The cruise industry’s gold rush to China, if not over, has entered a new phase: For the first time in at least four years, cruise capacity in China will not grow in 2018.
That means that the focus and management attention that has been lavished on the world’s most populous country may now be turning elsewhere.
To hear evidence of that, listen to the list of places that Norwegian Cruise Line Holdings CEO Frank Del Rio reeled off when asked if he’s ready to put a second ship in China.
“We have many other either unserved or underserved markets that we would also consider in the mix, should ships become available to us,” Del Rio said in response to a question from a Wells Fargo analyst. “We don’t have a presence in the mid-Atlantic states. We’re not in Baltimore. We’re not in Charleston. We don’t have a presence at all in the world’s second largest port, which is Fort Lauderdale. We don’t have a presence in the Gulf States of Texas or Alabama. We don’t have a year-round presence in Tampa or New Orleans or in Los Angeles.”
Del Rio went on to say that the Norwegian Cruise Line brand will have three ships in Alaska this summer, where some competitors have as many as eight.
“So, given our fleet size today and the fact that we will only be taking one ship per year, it could be a couple of years before we consider adding more tonnage to China, if the conditions in the rest of the world remain as robust as they are today,” Del Rio said.
The Chinese boom really got going in 2014 when Royal Caribbean Cruises Ltd. announced it would devote its brand-new Quantum of the Seas, the first of a new class of ship, to the Chinese market.
In a world full of supposedly bold moves, that one really was. And it prompted other lines for the first time to put brand new ships in China, as everyone feared being left behind in the scramble to impress the Chinese.
Being the preferred brand in a market that was projected to be the biggest in the world in a decade or so was worth the gamble of putting brand new tonnage in an unproven and opaque market.
So when Princess Cruises sent the Majestic Princess to Shanghai last year and Norwegian sent the Norwegian Joy, in addition to the Quantum and ships from Costa Cruises and others, the result was a crowded field.
Throw into the mix the spat between China and South Korea that limited itineraries out of northern China, and China became a much weaker cruise market last year.
While cruise lines insist that they’re in it for the long haul, and even in the short term it has been profitable, the sense that China is going to deliver a big increase in global cruise revenues has been tempered.
Already Norwegian’s focus for 2018 has turned to introducing Norwegian Bliss to the North American market, and in particular the U.S. West Coast. Who knows where else in the U.S. Norwegian ships might be coming next?