In the view of Liu Zinan, senior vice president of Royal Caribbean Group and chairman of Asia, if "restart" and "confidence recovery" are the key words of China's cruise market in 2023, then "cautious optimism" and "involution" are his trend predictions for China's cruise market in 2024.
As the head international cruise company, Royal Caribbean's performance in many quarters in 2023 exceeded expectations, although the Chinese sector has not yet restarted, but it has deployed the 2024 route and pre-sale work in advance, as of the end of 2023, the direct sales channel has completed twice the original pre-sale target, and the travel agency channel has also completed the cabin cutting and recognition work within two months, and Chinese consumers still maintain a high enthusiasm for outbound cruise tourism. With the operation of large domestic cruise ships and the increase in the proportion of Chinese-funded cruise ships, China's cruise market will present a situation in which foreign-funded cruise ships and Chinese-funded cruise ships each account for half of the country. Liu Zinan predicts that in 2024, the total scale of the national cruise market will be able to recover to 70% of 2019, and in 2025, the overall level will fully recover to the level of 2019.
The direct sales channel pre-sale has been completed twice the original target
Talking about Royal Caribbean's operation in 2023, Liu Zinan gave the answer that "net profit will catch up with the same period in 2019, and the group will further raise its performance expectations".
In fact, Royal Caribbean's performance in the second and third quarters has already exceeded expectations. Specifically, in terms of the performance data for the third quarter, Royal Caribbean's total revenue in the third quarter was US$4.2 billion, net profit reached US$1 billion, and the load factor was 110%, and the revenue of North America and Europe routes exceeded expectations. Liu Zinan said that in the third quarter, consumers' pre-trip booking and on-board spending far exceeded the level of 2019.
Although Royal Caribbean's rapid recovery in 2023 is mainly driven by the cruise market in North America and Europe, it can't wait to announce its return to the Chinese market, and the pre-sale of 2024 routes in the Chinese market has also added a lot of weight to its performance growth. At the end of June 2023, Royal Caribbean announced the launch of international cruise routes departing from Shanghai, China to neighboring countries from April 2024. In the first three days of the sale, the consumer market responded enthusiastically, with first-day ticket bookings doubling the all-time high. The most popular bookings are concentrated on the maiden voyage, May Day and summer long voyages, and some popular family room types for individual voyages have been sold out. Liu Zinan also revealed that the direct sales channel has been showing a growth momentum, and by the end of 2023, it has completed twice the original pre-sale target.
In addition to the direct sales channel, the booking situation of the travel agency channel also reflects the consumer preference for cruises. "After three years of stagnation in the international cruise market, it took only two months for a travel agent to subscribe to a seat in Royal Caribbean, which was very difficult. After a few months of observation, Liu Zinan found that after three years of cold winter, after the resumption of outbound group tours, at least 60% of tourists are newcomers, and only 40% of "old friends" have made outbound cruise tour products. In this context, the travel agency completed a series of tasks such as cutting cabins, recognizing cabins, and paying deposits within two months, and the speed was very impressive.
Liu Zinan believes that both consumers and travel agencies still maintain a very high enthusiasm for international cruise ships after the restart, which also makes international cruise companies more confident in the Chinese market.
Royal Caribbean Spectrum of the Seas
The proportion of customers around the age of 30 has increased
The three-year shutdown has brought a lot of changes to the market. In Liu Zinan's view, the biggest difference from 2019 is that the cruise passenger group has become younger and younger, and the trend of parent-child is more obvious.
Liu Zinan revealed that judging from the booking situation in 2023, the number of consumers around 30 years old has increased, while in 2019, the average age of consumers was 40 years old. In the post-epidemic era, the first customers to choose outbound travel are the elderly with higher incomes and relatively high energy, as well as young people who have more time and need to travel with their children. "On the one hand, after three years of separation from outbound travel, consumers aged 30-40 prefer family travel, and cruise is just a way to take a parent-child vacation, and on the other hand, the elderly group prefers a safe and convenient way to travel. ”
As Liu Zinan said, the development of China's cruise market is gradually becoming younger. According to the 2023 State of the Cruise Industry Report released by the Cruise Lines International Association (CLIA), the cruise tourism market will recover faster than the global outbound tourism market, and young guests will be the main force for the future development of the cruise market. The average number of cruise voyages in Asia and China is less than four days, and the average age of guests is around 40 years old.
