Luxury experiences define coastline cruises

Consistently high annual growth rate, rosy predictions, solidifying ecosystem, improving infrastructure spell boom

Experiences. That's what Chinese consumers from the middle-income group are chasing. And chasing them, in turn, are operators of luxury cruise ships with offers of comfort-soaked voyages that guarantee, well, stunning experiences of the Chinese coastline.

Demand is strong in spite of the overhang of COVID-19 concerns, industry insiders said, indicating business opportunities galore for cruise line operators, shipbuilders and related holiday service providers alike.

In a sense, that's rapid progress for a business segment in China that became the second-largest source of cruise trips just five years back. Over the past 16 years, the annual average growth rate of cruise passenger traffic reached 45 percent, according to the China Communications and Transportation Association.

"In the past 16 years, some 34 international cruise ships have operated in China. The country has built 10 specialized ports for cruises and five ports for both passenger and cargo ships. Another 12 cruise terminals are planned," said Hu Yadong, chairman of the association.

A new guideline released in August has further boosted the confidence of cruise operators, which plan to develop more tour itineraries to meet growing demand from middle-income experience-seekers in China.

The country will promote the development of cruise tourism markets in coastal cities such as Shanghai and Tianjin, as well as Shenzhen and Guangzhou in Guangdong province; Xiamen and Fuzhou in Fujian province; Qingdao, Shandong province; and Dalian, Liaoning province, said a guideline jointly released by the Ministry of Industry and Information Technology and four other departments.

Viking Cruises China, the China unit of Norwegian cruise line operator Viking Cruises, is operating through a joint venture with China Merchants Group, which holds a controlling stake.

"We are very glad to see the Chinese authorities have recently issued a new implementation outline to support the industry's future development. We have pioneered the creation of coastal cruises in China and we see huge growth potential in this category," said Brendan Tansey, managing director of Viking Cruises China.

The company provides five-day cruises that depart and return to Shenzhen, with a stopover in Xiamen. It also has routes that depart and return to Xiamen, with a stopover in Shenzhen.

"We believe government support would help us to introduce more routes, more trips and develop more world-class passenger ports along the coast to expand the category," Tansey said.

During this summer, CM-Viking received more bookings from family groups. Usually, it sees a strong demand from senior consumer groups, especially retired professionals and people at the height of their careers. Now, more young couples and newlyweds are coming onboard, the company said.

Gao Shengyi, a young blogger from Guangzhou, went on a CM-Viking cruise this summer. Her five-day trip started in Shenzhen, had a stopover in Xiamen, then returned to Shenzhen, and cost her about 10,000 yuan (around $1,440). The prices vary according to the different types of rooms on offer. The company offers "buy one get one free" promotions.

"I sat at the ship's bow and savored some fantastic European breakfasts, besides spectacular sunrises and sunsets as seen from the sea. I never experienced such memorable moments ever before, so they were unique in that sense. I also loved having ordered breakfasts in my room. I spent a lot of time at the bars on the ship, where musicians put on different performances. Truth to tell, I didn't want to disembark the cruise ship when the trip ended," Gao said.

Industry insiders said the COVID-19 has hurt the global cruise ship industry. In 2020, major cruise line operators such as Royal Caribbean International, Carnival Group and Norwegian Cruise Line saw their annual net losses reach $5.8 billion, $2.2 billion and $4 billion, respectively, according to their earnings reports.

Last year, more ships started to take to the waterways again and the global cruise industry in most markets had been crawling toward a gradual recovery.

CM-Viking said it had seen a growing demand from experience-hungry travelers. In some regional markets, many popular itineraries that typically attract English-speaking guests have sold out already for the next two years.

With incomes of some segments of population in China rising, the ongoing consumption upgrade trend is leading to demand for experiences like cruise ship voyages, and this may result in 8 to 10 million trips by 2025, the Cruise Lines International Association predicted.

Pierfrancesco Vago, executive chairman of MSC Cruises and global chairman of the association, said via video link during a recent cruise industry conference held in Guangzhou that China has become one of the most important and dynamic cruise tourism markets globally.

Before the pandemic, about 2 million tourists took cruises from ports in China annually, and the holding of the conference has further boosted the confidence of cruise operators, Vago said.

This year, due to sporadic COVID-19 cases and various travel policies of different cities in China, "micro-vacation" has been especially favored by Chinese tourists.

In March, the Chinese Academy of Social Sciences published a green paper about tourism, and it highlighted that "microvacation" is gaining popularity. Trips near people's residential cities have contributed to the majority of the domestic travel market's recovery.

CM-Viking said it believes "micro-vacation" is a bright spot in the Chinese tourism industry, and an opportunity for cruise operators. As a destination-focused brand, the company attaches great importance to a combination of destination activities and onboard offerings, featuring local performances and specialties, it said.

"Traditionally, ocean cruises mainly feature entertainment onboard. Now, many cruise trips focus more on onshore excursions," said Sun Wei, director of cruise products at Tuniu Corp, an online travel agency based in Nanjing, Jiangsu province.

"Besides, the booking cycle of taking cruise trips has been significantly shortened. In the past, travelers usually made reservations 15 days in advance. Now, they tend to book the trips a few days beforehand as they worry about sudden occurrence of new COVID-19 cases in some cities," Sun said.

From the shipbuilders' perspective, the new guideline would give full play to their shipbuilding power and present huge market advantages, and speed up the formation of a cruise and yacht industry ecosystem, complete with equipment producers with international standards.

By 2025, China is expected to generate demand for about 100 large-scale cruise ships. Growing demand for cruise tourism in China and the Asia-Pacific region will provide more business opportunities for Chinese shipbuilders, the Cruise Lines International Association predicted.

In early August, construction of the second China-developed cruise ship was started by Shanghai Waigaoqiao Shipbuilding Co, a State-owned shipyard in Shanghai.

Some 85 percent of the construction work on the first China-built vessel, built by the same company, has been completed and the ship is planned to be delivered in 2023 to serve the Chinese cruise market.

Carnival Corp, the world's largest leisure travel company, announced a 40:60 joint venture in late 2018 with China State Shipbuilding Corp, the parent of Shanghai Waigaoqiao Shipbuilding. Carnival will be the shipowner of the two China-built vessels.

The smooth progress shows that China's shipbuilding industry has preliminarily mastered the core technologies of the design and construction of large cruise ships, and the building of such ships in series can be expected soon, CSSC said.

"The shipbuilding industry, which is highly complex and comprehensive, involves general assembly manufacturing and shipbuilding support systems. Now, China leads the global market in total orders, but lags behind South Korea in high value-added and high-tech shipbuilding," said Wesley Xiang, executive director of the China unit at consultancy Frost& Sullivan.