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Cruise Business Commentary - Quantum of the Seas' move to China could be game changer for cruising

Royal Caribbean International's decision to base the 167,800 gross ton Quantum of the Seas in Shanghai in May 2015 after an initial winter season in New York marks the first time a cruise brand has decided to operate a ship of its latest class on the Chinese market. And that decision could be a game changer for the cruise industry.

Until now, cruise lines have sent ships that have seen years of service on the North American and European markets to China. However, some critics have noted that as the region has some of the finest hotels in the world, it is unwise to assume that Asians in general and Chinese in particular would flock in great numbers on these sometimes already tired ships.

On the other hand, a decision to send a brand new ship that often carries a price tag in the region of $1 billion to the Far East, only to operate it half-empty, would be a disastrous decision. Quite simply, the volumes have to be built up first and once the market has reached a critical mass, then it is the time to up the ante and deploy a first rate vessel on the Asian market.

The growth rate of China has been very rapid: it was only in 2006 that Costa Crociere, the Italian unit in Carnival Corp & plc group, based the 28,400 gross ton Costa Allegra in Shanghai,which made it the first western cruise line to have a ship based there.

For Royal Caribbean International, the time to send a top rate ship to China has now come. As company executives explained in a conference call, the line needs to seek a balanced view to its ship deployments, so that customer needs and company's interests will both be met in an optimal way. This does not only mean looking for the best yields at all times, but also to factor in long term strategic prospects in the equation. Deployment of Voyager of the Seas and soon afterwards Mariner of the Seas to Shanghai had significantly boosted the line's business there. Clearly, this must have been a major factor to base Quantum of the Seas in Shanghai: the long term strategic prospects appear encouraging and the executives noted they have lots of confidence in the China business.

The decision is likely to have a number of consequences:

-Royal Caribbean's competitors will have accept that the Chinese / Asian markets have become significantly more important regions for the business than what they have been so far,

-Asia will join North America and Europe as key deployment area of first rate cruise ships,

-Dated tonnage will have increasingly limited prospects to trade in the region and

-Major brands will have to factor in the requirements of the Asian market in the design of their new ships.

For Royal Caribbean International, a lot is at stake. Success with Quantum of the Seas could help it to establish itself as the definite market leader in the Chinese source market and pave the way for positioning of the third Oasis class ship, currently under construction, to China. The financial rewards of all this could, in the medium to long run, be phenomenal.

But risks are great as well.

Booking windows are short on the Chinese market, which limits the visibility the management has to foresee the development of the business. The business has substantial seasonal fluctuations and political risks arising from maritime border disputes between China, Japan and South Korea can also upset the business. In case major problems arise that require repositioning ships away from China, the positioning voyages will be long and therefore, expensive.

Royal Caribbean's announcement came a short while after Star Cruises had unveiled a decision to build a second 150,000 gross ton cruise ship at Meyer Werft in Germany that also targets the Asian market. With three 20-year plus old ships in its fleet, Star may have to axe these, perhaps in favour of a newbuilding. A major competitor has just thrown the gauntlet at Star's home turf.

Strategic decision in changing world to send Quantum of the Seas to China

The decision to send Quantum of the Seas to China in May 2015 was based on strategic considerations in a changing world, said Lisa Lutoff-Perlo, svp operations at Royal Caribbean International, the contemporary market unit of Royal Caribbean Cruises Ltd (RCCL).

"The world is changing, this ship appeals to guests from all over the world and we need to take a balanced view where our hardware is based," she said in as conference call. Ship deployments are not always based on prospects regarding revenue, but also strategic objectives of the company in the long term. "The decisions where to sail from are also of strategic, not always financial nature," she stated.

Certain modifications will be required in retail offerings, galleys and menus before the 167,800 gross ton Quantum of the Seas will be introduced on the Chinese market, with Shanghai as its base. The company would unveil its 2015-16 Asia-Pacific programmes at a later stage, said Chris Allen avp of global deployment and itinerary planning, declining to comment on questions regarding whether Quantum of the Seas would operate cruises from other ports than Shanghai.

Allen said that the Chinese market had seen an acceleration on business following the introduction of Voyager of the Seas and then Mariner of the Seas there and that the company has a lot of confidence in this market and its potential.