The Chinese market still adopts the big ship strategy
As for the business strategy of the Chinese market, Liu Zinan believes that large ships and new ships will continue to attract Chinese tourists.
Royal Caribbean Sea Symbol
It is understood that the 168,000-ton gross tonnage "Ocean Spectrum" will return to the Chinese market in the spring of 2024, and the ship is also the largest cruise ship currently operating in Asia. In Liu Zinan's view, the current "price war" in China's cruise market occurs more between low-end cruise products, and luxury ships of more than 160,000 tons can avoid short-term contact with these products, and differentiated product positioning can attract more consumers.
In addition to stepping up the deployment of the Chinese market, Royal Caribbean is also targeting Chinese tourists to take cruise vacations from abroad. Liu Zinan said that in November 2023, Royal Caribbean's 250,000-ton new large ship "Ocean Marker" was officially delivered, and will start its maiden voyage from Miami, USA in January 2024. At present, the pre-sale of new ships has been opened for Chinese tourists, and while competing for market share in China, it is also necessary to seize the cruise tourism market of Chinese tourists departing from overseas destinations.
As for the continuous investment in large ships and new ships, Liu Zinan said that although the continuous construction of new ships increases the cost of enterprises, it can maintain product innovation and attractiveness, which is particularly important for a cruise company. After the full recovery of market capacity in the future, how to balance the investment between profit margin and product innovation needs to be continuously studied.
Form a parallel situation of Chinese-funded and foreign-funded cruise ships
After Royal Caribbean "restarted" the deployment of the Chinese market, the market environment it faced was very different from that of 2019. Talking about future market changes, Liu Zinan judged that with the first commercial voyage of domestic large-scale cruise ships imminent, the pattern of China's cruise market is quietly changing.
According to Liu Zinan's recollection, before 2019, international cruise companies accounted for more than 90% of China's cruise market share, including Royal Caribbean, MSC Mediterranean and other cruise companies deployed large ships in China, and it can be said that at that time, basically more than 100,000 tons of large ships were foreign-funded cruise ships.
Liu Zinan continued to say that in the future, with the increase in the proportion of Chinese-funded cruise ships, the share of foreign-funded cruise ships and domestic cruise ships will basically show a situation where they will each account for half of the country.
It is understood that the first domestic cruise ship "Aida Modu" has a total tonnage of 135,500 tons, 2,125 guest rooms, and a passenger capacity of 5,246 people, and will officially start commercial operation on January 1, 2024, and deploy multiple routes and many voyages throughout 2024.
However, the cruise industry in mainland China is still in its infancy, and it is inevitable that it will encounter some challenges in the process of further development. Liu Zinan believes that for Chinese-funded cruise ships, it is necessary to make up for the shortage of cruise talents and the lack of maritime training resources, but also to seize their own development opportunities.
In 2024, the market will recover to 70% of 2019 levels
"In terms of capacity, the Shanghai cruise home port market will recover to the level of 2019 in 2024, and the total size of the national cruise market can recover to 70% of 2019. Looking forward to 2024, Liu Zinan gave such a set of data.
Liu Zinan believes that China's cruise market wants to quickly return to the track of healthy development after restarting, mainly depends on the business environment, the recovery of market confidence, as well as the business model, execution, development concept of cruise companies, etc. Although the current market development is not necessarily more optimistic than in 2019, favorable policies are also being introduced to continue to help the cruise market "set sail".
In September 2023, the General Office of the State Council issued a notice on "Several Measures to Unleash the Potential of Tourism Consumption and Promote the High-quality Development of the Tourism Industry", proposing to improve cruise and yacht tourism policies, and strengthen the construction of cruise ships, yacht marinas, coastal holiday camps, sports boat docks and other tourism supporting service facilities. Optimize the design of cruise routes and cruise tourism products, and promote the full resumption of international cruise transportation. Previously, the General Office of the Ministry of Transport also issued the "Notice on Doing a Good Job in the Comprehensive Resumption of International Cruise Transportation" to fully resume international cruise transportation in and out of cruise ports in and out of the mainland. Since the resumption of outbound travel in 2023, China's cruise market has continued to usher in favorable policies.
Faced with when the market will fully recover, Liu Zinan also gave his own judgment: it is expected that by mid-2025, the overall level of China's cruise market will fully recover to 2019. He expects that in the future, Royal Caribbean will gradually increase its capacity, strive to mobilize more cruise ships to deploy in the Chinese market, and accelerate the return to the right track.
Beijing Business Daily reporter Wu Qiyun