Global cruise lines set sail for China as passenger numbers are to rise

Quantum of the Seas. (Photo: cnss.com.cn)

Royal Caribbean's newest cruise ship, Quantum of the Seas, will have its home port in China.

The $935 million ship floated out of a German shipyard last week and will spend the winter sailing between New York and the Caribbean before moving to its new base next summer in Shanghai.

It is a brave move for the world's second-largest cruise company. Cruise operators have traditionally sent older vessels to developing countries while saving their most advanced ships for US and European customers. But surging growth in China means it is a market operators can no longer ignore.

Carnival Corp, the leading cruise company, will become the first global operator to have four ships based in China when it deploys its Costa Serena to Shanghai in April.

The race for China underscores the growing strength of the leisure and travel industries in the world's second-largest economy, as authorities try to spur domestic spending rather than trade and investment as an engine of growth.

Executives are confident about China's prospects even as its economy struggles with a prolonged slowdown from double-digit rates of expansion, saying that growth is still strong when compared with developed markets.

Miami-based Carnival expects to carry 500,000 Chinese cruise passengers in 2015, up from 350,000 this year.

"We know that's just a drop in the bucket to what lies ahead in terms of the market in China, which we believe is going to someday represent more than half of all the cruise guests," Carnival CEO Arnold Donald said in a phone interview.

The Asian Cruise Association estimated last year that the overall Asian market, which totaled 1.3 million passengers in 2012, could nearly triple to 3.8 million in 2020, including 1.6 million from China.

Carnival is even more optimistic, predicting the number will grow to 7 million, or about a fifth of the global market, by 2020.

"For the next five to 10 years, greater China, including Hong Kong, will play a critical role in the global cruise industry's development," said Zinan Liu, Royal Caribbean Cruises Ltd's managing director for China.

While the US and Europe are showing signs of revival, "there's no region that will grow as rapidly as China and Asia," he said.

Liu said Royal Caribbean expects to carry 400,000 Chinese cruise passengers in 2015, double the number from last year, from four main ports - Shanghai, Hong Kong, Xiamen and Tianjin.

The company's 18-deck Quantum of the Seas, which can carry 4,180 passengers, arrives in Shanghai in May of next year, joining two other Royal Caribbean ships based in China.

It is also expanding operations in Hong Kong to better market to customers in neighboring Guangdong, the richest province in the Chinese mainland, Liu said.