

With more passengers patronizing voyages outside Asia that could increase demand and, over time, keep pricing at a good level. “Absolutely,” D’Aoust responds. “We don’t look at one market into itself.“

She said that while right now most Asian cruisers prefer to travel within Asia, there is still a good outbound market that prefers seven- to 13-day cruises.

So they may start with Asia, but then head to the MediterraneanBaltic or elsewhere in the world. “We don’t see any obstacle to that growth,” she notes.

In China, the average age of cruisers is below 43 – with about 42 percent of cruise travelers below 40 years old. For the region, the same segment represents 38 percent of all cruisers.

This year, 31 cruise brands are active in Asia with 60 ships. The lines will operate 1,560 cruises this year, versus 1,095 in 2015.

Most capacity, not unexpectedly, is on mega-ships – with two in the region – as well as on 15 large ships. Twenty-one mid-sized ships will sail in Asia, plus 16 upscale smaller ships and six expedition ships.

Asia-to-Asia cruises and short cruises will dominate the itineraries. More than 1,473 voyages are planned. Another 87 voyages will “pass through” the region.

Nearly 50 percent will be four-to-six-night cruises, while nearly 38 percent will be two-to-three-night cruises.

Some 5,500 port calls are scheduled this year in Asia. Japan, China and South Korea will welcome the most calls. Sixteen Asian ports will each host more than 100 calls this year.

CLIA commissioned the 2016 Asia Cruise Trends study to further develop an in-depth understanding of the quickly evolving cruise marketplace. The research builds upon the 2013 white paper “Information, Intelligence, Insights” and the 2014 Asia Cruise Trends study, also undertaken by CHART Management Consultants.

“To develop this rich data for CLIA would not be possible without the wiling participation and active support of the cruise lines that operate throughout Asia and that serve its twelve source markets” Ted Blamey told us. “Tracking trends in capacity, destination volumes and market sizes is critical. The important findings of the study we know will be highly valued by all with a stake in Asian cruising” he added.