Royal Caribbean officials that hosted the conference call said that the deployments of the third Oasis class and third Anthem class ships had not been decided yet, but that a balanced view with regards of what the company can offer to its customers in various parts of the world plus what is in the interest of the company itself would determine these deployments.

The decision to base Quantum of the Seas in Shanghai resulted in a number of other changes in ship deployments, the most important of which being the transfer of Anthem of the Seas, the second unit of the Anthem class from Ft Lauderdale in Florida to Cape Liberty in the New York region for the 2015-16 winter season.

Quantum of the Seas to be homeported in Shanghai

Royal Caribbean International today announced that its newest ship, Quantum of the Seas, will make its home port in Shanghai (Baoshan), China, bringing the company's most innovative ship to the world's fastest-growing cruise market. The ship will reposition to China in May 2015, following her inaugural winter season sailing out of New York Harbor to the Caribbean. In China, Quantum of the Seas will join Mariner of the Seas and Voyager of the Seas in Asia, increasing the company's capacity in the region by 66 percent.

"Consumers in China have grown to expect the best the world has to offer, and Quantum of the Seas meets that standard like no other ship," said Adam Goldstein, President and COO, Royal Caribbean Cruises Ltd. "We are ready to accelerate the growth of this vital market with a ship that will capture the imagination of travelers looking for a one-of-a-kind vacation experience."

"Every trend we are seeing in China tells us we can achieve real long-term competitive advantage and appealing returns on our investments in this fast-growing market by accelerating our presence there," Goldstein said. "We will have to be nimble, but the ability to move fast is one of our strengths."

Goldstein said the company was able to make the move because its new-ship pipeline will keep the New York region supplied with top-rate ships as well.

"We are very mindful of the importance of New York, which is why we are bringing Liberty of the Seas and then Anthem of the Seas to this market."

Quantum of the Seas will debut in November 2014, and will spend its inaugural season sailing from Cape Liberty in Bayonne, N.J., before repositioning to China in May 2015. Beginning late June 2015, the ship will sail three- to eight-night itineraries year-round from Shanghai to Japan and Korea. Liberty of the Seas will then arrive to Cape Liberty to sail to Bermuda, the Caribbean, and Canada and New England for the 2015 summer and autumn seasons. The Freedom-class ship will be the company's newest and largest ship to offer cruises to Bermuda from the New York-metropolitan area.  Finally, Quantum of the Seas' sister ship, Anthem of the Seas, which launches in April 2015, will complete her inaugural Europe season from London (Southampton), U.K., before arriving to Cape Liberty in November 2015 to continue Quantum-class cruising to the Bahamas and Caribbean for the winter 2015-16 season.

"These incredible ships will meet the sophisticated expectations of consumers in Shanghai, New York and London. Our mantra for the new Quantum class of ships is 'this changes everything' – and upping our game in these key markets achieves just that," said Dominic Paul, Vice President, International, Royal Caribbean International. "Our distinctive style of high quality innovative cruises has become known to travelers around the world and we will continue to deploy our most technologically advanced ships where the demand is, with the expectation of winning new converts to cruising."

The groundbreaking Quantum-class ships, Quantum of the Seas and Anthem of the Seas, will debut a new set of first-at-sea onboard experiences, such as Ripcord by iFLY, a heart-pounding skydiving experience; North Star, a thrilling adventure that transports guests more than 300 feet in the air on a breathtaking journey; cutting-edge transformative venues including SeaPlex, the largest indoor sports and entertainment complex at sea with bumper cars, roller skating and more; and the cruise line's largest and most advanced staterooms ever.  Guests also will enjoy the new Quantum-class "Dynamic Dining," a completely new culinary experience that offers a landscape of 18 restaurant concepts as vast and varied as dining in the world's most cosmopolitan cities, including specialty restaurants created with partner-chefs Jamie Oliver, Devin Alexander and Michael Schwartz.

The Quantum Class spans 18 decks, encompass 167,800 gross registered tons, carry 4,180 guests at double occupancy and feature 2,090 staterooms. More information on Quantum class is available at http://www.RoyalCaribbean.com/QuantumoftheSeas. Media can find more details, images and videos at http://tinyurl.com/n6fmy5k.

