China already profitable for Norwegian, company gets license to sell direct

Norwegian Joy - highest occupancy of any ship in the fleet Norwegian Joy - highest occupancy of any ship in the fleet

Norwegian Cruise Line Holdings is 'very, very pleased' with the performance of Norwegian Joy. 'We're profitable in China,' Frank Del Rio told financial analysts Thursday. That's noteworthy for a brand new to the region and for a ship that's been in the market just half a year.

In a significant development of recent days, NCLH obtained a license to sell direct in China. That will enable the company to monetize its relationship with Alibaba, Del Rio said, adding that data mining is very important in a 1.4bn market where only 2m people have cruised. Alibaba is key to that.

Currently ship-chartering travel agents market cruises in China as shopping tours, not excursion experiences, Del Rio explained, so there's opportunity to educate consumers.

2018 gives 'reason to be excited' since the industry's China capacity is down, and South Korean ports may be returning to itineraries since Beijing recently announced the intent to improve relations with Seoul.

Since Chinese prefer shorter cruises, there hasn't been as much destination content available, and destinations are the key driver of yields.

'We hope that when South Korea comes back on, there will be more balance,' Del Rio said. Instead of just shopping, Chinese may be enticed to cruise for the cultural appeal of the destinations.

In the four months Norwegian Joy has been in the market, NCL has learned a lot about preferences and habits. The ship has the highest occupany of any in the fleet, Del Rio said, since Chinese often travel in family groups.

'They sure like to eat,' he added. 'Our food costs in China are a little higher than expected because they do enjoy meals.'

NCLH hopes to introduce shore excursions as a key component of cruising. Tours are not that popular among Chinese, according to Del Rio, who said they 'want to shop.' That's good for on-board revenue in that Norwegian Joy has vast retail offerings.

But Del Rio would love to see shore excursions brought into the mix of favorite activities since they help diversify the product and give another aspect to the cruise experience that people can go home and talk about.

Posted 09 November 2017

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Anne Kalosh

US editor of Seatrade Cruise Review and Seatrade Cruise News

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