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August 24, 2010

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Cruise companies look for smooth sailing in Shanghai

CRUISE ships that depart from Shanghai as a home port will climb to 66 this year, compared with 32 last year, while inbound and outbound tourists will rise 36 percent to 250,000, the city's tourism authority estimates.

Yao Qing and his wife are planning an eight-day cruise trip to Abu Dhabi in the United Arab Emirates in November.

The middle-aged couple spent 14,000 yuan (US$2,050) on a five-day cruise trip to Hong Kong and Taiwan in April and said traveling by sea opened their eyes to the pleasures of non-jet holidays.

"The cruise provided us with more time to relax, instead of hurrying from one scenic spot to the next without time to truly enjoy our trip," Yao said.

They are not alone among Chinese embarking on the pleasures of sea travel.

"Young and middle-aged professionals are the customers most likely to take a cruise in the next two to three years," said Zhen Weihang, secretary-general of the China Cruise and Yacht Industry Association.

Shanghai is banking on it. The city wants its expansive harbor facilities to be a port of call for large cruise liners carrying tourists.

Shanghai Wusongkou International Cruise Terminal in northeastern Baoshan District, which finished its first phase of construction in late April, is expected to be a complement to the Shanghai Port International Cruise Terminal in downtown Hongkou District, which opened in 2008.

After Wusongkou is fully completed in 2012, the number of berths for cruise ships will increase to eight from six.

The terminal will be able to accommodate 100,000-ton luxury vessels.

The port's ultimate goal is to receive 1 million international travelers a year, said Lu Guangyuan, general manager of Shanghai Wusongkou International Cruise Terminal Development Co. The port operator is also working with authorities and industry associations to develop logistics, training and other commercial centers, along with restaurants and other tourist amenities.

The city has received more than 120,000 cruise ship tourists from May to July, a fourfold increase from the same three months a year earlier, according to border administration officers.

This year, the Shanghai World Expo is swelling the numbers of visitors arriving by sea. City officials want to build on those gains.

Cruise ships that depart from Shanghai as a home port will climb to 66 this year, compared with 32 last year, while inbound and outbound tourists will rise 36 percent to 250,000, the city's tourism authority estimates.

"Chinese tourists are starting to consider cruises as one of their options when planning vacations," said Gianni Onorato, president of Costa Crociere SpA, a British-American owned Italian cruise line based in Genoa. "That is a big step forward, but we still have to implement a greater marketing effort to enhance market penetration. We may break even this year after entering China four years ago."

Tourists taking cruises in Southeast Asia are expected to grow by an average 5 percent a year, reaching 820,000 by 2020, officials from the industry association estimate.

China serves as an important cruise hub in the summer and wintering-over berth in the off-season. Cruise lines are focused on the market because so many Chinese now have the disposable income to travel.

"China has a potential of around 40 million cruise guests annually if the market penetration reaches the level of the US and Europe," Michael Bayley, senior vice president of Royal Caribbean Cruises Ltd, said at the All Asia Cruise Convention in Suzhou in June.

Miami-based Royal Caribbean signed a memorandum of understanding last year with Shanghai International Port Group to strengthen a strategic partnership in areas of cruise operations in port, market promotion, staff training and management-experience exchange.

"Such strategic partnerships are an important and valuable element of our activity to increase penetration in China," Bayley said.

The Chinese market is somewhat similar to the European market in the early 1990s, and much more effort is needed to increase customer awareness about cruises, according to Costa's Onorato.

"We're happy to see infrastructure construction going at a very high speed in China," he said. "They are most certainly aiming their efforts to meet the needs of the ocean liner industry."

However, many problems remain. For one, competition for cruise tourists is increasing.

Costa Crociere has launched regular routes between Hong Kong and Taiwan, targeting Chinese mainland travelers.

The industry has also yet to effectively tap into the potential of travelers who live in China's second and third-tier cities.

"Only about 100 travel agencies are qualified to sell outbound cruise packages, while in Europe and North America, we sell those packages on our own," Onorato said. "We believe the government, in time, will allow more players in the industry."

Indeed, the government is doing just that.

"We are working on draft regulations to encourage foreign-owned cruise liners to set up individual enterprises to run their cruises and ships, and sell tickets as well as travel packages," said Song Dexing, director of the Water Transportation Bureau of the Ministry of Transport.

That effort dovetails well with the goal of the State Council, China's Cabinet, to turn Shanghai into a major global shipping hub. Upgrading port facilities for all shipping will benefit cruise lines as well.

More routes across the Taiwan Strait are expected to be unveiled, Song told an international cruise conference in Tianjin last month.

The Shanghai Maritime Safety Administration is also working with the Ministry of Transport to allow cruise ships leaving China to stop at multiple cities before they head off to overseas destinations.

As it stands now, for example, a cruise ship headed from Shanghai to Japan makes a direct trip after passengers board. Under one pilot program, the ships are now permitted to stop at Qingdao and other coastal cities to pick up tourists.

Foreign travel agencies will be allowed to operate outbound cruises leaving from Shanghai after new rules expected to come into effect at the end of this year, Shao Qiwei, director of the National Tourism Administration, told an industry forum in June.

"Shanghai needs to draft more measures to support cruise ship companies because experience shows us that a booming cruise industry also lifts the hotel and restaurant sectors and boosts commercial property development," said Cheng Juehao, deputy professor at Shanghai Maritime University.




 

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