Time to Rethink the Bucket List

Published Feb 15, 2013 4:13 PM by Wendy Laursen

The history of the U.S. cruise industry has been a tale of global expansion, but now Australia and China are writing their own chapters. And the Caribbean, while still the world’s top cruising destination, is facing stiff competition from the likes of Australia, China and Singapore. “Sydney Harbor is the primary attraction for cruise ships coming down this way,” says Brett Jardine, General Manager of the International Cruise Council Australasia. “Entering the harbor on a cruise ship is well up there on the bucket list of many people.”

Sydney is Australia’s busiest cruise port, and the number of Australian cruisers has almost tripled in the last five years. The 2011 growth rate of 34 percent far exceeds the 14 percent increase in German and French passengers, the five percent increase in U.K. passengers, and the four percent increase in U.S. passengers. Australians now represent approximately 3.4 percent of the world’s cruise market, and market penetration is 2.7 percent, not far below the U.S.’s 3.2 percent.

The city’s largest passenger terminal user, Carnival Australia, is growing rapidly. When Carnival Australia was first formed in 2004, the company had seven ships sailing in local waters, but the 2012-13 season will see a record 14 Carnival ships based in Australia for all or part of the season with an additional five ships visiting as part of their itineraries.

Growing Pains
Carnival Spirit is the newest and largest ship to be home-ported year-round in Australia. Carnival has spent over A$7 million upgrading the vessel to capture a mix of Aussie and American styles, both being playful, outgoing and fun-loving, says the company. Two bespoke upgrades created specifically with Australians in mind are Green Thunder, the steepest and fastest waterslide at sea, and Serenity, a huge, luxurious, child-free retreat with panoramic views. The food offerings on board now include an Aussie backyard-style BBQ.

An increasing number of large cruise ships are entering the Australian market including Royal Caribbean International’s Voyager of the Seas, which is spending its maiden season in Sydney in 2012-13. The vessel will showcase concepts never before seen in Australia and New Zealand waters, such as an onboard ice rink. For the 2013-14 season, Royal Caribbean Australia is offering a Cruisetour package which includes a pre- or post-cruise escorted land tour to attractions such as the Great Barrier Reef and Uluru.

But Sydney is struggling to cope with the growth. Vessels such as Voyager of the Seas and Carnival Spirit are too large to sail under the Sydney Harbor Bridge to Sydney’s second terminal at Barangaroo or its new replacement at White Bay. Larger vessels stay east of the bridge and berth at the Overseas Passenger Terminal at Circular Quay. A few ships have been granted access to the naval base at Garden Island to cope with peak demand. “The Overseas Passenger Terminal in Sydney is already at capacity and the need for a permanent shared solution at Garden Island is now critical,” says Ann Sherry, CEO of Carnival Australia. “The alternative, where cruise ships would be forced to moor mid-harbor before ferrying passengers to shore in tender boats, would not only give international visitors a poor introduction to Sydney but also act as a brake on cruise industry growth.” Some of Australia’s naval vessels are expected to be permanently transferred to Brisbane as a result of the cruise industry’s ongoing need for berth space.

Nearby, New Zealand will be welcoming Celebrity Solstice, Voyager of the Seas and Queen Mary 2 this season. Ship visits have risen from just one in 1991 to around a hundred in 2012. Like Sydney, new port infrastructure is under construction to cope. Currently, Queen Mary 2 has to be berthed at one of Auckland’s commercial wharves as it is too long for the city’s cruise terminal.

China Rising
China, however, is working ahead of demand. China has 14,500 kilometers of coastline, so it is likely that economies of scale will be achieved for operators by the deployment of large cruise ships to minimize the impact of fuel costs, and this is reflected in the country’s infrastructure development. The new terminal under construction at Kai Tak in Hong Kong will be capable of accommodating two of Royal Caribbean’s largest vessels. An international cruise terminal opened in Tianjin in 2010, and Shanghai now has a second terminal. A terminal is also planned for Guangzhou.

