Shanghai Lures Cruise Business

New cruise terminal under construction designed to handle three megaships

By: Kevin Brass

In an attempt to woo more cruise ships to mainland China, Shanghai has started construction on a $240 million cruise ship terminal on the northern end of the Bund. When completed in 2007, the new facility will be big enough to handle three 80,000-ton megaships at the same time.

The project is the latest sign that mainland China is poised to develop into a major cruise center, after years as little more than an add-on to Hong Kong-based itineraries.

“China is generating a huge amount of interest,” said Andrew Poulton, director of strategic marketing for Radisson Seven Seas Cruises.

In many ways, China may be the sleeping giant of the cruise business. Although a regular stop for many ships and one of the fastest growing destinations in the world it’s still relatively untapped as a cruise market.

“For years, they didn’t have any decent ships in the area,” said Pat Bennett, partner in San Francisco-based TheCruiseExperience.com. “But now there are a lot of good ships out there.”

In many ways, 2004 is a banner year for cruises to the mainland. After SARS washed out the 2003 season, Radisson, Princess Cruises, Silversea Cruises and Crystal Cruises all included China in itineraries this year.

This year Princess added its first-ever summer itineraries to China as part of the Pacific Princess’ world cruise. With three ships in Asia, Princess will offer rooms for 9,012 passengers on routes including China this season, compared to a capacity of 5,200 passengers in the 2003-2004 season.

As a destination, China fits many of the criteria for the modern cruise client, especially those looking to explore an exotic location. For clients that have already taken cruises on the most popular European and Caribbean itineraries, China can be the perfect change of pace.

“People are looking for something different,” said Craig Mungary, manager of Central Valley Cruise Adventures in Fresno, Calif. “They’ve done the Mediterranean. They’ve done Alaska.”

As a region, Asia is one of the fastest growing destinations for cruise companies. In 2002, the cruise lines reported 360,000 bed days spent in Asia, a 57 percent increase from the year before, according to statistics compiled by the Cruise Line International Association (CLIA).

But the CLIA numbers also reflect the ebbs and flows of interest in the area. In 1987, the cruise lines reported 465,000 bed days in Asia, a level that hasn’t been touched since. By 1999, the visits to Asia had sunk to 188,000 bed days, as cruise companies deployed more ships to Alaska and the Caribbean.

The roller coaster-like numbers reflect the cycles of the industry, and the desire to rotate ships to different areas to offer regular customers new choices. Next year, Radisson’s Seven Seas Voyager will skip China to focus on Australia, Poulton said. Silversea will stop in China 18 times this year including its first visit to Shanghai but in 2005 the Silver Shadow won’t be in the area and the Silver Cloud will probably only make two stops in China.

“It’s a function of our broader deployment,” said Jim Burnside, Silversea’s vice president of revenue and passenger services. “We don’t have a lot of repetition.”

As an exotic destination, cruise companies worry that clients are unlikely to visit China year after year like they do in the Mediterranean or Baltic. The sheer distance and expense of traveling to China also mute the companies’ enthusiasm for expanding their China offerings.

“I don’t think anyone has really tried to do the China market,” said Bob Chase, owner of Chase Travel Service in Glendale, Calif. “They’ve just stuck their feet in the water to see if anybody bites.”

The lingering perception of SARS and the avian flu is also muting the cruise companies’ short-term enthusiasm for China.

“We do feel that there is a strong interest in China,” said Crystal Cruises spokeswoman Mimi Weisband. “But I think it has been affected by fear of SARS.”

To help boost its March cruises to China, Radisson was offering clients their choice of either free economy air from North America, a free business-class air upgrade or a $1,500 savings off the cruise fare. But the October cruise is “booking very well,” a clear sign that the public’s fears are waning, Radisson’s Poulton said.

The cruise companies are also developing new strategies for Asia. Star Cruises recently announced that its Hong Kong-based megaship SuperStar Leo, the largest ship to ever dock in Shanghai, would move from Asia to Alaska this summer and permanently join the fleet of Star sister company Norwegian Cruise Line. Meanwhile, the mid-size Norwegian Sea will transfer to Star.

“Medium-size ships offer greater deployment flexibility and more diversification of capacity in a developing market where demand patterns have yet to be established,” according to a Star release.

Star Cruises is considering using the new Shanghai terminal as a homeport for several of its ships, according to news reports. Star, now the third largest cruise company in the world, is reportedly negotiating to invest in a project to add hotels, shopping and an entertainment complex to the cruise ship facilities.

The new facilities may vault Shanghai into competition with Hong Kong and Beijing as a launching port for itineraries.

“Going forward we may consider Shanghai as a turn port rather than as a transit call,” said Silversea’s Burnside.

The China talk is welcome news for travel agents who say China is often one of the first destinations mentioned these days by cruise clients.

“I think the demand is there,” said Don Berkebile, a cruise specialist for the Travel Dynamics Group, an agency based in La Jolla, Calif. “I have a half-dozen clients right now who want to know about China.”

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