The recent booming of the cruise industry in the Asian market has proved to be a great business opportunity for first movers such as Genting Hong Kong, Colin Au, the Group President reveals in an interview with World Maritime News.
According to Cruise Lines International Association’s (CLIA) 2016 Asia Cruise Trends study, there has been a double-digit growth in Asia’s cruise tourism, both in capacity and destinations, and there have been no signs of slowing down.
The study revealed 1,560 sailings were scheduled for 2016, up by 43 percent when compared to the previous year. Speaking of number of ships, this meant 60 ocean cruise ships were set to sail in Asia, 15 percent more ships than the 52 operating in 2015. The capacity to carry passengers also surged by 51 percent in 2016, bringing the overall passenger capacity on ocean cruise ships to expected 3.2 million in 2016.
China has been singled out as the main driver of passenger growth in Asia, adding 770,000 more cruise travelers since 2012. Four of the five other major markets also saw double-digit 3-year compound growth: Taiwan (29 percent), Japan (30 percent), Hong Kong (69 percent) and India (37 percent), CLIA’s data showed.
However, the growth in popularity of the emerging market needs to be accompanied by equivalent development of various other supporting segments of the industry, i.e, infrastructural investments in ports and elsewhere, so as to be able to welcome the inbound cruise ships and their passengers.
Responding to these market developments, Genting Hong Kong established Dream Cruises in late 2015, a new company focused on the Chinese and Asia Pacific market, and ordered two large cruise ships for the company.
In the following text, Mr. Colin Au sheds light on the activities of Genting Hong Kong in this particular sector and shares his company’s views on the market trends in the region.
WMN: What prompted your decision to launch a new brand?
Colin Au: After the purchase of Crystal Cruises and the deployment of a number of contemporary cruise ships in China, Genting Hong Kong believed that Asia was ready for a luxury brand and therefore used the two new ships, each with about 140 Dream Palace suites, to position it as the only luxury brand in Asia.
With first-mover advantage, we are taking the lead with Dream Cruises to cater to the luxury segment, which is supported by a booming middle and affluent class, bringing far-reaching economic changes. We are confident the introduction and launch of Dream Cruises as the first-ever Asian based luxury cruise line is timely and will not only meet, but also spur the growth of the high-end cruise market across the region.
WMN: Do you expect it to be challenging fighting for the Asian cruise market share with other cruise lines eyeing the same market such as Carnival and Royal Caribbean?
Colin Au: The Asian cruise market is still in its infancy and the size of the population and economic growth rate means that a number of brands in various market segments can cater for this market and have their market share of a very large cruise potential in the region.
WMN: With the first ship, Genting Dream, delivered in 2016 and the second one, World Dream, to be delivered in fall this year, Dream Cruises – together with Star Cruises – will offer the largest cruise capacity days in Singapore and Asia by the end of 2017. Do you think ports in the region are fully capable of accommodating your ships? If not, will the capacity addition accelerate port infrastructure upgrades?
Colin Au: Both China and ASEAN, the Association of South East Asian Nations, have put priority on developing cruise tourism with many port and cruise infrastructure projects being developed by the government, especially in China.
On our part, we are developing the Guangzhou (Nansha) port, Manila port, North Bali port and Shimizu (Mt Fuji) port with local partners and will be developing more as we deploy our cruise ships to new destinations.
WMN: Are there any plans to order greener ships, powered by LNG, in the future?
Colin Au: Currently there are only a few ports in Asia where LNG is available and LNG prices in Asia are costly as LNG has to be imported outside Asia. However, we are closely and constantly following the developments and the opportunities, as well as the suitability of timing in exploring the use of new alternatives to power our future newbuilds.
For the time being, Au said that the company has decided to invest in scrubbers to be installed on its newbuilds in compliance with regulations which will enter info force soon.
WMN: In 2016, Genting Hong Kong acquired four German shipyards – three controlled by MV Werften and one by Lloyd Werft- shipyards that have already built mega cruise vessels. In your opinion, how much is it likely for shipyards in Asia to make the entrance in cruise shipbuilding business? What remain to be key challenges?
Colin Au: Shipyards in Asia do not have a good historical record in building cruise ships as they are located far from the cluster of subcontractors that are present in Europe. Nevertheless, Asian shipyards will eventually build cruise ships as the current European shipyards will not be able to cater for the growth of the cruise industry in Asia as well as to replace the existing fleet of cruise ships.
It will take time for the cruise shipbuilding cluster to be developed in Asia due to the rigorous project management process, as well as the training and experience of work force as cruise ship building is completely different from building other classes of ships. Cruise ships built in Asia will become a reality in the future and Chinese yards have orders for cruise ships slated for delivery in 2023. German yards will have to keep ahead in terms of quality, technology and efficiency to effectively compete in the future.
WMN: After acquiring Nordic shipyards, Genting Hong Kong announced it will invest EUR 200 million in various improvements which would help the shipyard build large cruise ships. Have you already started with these improvements? What has been done so far?
Colin Au: Yes, we have committed to about EUR 100 million out of the EUR 200 million budgeted till 2020. Orders have been placed for thin plate laser welding line, computer control systems, cabin factory and other improvements. We plan to break ground for the new building halls in May in Rostock.
WMN: In conclusion, how would you assess your business operation in 2016 as a group and what are the major plans for 2017?
Colin Au: 2016 and the first quarter of 2017 have been very eventful for Genting Hong Kong, highlighted by a series of landmark achievements and important milestones such as:
- Launching the Dream Cruises brand
- New homeports in Manila, Shanghai, Osaka, Tokyo, Kaohsiung and Laem Chabang (Bangkok)
- New destination ports in Kagoshima, Shimizu, Bali and Surabaya
- Creating Genting Cruise Lines, which will help combine services, wherever possible, of the three cruise brands – Star Cruises, Dream Cruises and Crystal Cruises – for better efficiencies.
In fall this year, the company’s second Dream Cruises’ ship, World Dream is expected to set sail on its maiden voyage to Asia. Newbuilds of the Crystal River Cruises, Crystal Bach and Crystal Mahler will also embark on their inaugural voyages in Aug and September 2017 respectively, followed by Crystal Debussy and Crystal Ravel in 2018, setting sail on the Rhine and Danube rivers.
World Maritime News Staff; Image Courtesy: Genting Hong Kong; Meyer Werft