The number of cruise ships received at Chinese mainland ports increased from 156 in 2009 to 262 in 2011. According to market analyst G. P. Wild International, the leading sources of tourists to China in 2011 were the U.S., Australia and Singapore, and China is growing in importance as a cruise market both in terms of sending and receiving cruisers. “There are increasingly more Chinese travellers both domestically and overseas due to the growing spending power of the middle class and the easier application process for travelling abroad,” says William Ng, COO of Asia’s largest cruise line, Star Cruises. Star Cruises, together with Norwegian Cruise Line (which is part-owned by Star’s parent, Genting Group), is the third largest cruise operator globally and owns a combined fleet of 18 ships. Cruise travel is still relatively small in China, says Ng: “While Chinese affluence surges, the cruise industry has to get a good grip on this opportunity by cultivating a better understanding of Chinese holiday-goers’ preferences.”

Star Cruises is responding with a $50 million refurbishment to SuperStar Gemini, which is designed to offer luxury resort-at-sea packages. The vessel’s excursion highlights will include Spaland in Busan, Korea, which consists of 22 spas filled with natural spring water pumped up from 1,000 meters underground, and onboard entertainment will include quirky games such as passengers catching tennis balls in buckets attached to their heads.

Singapore now has two large-scale cruise terminals in recognition of the expected growth of cruise vacationers in Asia, says Ng. SuperStar Virgo is home-ported in Singapore and offers itineraries to tourist hotspots like Redang Island and Penang in Malaysia. “Penang is blessed with geographical vicinity to exotic destinations like Krabi and Phuket as well as a thriving local culture. Our vessel there, SuperStar Libra, is able to ride on this advantage and steadily increase the prominence of cruise vacations as part of the local travel scene. Its main challenge is air connectivity. Once we sort this out, the Malaysia Northern Corridor will open up,” says Ng.
Costa Cruises is home porting Costa Atlantica in Singapore in May-2013.

Costa Atlantica, in Singapore in May 2013. The company is partnering with the Singapore Tourism Board and Changi Airport Group to develop the market there. Singapore welcomed 394 ship calls and 940,000 passengers in 2011. “Supported by the opening of Marina Bay Cruise Centre Singapore and a rejuvenated Singapore Cruise Centre, Singapore is well equipped to serve as the gateway to Southeast Asia,” says Lionel Yeo, CEO of the Singapore Tourism Board. Singapore’s offerings include cruises to nowhere on gaming ships. Very often these are one-night cruises for passengers from countries such as China.

Russia and Beyond
While agreeing that China is emerging as one of the leading generators of global tourism, G. P. Wild’s Managing Director, Peter Wild, is nonetheless eying future cruise market potential elsewhere. “To date, there has not been a concerted effort to develop Russia as a source market even though the levels of affluence in Russia have been rising and the country has a population almost twice the size of Germany,” he says. The short season for cruising directly from Russian ports complicates the process of market development, but he proposes that Russian cruisers could fly-cruise to Istanbul, Dubai, Singapore, Shanghai, Hong Kong and Barbados outside the local cruise season. “Cruise tourism by Russian consumers is a market waiting to happen. It should grow rapidly when properly stimulated.”

Russia’s status as an international destination could also be built up. Russia has borders with 14 different countries and stretches from Europe in the west to China in the east. The fly-cruise concept could be employed, particularly with the growth of low-cost airlines, and extended to include land-based stays at places such as St. Petersburg. Only four Russian ports – Murmansk, St. Petersburg, Sochi and Vladivostok – regularly feature cruise itineraries, but more might be developed. The Arctic port of Archangel, for instance, has a fascinating history and in medieval times was the main port of the region.

Over the last 10 years, global tourism generally has increased by almost 40 percent, while inbound tourism in Europe has grown by less than 24 percent, says Wild. Growth in Europe may be affected in the short-term by continued instability in Syria, Egypt and the wider North Africa and Middle East area, he says. This tends to favor a redeployment of cruise ships by the North American lines away from Mediterranean Europe with the Caribbean historically being the primary beneficiary. However, Wild expects the number of European cruise tourists to reach 6.8 million by 2017, and as a destination it could soon exceed the Caribbean.

But both of these top destinations will face growing competition as globalization of the cruise industry is likely to be a major trend over the next ten years. Substantial growth is possible in Eastern Europe, Russia, Australia, South America and the Far East. While largely an American invention, cruising has grown into a global phenomenon. Time to update that bucket list!

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.