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Hong Kong Seeks Share of Burgeoning Mainland Luxury Cruise Market

Chinese tourists are embracing cruise holidays as never before, drawn by falling prices and tailored packages. With its own tourism sector suffering as a result of the recent decline in mainland visitors, Hong Kong is now keen to get on board.

Photo: Luxury cruises: A golden ocean-going industry.
Luxury cruises: A golden ocean-going industry.
Photo: Luxury cruises: A golden ocean-going industry.
Luxury cruises: A golden ocean-going industry.

According to figures published by the China Cruise and Yacht Industry Association (CCYIA), China's entry-exit cruise passenger throughput stood at 1.24 million in 2015, up 44% year-on-year. The number is expected to reach 1.45-1.5 million in 2016. The Ministry of Transport is also projecting 4.5 million passengers by 2020, representing an average annual growth rate of 33%.

Taking a more negative view, a number of recent media reports have stated that "cruise vacations account for less than 1% of China's outbound travel". Contrary to this, a number of industry players have maintained China's cruise industry is vibrant and has huge potential for further growth.

Japan and South Korea

The shift from sightseeing to vacation-oriented travel is a general trend within the tourist industry. Cruise vacations to Japan and South Korea have become particularly popular and are now an indispensable part of China's cruise economy. Cruise holiday operators have also been keen to woo tourists with lower prices and a number of add-on incentives.

According to information published on one Chinese tourism website, cruises departing from China are mainly bound for Japan and South Korea. Among the more popular destinations in 2015 were Fukuoka, Jeju, Sapporo, Nagoya, Nagasaki, Okinawa and Kagoshima. In part, this reflects the success of Japan in attracting such visitors, with the country going as far as to waive visa requirements for cruise ship passengers.

Photo: On-board leisure facilities.
On-board leisure facilities.
Photo: On-board leisure facilities.
On-board leisure facilities.

With increasing numbers of cruise ships and growing competition in recent years, the once huge fees demanded by cruise operators have dropped noticeably. Short cruise holidays bound for Japan and South Korea, for instance, now start from around Rmb3,500. In other countries, the typical Luxury costs are between Rmb5,000 and Rmb10,000 per person.

According to number of industry insiders, cruise vacations are cheaper than many domestic short trips and do not involve the usual hassle associated with travelling. The overall appeal is that cruise ship passengers can enjoy a great value for money vacation, complete with good food, leisure, exercise, recreation, shows, sightseeing, shopping and a variety of other services. As in many other areas of commerce, the true secret to success in China's cruise market lies in the accurate targeting of potential passengers and keen pricing.

Understanding mainland consumers' vacation preferences and customising the service exactly to their requirements have proved the catalysts for the explosive growth of China's cruise industry.

While once happy to hop off a bus, take a few photos and then go back to sleep on the coach, the contemporary Chinese tourist has different expectations, preferring a more leisurely and more experiential holiday. As a result, cruises, which combine outbound travel with shopping, leisure and a genuine family experience, are becoming increasingly popular among Chinese tourists.

In terms of the preferences of mainland travellers, they put a higher priority on shopping, wining and dining than passengers from other countries. They are also more likely to take part in group recreational activities. Western travellers prefer reading or enjoying the sun while on board ship. Even when the ship reaches a port of call, many western passengers stay on board to read or sleep rather than going a shore. Chinese tourists are different. They like to travel with friends and relatives and are more likely consume a significant volume of food. They also have a strong desire to shop, resulting in many of the more popular items  in the on-board duty-free shops having to be replenished several times over. When a ship berths at a port, virtually all the Chinese passengers tend to go ashore for sightseeing or shopping.

Some cruise lines have shop ambassadors, dedicated members of staff who provide brand introductions to Chinese passengers in Mandarin, recommending products they may be interested in. A number also have bilingual children's cruise ambassadors, staff members who socialise with children and their families during dining hours and other activities. Certain ships have also started proving on-board dance lessons. Many Chinese passengers are said to have welcomed these innovations.

