Alan Lam reporting from Sanya, China
The 12th China Cruise Shipping Conference and International Cruise Expo (CCS 12) is currently under way in the Chinese resort city of Sanya, on the island of Hainan. This year’s focus has been on how the Chinese and international cruise industry might respond to the government Belt and Road Initiatives and the problems occurring in the Chinese cruise market.
China’s cruise industry has arrived in yet another new era, an era when the growth has slowed and the industry is confronted with a few problems. Persistent price pressure and the rising cost have eroded the profitability of cruise lines, forcing them to take a longer-term view and rethink their strategies if they are to remain in the Chinese market.
At present cruise products on offer in China are singularly monotonous, consisted primarily of short itineraries to South Korea and Japan. The Chinese consumers have now much stronger spending powers and enjoy comparable lengths of leisure times to those of their counterparts in the developed countries. The demand has therefore not met by the supply. Cruise lines are urged to re-configure their itineraries for the coming years. They need to plan longer itineraries and develop other destinations.
These are just examples of the mounting challenges the industry is facing in this expanding market. The expansion of the last two years has not been translated into net incomes for cruise lines – unlike in North America and Europe - largely because of the discount-based distribution system, which serves to degrade the value of cruising and suppress cruise lines’ earnings.
Yet under the Belt and Road Initiatives, the expansion of the industry has taken on a new meaning; it has gone up several gears. The nascent Chinese cruise industry is now encouraged to go global in cruise operations, shipbuilding and port infrastructure development.
As the discussions continue, the questions are asked concerning how much longer can cruise lines can endure losses in this market if the situation does not improve. However the confidence in China’s future cruise business potential appears to remain intact.
Cruise Business Review is a media partner of CCS 12. An in-depth report on the conference topics will be published in the winter issue.