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Asian cruise market: In numbers

Firstly, according to CLIA (Cruising Lines International Association), Asians are discovering cruising in a big way – for the first time, the number of cruisers in Asia crossed the four million mark (4,052,000), a growth of 20.6 per cent over 2016.

Secondly, capacity is arriving in a big way – ships are moving East and Asia is set to be the fourth largest cruise region in the world. According to CLIA, the number of cruise ships in Asia went from 43 in 2013 to 78 in 2018, the number of cruises and voyages grew from 861 to 2,041 in the same period and passenger capacity ballooned from 1.51m to 4.26m.

The biggest cruise company in Asia, Genting Cruise Lines, which has been operating for 25 years, has daily capacity out of Singapore of 16,000 and by 2020/2021, this will grow by an additional 18,000 a day, said Michael Goh, senior vice president – international sales.

Royal Caribbean Cruise Lines is injecting more capacity into the region as well. Angie Stephen, AVP, Managing Director – Asia Pacific, said Asia was the last frontier in cruising – ships have nowhere to go with Europe, the US and Caribbean pretty much saturated. “You are the future,” she said as she urged the audience of 400 travel agents to become “dream makers not order takers” and “convert land tours to cruise tours”.

The interesting thing about cruising in Asia is that customers are much younger – 4 in 10 are under 40 – and cruises are of shorter duration – 4-6 nights. And penetration is still very low – in Indonesia, only one per cent of its population has cruised, said Pauline Suharno, secretary general, ASTINDO National Board.

With younger cruisers, shorter duration trips and a vast pool of first-timers from emerging markets, this means that they’d be more inclined to searching and booking on digital channels. Look at how low-cost airlines moved consumers en masse and while some will argue that a cruise sell is more complicated than an airline ticket, technology has evolved that now allows more complex packages to be sold.

With the audience comprised of traditional travel agents, cruise liners were understandably coy about sharing their digital strategy but clearly, they have to be where their customers are – at least in the inspiration stage and then driving them to Omni-booking channels.

“There’s no ignoring the social digital channel, we have to be where the customers are,” said Stephen.

She urged the audience to focus on creating first-timers. “Repeats are about switching brands, we collectively have to grow the market and go after the first-timers.”

Arnie Weissmann, editor-in-chief of TravelWeekly, moderating a panel, said that in markets like North America and Europe, direct sales and some marketing through OTAs has brought travel agent market share down to about 70 per cent on average. His observation was that with Asia more advanced than Western societies in digital fluency, a shift towards digital channels could be inevitable.

However, he added that “while I do think digital tools will move the cruise industry forward, I also think it will be tough for the lines to crack 30 per cent direct in any market (about where they are in the US) because of the complexity of the product and the cost for a family of four”.

“Even a “cheap” cruise – say, USD 800 per person for six days – is over USD 3,000, and people get overwhelmed looking at 40 cabin categories on one ship. The people booking directly are doing it because it’s easy for them to find their cabin – their prime motivator is “cheap,” and they’ll book the smallest inside cabin they can find, and stay in public spaces as much as they can. Cruise lines, of course, would love to sell 100% direct, but it’s still agents who bring in the high margin bookings. That said, there are some very successful large call centre travel agencies in the US that flood the internet with the cheap price offers, and are then very, very good at upselling.”

An industry observer noted there are digital opportunities in the searching stage. “Where does someone go to search for cruises in Asia? Why hasn’t it happened here, even if it’s a meta-search site?”

Expedia sells cruises in the US but it is understood the business is primarily booked offline, and hence has heavier cost structures than other travel segments.

From what I saw, cruise companies are certainly good at creating videos to inspire travel agents to sell but it’s a different ballgame when it comes to inspiring consumers. Meghan Joseph, client partner, travel, Facebook called out the rise of mobile videos which will form 70per cent of Internet traffic by 2021 (Cisco). “The recommended duration is 15 seconds but you have to catch their attention in three seconds,” she said.

Nicole Lai, head of marketing for RCCL, said the 3-second was an eye-opener, she had been advised by her agency it was six seconds. She noted that in China, her colleagues are active on using WeChat as a distribution and booking channel.

So clearly cruising has to compete for consumer’s time and attention span like every other sector of travel.

The positives about cruises are that their ships are destinations unto themselves. There’s nothing you can do on land that you can’t do on cruises and cruise companies are into creating experiences today.

There are Go-Kart races, submersible underwater trips, thematic cruises with celebrity chefs, and celebrities of all kinds and Genting’s acquisition of the Singapore entertainment brand, ZOUK means wild parties on the open sea. River cruises are also rising in popularity with ships able to get into narrower waterways and again, river cruisers in Asia are younger than in Western markets.

You save 20-30 per cent more vacation time, the cruise liners say – check-in is simpler, especially the fly-cruise services offered in Singapore where the cruise terminal and the airport work hand-in-hand to remove baggage worries and you don’t have to pack and unpack on the journey.

Cruise companies are certainly not behind in using technology to create better experiences onboard. RCCL recently launched its Excalibur app, with features that include a facial recognition system and virtual reality previews of shore excursions.

One bone of contention raised is the charging of wifi onboard cruise liners and it reminded me of the same arguments heard about hotels a few years ago. For big ocean cruise liners, wifi is expensive and it’s good ancillary revenues. But the argument is that if more people are allowed to share real-time, then you’d be able to inspire more first-timers. “I promise you that whatever you give away in wifi, you will more than get back in new customers,” said Joseph.

Even entertainment onboard is changing. Colin Kerr, senior vice president, entertainment, Genting Cruise Lines, said the shift is from passive to engaged. “In the past, audiences watched, today they want to participate.”

When Dream Cruises hosted the first “China’s Got Talent” competition on its inaugural ship Genting Dream, it encouraged audience members to download the app so they could participate as commentators in real-time.

“We try and gather as much data as we can on customers beforehand so we can look after their personal needs and tastes onboard,” said Kerr, who was a cruise director before looking after entertainment onboard its ships.

For traditional travel agents, cruising is the last bastion – with rail and buses beginning to be disrupted digitally, it is the one segment that delivers healthy commissions (15-20 per cent) and higher ticket prices. River cruises typically fetch higher commissions.

Dynasty Travel, Singapore is going one better – it is offering chartered and thematic cruises and creating a new market of cruisers in Singapore, said Alicia Seah, director, public relations and communications.

Steven Ler, President of NATAS (National Association of Travel Agents Singapore), said agents and cruise liners have to work together to put together creative packages to give people more reasons to cruise. The slow pace of cruising and family bonding time is an attractive incentive for Singaporeans, who are well-travelled and now want to explore a different way of travel.

RCCL’s Stephen, who recently arrived in Singapore to take on the new APAC role, urged travel agents not to sell cheap. “It is the ugliest word.”

Her words, however, fell like a drop in the open ocean. When I asked the audience at the end of the day what would inspire them to sell more cruises, they shouted, “Commissions and price.”

It is clear though with the way the tide’s turning, those who insist on selling on price and commissions and do not think creatively and adapt will, well, drown eventually.


Event: Cruise World Asia by Travel Weekly Asia