Western Cruises Sailing East: Is it time to jump on board?
With the recent introduction (earlier this month) of Norwegian Cruise Line's first ship launched specifically for the Chinese market, currently the fastest growing market for cruises, is it time to start investing in these cruise lines?
Leading cruise companies have been building ships specifically for the Chinese market, and Norwegian Cruise Line is the latest company to get on the bandwagon.Norwegian Cruise, the world’s third-largest cruise line, said on Monday it would add its first purpose-built ship designed for Chinese tourists in 2017.
The move is part of Norwegian Cruise’s effort to tap into the rising demand among Chinese tourists for cruise travelling.
The cruise line just opened sales offices in Hong Kong, Beijing and Shanghai.
The new ship plan was announced by chief executive Frank Del Rio during the CruiseWorld China summit in Shanghai.Earlier this month, industry giant Carnival Cruise Lines also announced it would deliver its first Princess Class ship customised for Chinese consumers in 2017, called Majestic Princess.
“China will be the largest cruise market in the short term and we want to be part of it,” Del Rio said.
“Rather than enter the market in a small way, we are bringing our biggest and newest ship as our entry.”
Cruise brands used to use refurbished old vessels for the Chinese market, which sometimes made travellers from the country feel uncomfortable with the unfamiliar food and service styles.
“I’ve been quite surprised how little customization has been done for the Chinese market,” Del Rio said, adding that the company’s tailor-made product would meet Chinese guests’ unique preferences in accommodations, cuisine and onboard experiences.
The new ship, which will have its home port in China in 2017, will have a capacity for 4,200 guests and sail to Japan and Korea.
It will be the second ship of Norwegian Cruise’s Breakaway Plus class, and the company describes it as “the most innovative ship ever”.
“We will better understand their dining requirements, providing high-end quality Mandarin and Cantonese cuisine, and we will create different activities to attract [different] generations,” said Del Rio, adding that additional details would be disclosed in the coming months.
The number of cruise passengers in China saw a compound growth rate of 79 percent over the past three years, reaching 700,000 last year, and it is expected to hit one million by the end of this year. There are 12 cruise ships with home ports in China, nine of them foreign vessels.
Del Rio said Norwegian Cruise might bring another new Breakaway Plus ship and a ship from the Oceania or Regent fleet to a home port in China in three to five years.
“The supply of cruises in China is far from saturation. More ships are needed,” Del Rio said. “You build them, and they will come.”
Carnival chief executive Arnold Donald said on Monday in Shanghai it would expand its operation in China by introducing two additional cruise brands, Carnival Cruise Line and AIDA Cruises, in 2017.
It currently operates Costa Cruises and Princess Cruises in China.
MSC Cruises said it would have its first China-based ship sailing from Shanghai in May next year, after a total renovation.
Link to article: South China Morning Post
Key points:
- Norwegian Cruise Lines, for the first time built a ship specifically for the Chinese market, set to start service in 2017 (Carries up to 4200 passengers)
- Norwegian Cruise Lines opened new offices in Beijing, Hong Kong, and Shanghai
- Carnival Cruise Lines shifted its COO to Shanghai last year to lead companies initiative in CHina
- Carnival Cruise Lines, along with China State Shipbuilding Corp (CSSC) and China Investment Corp (CIC) have struck a deal to create and co-own a new luxury cruise-liner, twice the size of the Titanic, that will be launched in 2020
- Royal Carribean pulling back in Latin America to set sail for China
- Chinese market for cruise travel could nearly double to $11.5 billion by 2018 compared to $6.8 billion
- Cruise lines took advantage of cheap fuel costs.
Stocks to watch:
- NCLH (Norwegian Cruise Line Holdings)
- CCL (Carnival Cruise Lines)
- RCL (Royal Carribian Cruise Lines)
YTD: 33.11%
Earnings Date: 11/04/2015
ROI: 9.73%
YTD: 18.20%
Earnings Date: 12/17/2015
ROI: 5.59%
YTD: 18.88%
Earnings Date: Passed (Up $2.84 from $2.20 last year)
ROI: 3.50%
- Reuters NCLH
- South Ckina Morning Post
- MarketWatch.com
Link to sources:
How do you all feel about investing in cruise lines?
