NCL boss talks Luxury cruises in China.

Why cruise lines need Asia’s cashed up retirees.

The boss of Norwegian Cruise Lines, Regent and Oceania has spoken of the challenge facing the markets of China and Southeast Asia.

Unless Chinese retirees can be persuade to cruise, the markets risked hitting a growth roadblock because young families could not afford long holidays.

Frank Del Rio, who this month launched the work’s most luxurious cruise ship, and whose line will send the newly built Norwegian Joy to Shanghai next year, said he would only consider entering the Chinese market with a luxury vessel in 2020 or beyond.

But he told ASEAN Cruise News the China market, where he and his competitors are sending many new ships specially built for Asian cruisers, had a hurdle to overcome.

While there was enormous potential – 125 million Chinese visited foreign countries in 2015, and the government is promoting leisure travel and making it easier by relaxing visa requirements – there was risk for cruise companies.

“Everything points to the Chinese consumer having the financial wherewithal to continue travelling and the time – which is becoming more of a constraint to travel,” Mr Del Rio said. “But I see a lot of parallels with what is happening in China today with what happened in the United States 34 years ago, when the cruise industry started. So far, so good. But soon, they’re going to hit a couple of obstacles that they have to jump over so that growth can continue.”

Mr Del Rio recalled the lessons from America: the length of cruises had to grow to allow for industry expansion: first 3-4 days around Miami, then 7 days in the Caribbean basin, and finally longer cruises to Alaska and within Europe. It drove the industry’s growth.

“It was the elderly that fuelled the growth. And the question has to be for China: will the elderly take up cruising? And how quickly? Do we have to wait 20 years for a 40-year-old to turn 60 before he goes on more cruises? Or will a 60-year-old today go on a cruise?

“Because if we don’t get that person who is not working anymore, the cruises can’t increase in length and we can’t have itinerary variety. And if we can’t have itinerary variety, we’re going to be stuck with three, four and five-day cruises out of Shanghai and Beijing.

“And if that’s the cases, we’ve got a problem. Because the Chinese government may be building a lot of infrastructure in Hong Kong and Beijing and Shanghai, but when you look out three to four days from that ports, where do you go? There are a couple of ports in Korea, and couple of secondary ports in Japan – in three or four days you don’t get to Tokyo.

“We have to jump that next step in China. If you can’t make that jump, if the Chinese do not start to wanting to cruise in the Caribbean, which represents 43 per cent of the deployment of all cruise ships, there is a problem. Those are some of the challenges that face the cruise industry.”

He added that he expected a luxury market in China in 2020 or beyond – and was considering putting the Regent Seven Seas Explorer’s sister ship, already slated for delivery in 2020, in China.

China was already a big consumer of luxury goods like fashion and cars, so luxury cruises could find a strong market.

He added his line had big plans for Cuba in 2017. Oceania’s Regatta and Marina were scheduled to go there and another ship for Norwegian would be there in 2017 – the line was just awaiting a phone call from the Cuban government approving the itineraries.

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