Travel industry steps up pace with public sector to serve wave of Chinese tourists
If a friend from abroad were to show up suddenly in China as a tourist, the question, “Gee, when did you land” will likely pop up based on the presumption that he or she flew into the country. But, if some tourism companies’ plans bear fruit, there might soon be an alternative question: “Hey, when did you make landfall?”
More tourists are expected to reach China by ship from now on – specifically cruise liners. And, as wanderlust grips the experience-hunting Chinese middle-class flush with rising incomes and bitten by the consumption upgrade bug, the domestic tourism is expected to include a lot more cruises, market insiders say.
The Cruise Lines International Association says that by 2025 the number of Chinese travelers who have experienced cruises is expected to grow to 8 to 10 million.
That would mark a surge from about 2.5 million Chinese travelers, around 2 percent of China’s outbound global travelers last year.
An estimated 300 million Chinese consumers will be able to afford cruises in the near future.
“In the next 10 to 20 years, the number of Chinese who take a cruise annually is expected to surpass that of the United States,” says Zheng Weihang, executive vice-president and secretary-general of the China Cruise & Yacht Industry Association. “Growth in the world’s cruise market is expected to come largely from China,
“As the industry continues to grow and develop in the region, China is widely expected to eventually become the largest cruise market in the world.”
Small wonder that moves are afoot at both governmental and corporate levels to harness all that potential. Spanning modernization of ports, purchase of ocean liners, multimodal transport mechanisms and longer-duration visa-free visits to certain Chinese mainland areas in the neighborhood of ports, the big-ticket measures seek to monetize multibillion-dollar opportunities.
Michael Thamm, CEO of Costa Group and Carnival Asia, spoke after parent Carnival Corp, the world’s largest leisure travel company, announced a 40:60 joint venture with China State Shipbuilding Corp in November.
“We are here in China not only to operate ships but to build the whole ecosystem, including shipbuilding, supply chain, port development, distribution and destinations. We would like to contribute to building a cruise economy in China, putting into full play the multiplier economic effect,” Thamm says.
Meanwhile, Shanghai is planning the Wusongkou International Cruise Terminal, an integrated complex complete with duty-free shops comparable to those at its international airport.
The products sold at the port’s boutiques and in nearby areas will be upgraded. The idea is to boost coordinated growth of leisure cruises and city tourism, the local government says.
The planned terminal will, in itself, be a potential tourist attraction, much better than the current port in Shanghai, where a solitary duty-free shop covers less than 500 square meters, and sells mainly cigarettes and liquor. For today’s outbound and inbound cruise tourists, that simply won’t suffice.
Shanghai’s local government therefore said in a statement issued in October that the planned terminal will house large duty-free stores that will stock high-end goods.
A campaign to spread awareness about China’s various visa-free visit policies is also being launched. Unlike airline passengers, many foreign cruise travelers are not aware of China’s 144-hour visa-free transit policy.
International travelers from 53 countries can enter the Chinese mainland through ports in Shanghai, as well as Jiangsu and Zhejiang provinces.
Publicity for visa-free policies can attract more inbound foreign tourists to enter China by cruise ships, the Shanghai government said in its statement.
South China’s island province, Hainan, has also started a pilot run of a 15-day visa-free policy for tourists who take cruises and enter the country from the island.
The plans for upscale cruise terminals are being shaped by the commercial success of duty-free shops at key airports, such as Shanghai Pudong International, fueled by a constantly growing number of international travelers with strong spending power.
The airport said in its earnings report that income growth outside the aviation sector mainly comes from the growth of duty-free retail. Tourists spend not just on hotels, local travel, food and shopping at malls and other areas but also at airports.
China is the world’s No 1 outbound tourism market. According to the United Nations World Tourism Organization, the country’s 142 million outbound travelers spent an estimated $258 billion (226 billion euros; ￡203 billion) traveling abroad last year.
If they are encouraged to spend at home as well, and if more Chinese people begin traveling, then new attractions such as cruise trips and modern terminals at ports could prove to be a big draw.
Consequently, Shanghai will encourage cruise operators and third-party agencies to further develop the domestic cruise markets. Efforts are underway to introduce links between cruise lines, airlines, trains and buses to enable multimodal transport for travelers.
In addition, the city will promote cruises at airports, train stations and other places with large passenger flows.
At the corporate level, CSSC Carnival Cruise Shipping, the China-based joint-venture cruise line, will be operating its own fleet to serve Chinese guests by the end of 2019.
It announced an agreement to purchase two existing ships from Carnival Corp’s Costa Group, a major cruise operator in Europe and Asia.
The first of these ships, Costa Atlantica, is scheduled to be transferred to the new Chinese cruise line by the end of 2019.
Currently, Costa Atlantica mainly sails from southern China seaports like Shenzhen to Southeast Asian countries such as Vietnam and the Philippines. Its sister ship, Costa Mediterranea, will be transferred at a later date, according to the company.
Moreover, the joint venture signed a contract for two new cruise ships, the first in a China-built large cruise fleet.
The two new cruise ships will be built by Shanghai Waigaoqiao Shipbuilding Co, a State-owned shipyard in Shanghai. The first vessel is expected to be delivered in 2023 to serve the Chinese cruise market.
The agreement also gives the joint venture the option to order four additional China-built cruise ships to serve the growing demand of Chinese consumers.
Thamm of Carnival Asia said: “As a large, dynamic and underpenetrated cruise market with continued long-term projections for outbound tourism growth, China represents a significant opportunity for the cruise industry to raise awareness, consideration and demand for cruise vacations in the coming years.”
But the cruise industry in China faces a significant hiring challenge in the face of growing demand. By 2020, the talent gap in the sector will reach 280,000, according to the Cruise Lines International Association.
MSC Cruises, one of the major cruise lines with a dominant market share in Europe, South America and South Africa, entered the China market in 2010. The company said it needs 32,000 new crew members, including entry-level employees and midlevel managers by 2022.
( China Daily European Weekly 12/14/2018 page28)