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SINGAPORE: The global cruise industry is looking to Asia as a major growth engine. Industry players said on Friday the region's growing middle class is providing an untapped market for operators.
Market watchers said cruise operators' bottomlines have been hit by the global financial storm. Industry leader Royal Caribbean International, for example, saw its revenue per guest, per day, drop by more than 10 per cent in 2008, compared to the previous year.
Many operators have resorted to big price discounts to fill their ships, with some giving one-for-one offers.
Adam Goldstein, president & CEO, Royal Caribbean International, said: "We have continued to fill our ships, but we have resorted to discounting the price to do so.
"It's better for our company and the industry to fill the ship. It's better for the guests as there's a more vibrant atmosphere onboard; it's better for the shareholders – there's more onboard spending; it's better for the crew, there are more gratuities."
Despite the drop in revenue, experts said the industry is poised for steady growth of about 5 per cent annually, propelled by Asia's economic recovery.
The region currently makes up only 5 per cent of the world cruise market, with the Caribbean region at 55 per cent.
Operators are eyeing this potential and have been gearing up to tap into it by increasing their capacity and operations to Asian port cities.
Royal Caribbean, for one, is stepping up operations in the region by having one of its ships, Legends of the Seas, permanently based in Asia.
The company is aiming for at least 100 per cent year-on-year growth next year when it more than doubles the number of its cruise offerings to 60.
Another operator, Costa Cruises, is also increasing its capacity when it brings on stream a larger ship which can take about 1,700 guests next April.
Cheong Teow Cheng, president, Singapore Cruise Centre, said: "Asia is just waking up. It's new to the cruise industry and Asia has also – at the moment – the most movement, with the population here getting more educated, with more capacity to spend. Therefore, they are the ones that are now looking at holiday options."
But experts said many developing countries in Asia need to invest in upgrading their port infrastructure to fully maximise the region's potential.
For example, industry players said a number of ports and cruise terminals in China and Indonesia need to be upgraded as soon as possible to cater to the region's growth.
The reward for having cruise ships dock at its shores is attractive, with estimates showing that for every S$1 spent onboard, S$8 will be spent on land for a location like Singapore.
Singapore Cruise Centre, a market leader in cruise terminal operation, expects a lot of potential revenue to be made in the area of overseas consultancy.
Industry players also plan to step up efforts to educate travel agents and consumers in Asia on the concept of a cruise holiday.
"If you look at the growth of cruising over 40 years in North America, one of the enabling factors was knowledgeable, motivated travel agents promoting cruises to their customer base. (It's a) long way to go here in Asia to produce that kind of environment," said Goldstein.
- CNA/so
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