TUI Travel expects online to account for half of 2014 bookings, to generate £1.8 billion in turnover

TUI Travel, the London based tour operator, expects online sales will hit 50% of total sales this year, worth £1.8 billion in turnover, Travel Weekly reports in a daily newsletter.

The company is a major retailer of cruises and owns Thomson Cruises that operates five ships on the British market.

A quarter its bookings in the first quarter of this year came via tablets or smartphones, the company has revealed. This represents a 78% increase in bookings made from mobile devices between January and March last year. In the same period, 49% of total web traffic came through smartphones.

TUI UK and Ireland managing director Dave Burling said: "This shows the investment we have made in these devices. Customers want to research these holidays on the devices of their choice."

Burling added: "We have got a huge online business. This January we had half a million browsers of our hotel videos on our website; this gives you an indication of the scale of the business.

“The biggest trend online has been the move towards developing sites which can work not just on desktops but on tablets and smartphones. We are continually looking at investing in this business and in terms of the quality and service we give,” he was quoted as saying.

Explorer to join Voyager and Radiance of the Seas in Australia and South Pacific for winter 2015-16 season

Royal Caribbean International today announced that Explorer of the Seas will join Voyager of the Seas and Radiance of the Seas for the winter 2015-16 season at Sydney. Royal Caribbean’s winter 2015-16 Australia, New Zealand and South Pacific season will open for reservations on April 29, 2014.

From November 2015 through April 2016, Explorer of the Seas will primarily sail 11- and 14-night New Zealand cruises, with up to seven ports of call in the South Pacific country, while Voyager of the Seas will sail 8- to 12-night South Pacific and Fiji cruises, all round-trip from Sydney.

During its inaugural Australia season, Explorer of the Seas also will offer 3- and 4-night cruises in November 2015 and in February and March 2016 for vacationers to sample one of the world’s largest and most innovative cruise ships. During its third consecutive winter season, Voyager of the Seas also will sail a 13-night South Pacific and New Zealand cruise on Nov. 5, 2015, which will call at Bay of Islands and Auckland in New Zealand, as well as a 7-night Tasmania cruise on Nov. 28, which will feature an overnight at Hobart, as well as call at Melbourne, Australia.

For its part, Radiance of the Seas will offer vacationers a variety of itineraries to the South Pacific and Fiji, New Zealand, and throughout Australia. Vacationers can choose eight- to 14-night South Pacific itineraries from Dec. 2015 through Jan. 2016, or circumnavigate Australia in November 2015 and from late-February through March, 2016 – each comprising a 16-night New Zealand and southern Australia sailing from Sydney to Perth (Fremantle), followed by a 16-night northern Australia and Bali cruise back to Sydney. Radiance of the Seas also will sail four- to seven-night Tasmania cruises, departing Dec. 11, 2015, and Feb. 18 and Mar. 28, 2016, and a 10-night Queensland cruise, departing Feb. 8, 2016.

Vacationers also can chose among a wide variety of sailings that span distant regions as part of each ship’s repositioning. Explorer of the Seas will take guests on a 10-night Singapore to Perth itinerary, departing Nov. 3, 2015, followed by a 16-night southern Australia and New Zealand cruise that arrives in Sydney on Nov. 29 for an overnight stay. The ship reverses these itineraries at the end of the season, departing from Sydney on Apr. 12 and from Perth (Fremantle) to Singapore in late April. Voyager of the Seas also will reposition between Singapore and Sydney on 14-night northern Australia itineraries on Oct. 22, 2015, and April 16, 2016, with the former featuring an overnight in Singapore.

Alternatively, Radiance of the Seas’ trans-Pacific crossing will combine Hawaii with Australia or Canada on a 10-night Hawaii cruise from Vancouver, B.C. and subsequent 18-night, trans-Pacific itinerary to Sydney, departing Sept. 11 and 21, 2015, respectively. A return trans-Pacific cruise will sail from Sydney to Hawaii on Apr. 3, 2016, followed by an 11-night Vancouver-bound sailing on Apr. 20.

Viking Star