The quality of other cruise-related services is also said to be improving. Many tour operators, for instance, now offer to collect passengers from their homes. This removes all the hassle associated with making your own way to the dockside.

Promotion of Cruise Vacation Sales

Overall, there are seen as three key factors driving the cruise holiday sector in China.

Photo: Luxurious and spacious: Contemporary cruise liners.
Luxurious and spacious: Contemporary cruise liners.
Photo: Luxurious and spacious: Contemporary cruise liners.
Luxurious and spacious: Contemporary cruise liners.

1. Changes to China's demographics have generated a number opportunities for the development of the cruise industry. With typical cruise passengers tending to be middle-aged or elderly people, the growing number of such individuals has inevitably provided a boost to the cruise industry.

2. With the rapid increase in the demand for more leisurely vacations and the growing popularity of parent-child TV programmes, family trips have never been more popular. The cruise industry is ideally positioned to take advantage of this shift in demand.

3. As the cruise industry has a positive knock-on effect to a number of related industries, its development is expected to receive an increasingly high level of official support.

Zheng Weihang Executive Vice-president and Secretary General of the CCYI, believes that, although China's cruise market has seen rapid growth and its potential is huge, many of those living in the more inland cities know little about cruise vacations nor are there many cruise packages suited to their needs.

Some efforts, however, are being made to address this. According to one mainland tourism website, more than 10 cruise vacation roadshows are now targeting these inland cities. In 2016, this has seen promotional events held in Changsha, Xian, Sichuan, Xinjiang, Chongqing, Xiamen, Guangzhou and Kunming.

Highlighting the importance of this, Zheng said: "We should not simply regard selling cruise products as selling tickets. At present, China's tourism industry lacks systematic planning with regard to the service standards, professional qualifications, pricing and product content of cruise vacations."

Zheng noted that Travel Industry Council of Hong Kong has trained many cruise vacation tour leaders. Taiwan's International Cruise Council has introduced a similar policy since it was launched last year. The mainland is notably lagging in this respect. Zheng said: "Cruise lines and the CCYIA should work together to provide systematic training for sales personnel and tour leaders."

Hong Kong

The Hong Kong government is now actively promoting cruise tourism in the hope of attracting more tourists from around the world. This is largely because Hong Kong's inbound tourism and retail sales figures both dropped as the number of mainland tourists visiting Hong Kong plunged.

Photo: Highly promoted: Cruise holidays.
Highly promoted: Cruise holidays.
Photo: Highly promoted: Cruise holidays.
Highly promoted: Cruise holidays.

Orchid Yu, the Hong Kong Tourism Board's (HKTB) Representative in Guangzhou, said this year Hong Kong is focussing on promoting multi-destination itineraries in partnership with various bureaus of the China Maritime Silk Road Tourism Promotion Alliance. It is also looking to promote Maritime Silk Road tours in conjunction with the Asia Cruise Cooperation (ACC).

Five Asian cruise destinations – Hainan, Hong Kong, the Philippines, Taiwan and Xiamen – jointly launched the ACC in March of this year. Yu said that the HKTB now hopes to work closely with a number of mainland ports to help expand the Asian cruise market and develop new routes.

Relying on the resources of homeports, the ports of call and the cities where the ports are located, the cruise industry plans to establish a trans-regional, trans-sectoral, multi-domain and multi-channel industry chain. This will encompass shipbuilding, port services, logistics support, transportation, sight-seeing, catering, shopping, banking and insurance. Its ability to harness the coordinated development of multiple sectors has seen the cruise industry hailed as the "golden ocean-going industry". In total, cruise terminal services are said to generate about 30% of the revenue of the entire industry chain.

Hong Kong currently has two cruise terminals – the Kai Tak Cruise Terminal and the Ocean Terminal in Tsimshatsui. The Hong Kong government hopes to make good use of the city's excellent location and Victoria Harbour in particular. To this end, it is looking to optimise hardware and support services, establishing Hong Kong as a leading regional cruise hub and turning the cruise industry into a new growth area for Hong Kong's tourism sector.

Lin Qing, Special Correspondent, Beijing

Content provided by Picture: HKTDC Research
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