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China lifts ban on group travel – ‘a breakthrough for East Asia cruising,’ expert Ted Blamey says

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Ted Blamey, Principal CHART Management Consultants
The news that China has lifted pandemic-era restrictions on group tours for more countries, including key markets such as the US, Japan, South Korea and Australia should prove to be the most consequential development of the past five years for the cruise industry in East Asia, said Ted Blamey, principal of CHART Management Consultants.

China recently lifted its ban on group travel to 78 more countries, finally including South Korea and Japan – two countries that previously featured on ex-mainland China cruises and key contributors to the exponential growth of the Chinese passenger source market to over 2m in the 2010s.

While the Japan ban was the result of widespread travel restrictions imposed by Beijing to contain the pandemic at home in early 2020, the South Korea ban goes back to March 2017.

South Korea

The inability of ships departing mainland China with Chinese passengers to call at any South Korean destination thus imposed had three significant effects on the growth and development of cruising throughout East Asia – a region heavily dependent on the mainland China source market.

‘Firstly, the effect on South Korea was huge,’ Asia cruise industry expert Blamey told Seatrade Cruise News.

‘Up to that time, Jeju Island, a beautiful destination in its own right, was the most frequented transit port in all Asia with 460 calls in 2016 and 477 in 2017 and was the top port for total calls in the former year and second only to Shanghai Baoshan in the latter.’

Blamey noted: ‘South Korea as a whole hosted 745 calls in 2016 and 737 calls in 2017. But, by 2018 there were just 134 calls to all South Korean ports and 172 in 2019. Jeju Island had just 29 transits in 2019, its all Asia ranking dropping from 1 to 43.

‘Second, it meant that the number of itinerary options from the many ports along the China coast shrunk alarmingly. West coast of Japan ports became almost the only accessible destinations in the under five-day cruise durations favoured by Chinese cruisers.

‘Capacity began to fall,' he remarked. (Foreign-flag ships are under cabotage restriction and until very recently, there have been no China-flagged ships, so from China homeports no transits were possible along the China coast either.)

China source market

Both effects, in turn, led to a pause in the up-to-then spectacular growth of the mainland China source market. Having reached 2.4m and thus the second largest in the world in 2017, passenger counts dropped 1.6% in 2018 and another 18.6% in 2019.

That enabled Japan to become the beneficiary. In the immediate pre-COVID year, 2019, Naha Okinawa (234 transits), Fukuoka (217 transits), Nagasaki (195), Miyakojima (166) and Ishigaki (155) were the top five transit ports in all Asia, according to CHART Management data.

Now South Korea is again on the map. And group travel restrictions brought about by the pandemic bring Japan destinations back, too.

‘That is the best possible news for rekindling cruise deployment and capacity in East Asia,’ Blamey said.

Opportunities

It also opens opportunities for cruise lines to increase yields: ‘It was having more than one country on the itinerary that drove yields for the cruise lines sailing out of north China. Cruises to Japan alone had to compete with land tours,’ Jeff Bent, managing director of Worldwide Cruise Terminals, operator of Hong Kong’s Kai Tak Cruise Terminal told Seatrade Cruise News.

Blamey believes now the many ‘excellent’ turnaround ports from China’s north (such as Dalian, Qingdao and Tianjin) to Shanghai and south to the Greater Bay Area ports, such as Hong Kong and Shenzhen, will see their long-awaited [full] activity return.

Cruise ships back

Since the beginning of 2023, Hong Kong’s cruise scene has had a strong comeback. As of mid-July, Hong Kong secured 165 cruise calls from 18 cruise lines in 2023 and, according to the Hong Kong Tourism Board, the cruise market is expected to chalk up healthy growth rate in the coming years as well.

Resorts World Cruises committed to year-round homeport deployment in Hong Kong with Resorts World One from March 2023 onwards, offering three departures from Kai Tak Cruise Terminal on a weekly basis.

MSC Cruises, with two ships, and Royal Caribbean International with Spectrum of the Seas are returning to ex-China cruising in 2024.

Seatrade Cruise Asia Pacific in Hong Kong

Blamey, who will feature as a moderator at the upcoming Seatrade Cruise Asia Pacific in Hong Kong, October 24-26, commented: ‘We will all be watching with keen anticipation. And, no doubt, this will be a hot topic at the conference.’ 

TAGS: China