As the tastes of Chinese tourists change, increasingly aligning with international tourism trends, the cruise industry finds itself playing catch-up.
The boom in Chinese outbound tourism, driven by higher incomes and looser restrictions, has had a global economic impact. It has also given rise to certain generalisations being ascribed to Chinese tourists, such as a preference for popular landmarks and a penchant for luxury shopping, which have been closely watched by the global tourism sector, among others. In fact, the actual tastes of tourists from China increasingly resemble those of tourists from the West.
This departure is most apparent on cruise ships, and this segment of the tourism sector is seeing the effects. America continues to dominate, with U.S.-based Carnival, Royal Caribbean and Norwegian Cruise Line together controlling nearly 80% of the global market. While Americans comprise the vast majority of cruise-goers, the Chinese come in second. In recent years cruise lines have banked on their numbers growing.
Now the cruise industry is contracting in China, with passenger numbers dropping by 1-2% in 2018 and estimated to dip by as much as 15% more this year. The problem might be attributed to cruise lines playing to Chinese passengers’ tastes, real or perceived, a bit too much, offering what David Beckel of research firm Bernstein describes as “floating shopping malls with casinos”.
Some cruise lines now find themselves lagging newer tourism trends being adopted by Chinese and Western tourists alike. Major landmarks and shopping no longer top the agenda. Rather, travellers are eschewing material things in favour of experiences, or setting out for what Cruise Lines International Association, an industry trade group, calls “achievement travel”, seeking “experiences beyond sightseeing.” According to consultancy Oliver Wyman, the share of Chinese holiday spending on shopping has fallen nearly 10%, from 41% in 2016 to 32% by 2018.
The problem is showing up in the numbers: Analysts at Goldman Sachs estimate that only 0.5% of potential passengers in China took a cruise in 2017. Some blame regulation, but as The Economist points out, cruise lines that have relied too much on shopping for profits have suffered. In 2017, Norwegian launched its first ship tailored to China, loaded with plenty of shopping, gambling and Asian restaurants. It flopped, and had to be revamped and re-routed to Alaska at a cost of $50 million in 2018.
That same year, Royal Caribbean grounded its SkySea Cruise Line, which had been developed specifically for the Chinese market in a joint venture with Chinese online travel agency Ctrip. Royal Caribbean continues to operate in China – by offering a Western experience at a premium price. Executive Chairman Richard Fain claims that it is among the few lines in China making money, and it is adding more ships.