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Asian volumes, capacity continue to grow – CLIA study

  • Written by Kari Reinikainen

Cruise Lines International Association (CLIA) has released the findings of the new, comprehensive 2016 Asia Cruise Trends study. The Asian source markets experienced the most growth year over year in ocean cruise passengers with 24% increase from 2014 to 2015 and a total of 2.08 million passengers in 2015. Asian cruise deployment, capacity and destinations have been showing remarkable growth too.

"While we expected Asia to experience record-breaking growth in cruise travel, we are astonished at the rate at which the region is emerging as one of the most significant cruise destinations and cruise source markets in the world,” said Dr. Zinan Liu, Chair of CLIA North Asia, in a statement.

“The Asia Cruise Trends project has again developed extremely valuable data on what is happening in Asian cruising, its current size and recent growth trends”.

“The cruise industry has been nimble and responded quickly to the demand for cruise travel in Asia by delivering cruise ships with amenities and experiences tailored to Asian travellers," said Cindy D’Aoust, President and CEO, CLIA. “Asian cruise travel continues to deliver a growing number of enticing opportunities for international guests to visit Asia's fascinating destinations."

The project reveals many essential facts and trends on the current State of the Asia Cruise Industry:

  1. More Cruises Offered – The number of ocean cruises and voyages offered in the region continues to grow to meet demand with 1,560 sailings scheduled for 2016 alone, a sharp increase of 43 percent when compared to last year. There has also been a significant increase in the number of days cruise ships are in operation, from 4,307 operating days in 2013 to 7,918 in 2016.
  2. Increase in Cruise Ships – This year, 60 ocean cruise ships will sail in Asia versus 43 ships in 2013, 15% more ships than the 52 operating in 2015. Of the ships sailing this year, 14 operate year-round while another 12 have extended deployment in Asia.
  3. Capacity Boost – The capacity to carry passengers continues to grow, surging by 51% in 2016. As a result, the overall passenger capacity on ocean cruise ships will reach 3.2 million in 2016.
  4. Demand for Destinations – Cruising in the region includes more than 204 destinations across 17 countries, making traveling by cruise ship one of the easiest ways to see multiple destinations throughout Asia. While the introduction of new ports throughout Asia is great for travellers, it is also great for local economies by bringing more visitors to Asian destinations.
  • Japan is again the biggest destination country with 1,526 port calls in 2016, followed by China (850), South Korea (745), Vietnam (466) Malaysia (422) and Singapore (391).
  • The most visited port in 2016 will be Jeju Island, South Korea (460 calls), closely followed by Shanghai (437), Singapore (391) and Fukuoka (258).
  1. Asia Passenger Growth –Asian travellers are cruising more than ever before. Asia experienced the most growth year over year in ocean cruise passengers with an impressive 24% increase from 2014 to 2015 and a total of 2.08 million ocean cruise passengers in 2015.
  2. Increase in Chinese Cruisers – From 2012 to 2015, the number of Chinese passengers grew at an annual compounded rate of 66%. Growth in 2015 alone was 40%. In 2015, 986,000 passengers were from mainland China, representing close to half of the Asian volume, compared to 703,000 in 2014. In both 2014 and 2015, China has been the world's fastest growing major source market.
  3. Preference for Shorter Cruises – Asian passengers continue to prefer shorter ocean cruise lengths. In 2015, almost three out of ten (30%) Asian passengers continued to choose cruises two to three nights in length and half (50%) chose four to six night cruises. Almost a fifth of passengers chose extended cruises with 19% of Asian passengers opting for seven to 13 night cruises. As a result, the average length of cruises taken by Asian passengers has increased slightly from 5.2 nights in 2014 to 5.3 nights in 2015.
  4. Asian Exploration – While Asian outbound tourism is exploding around the world, the study found that Asian cruisers are primarily exploring Asian destinations. More than eight out of ten Asian passengers (84%) cruised within Asia. The remaining 16 percent flew to cruise destinations outside the region, primarily in Europe with 74% of the international volume, followed by Alaska and the Caribbean. From Japan, 23% are traveling outside Asia, along with 30% from India. Only 3.6% of Chinese travel outside of Asia
  1. Under 40 Cruisers – In China, the average age of cruisers is below 43 with about 42% of cruise travellers below 40 years old. For the region, the same segment represents 38% of all cruisers.
  1. Attracting the Asian Traveller – Cruise lines have recognized the need to britheir best ships and amenities to the region. New on board offerings tailored to the Asian guests include inclusive on board activities aimed at multi-generational families, high-end shopping, languages, adapted menus to include familiar favourites and regional cuisine, cabin amenities and high-tech features.

NCLH shares open stable after Tuesday’s heavy losses

  • Written by Kari Reinikainen

Shares in Norwegian Cruise Line Holdings, Ltd (NCLH), the world’s third largest cruise shipping group, opened a fraction higher on Wednesday morning following a loss of almost 12% on the previous day.

In early trading on Nasdaq in New York on Wednesday, NCLH shares traded at around $38.00, about 0.2% higher from the opening.

On Tuesday, they closed 11.8% down on the day at $37.66 after NCLH had trimmed its earnings forecasts for the rest of the year and abandoned a goal to reach earnings per share of $5.00 in 2017.

Norwegian lowers guidance, abandons $5.00 EPS target for 2017

  • Written by Kari Reinikainen

Norwegian Cruise Line Holdings, Ltd (NCLH), the world’s third largest cruise shipping group, has lowered its guidance for full year earnings and abandons.

The company cuts its earnings per share (EPS) forecast for this year to the range of $3.35 to $3.45 from a forecast of $3.65 to $3.85 in its first quarter interim report.

NCLH expects net yields to increase by 1.0% in as reported terms compared to a forecast of a 3.5% rise in the previous interim report.

“As a result of its revised expectations, the Company no longer expects to achieve its previously stated target of $5.00 Adjusted EPS in 2017,” NCLH said in a statement.

 "Although we experienced significant booking headwinds we delivered earnings consistent with expectations, generating Adjusted EPS growth of 20% for the first half of the year. As we enter the second half of the year, we are revising our earnings expectations primarily as a result of four factors: continued weak demand from our core North American consumer for European sailings at a time when half of our fleet is deployed in the region, including eight of our highest yielding ships; the effect of a weaker British pound post the Brexit vote; an adjustment to earlier pricing expectations for Miami-based Caribbean itineraries, which continue to outperform prior year despite a doubling of capacity in the low season months; and the impact from maintaining pricing discipline to minimize discounting," said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings.

 "With this revision to expectations, we are confident we will deliver strong earnings growth for full year 2016 and grow 2017 Adjusted EPS in the range of 15% to 25%," he said.

Norwegian group’s second quarter net profit falls on higher operating costs

  • Written by Kari Reinikainen

Norwegian Cruise Line Holdings, Ltd, (NCLH) the world’s third largest cruise shipping group, has reported a fall in second quarter net profit on higher operating expenses, but the profit rose in the first half of the year.

Group net profit fell to $145.2 million in the second quarter from $158.5 million in the same period last year, as operating expenses increased by $42 million. Revenues rose to $1.19 billion from $1.09 billion.

In the first six months of the year, the profit rose to $218.5 million from $137.0 million. Revenues increased to $2.26 billion from $2.03 billion, the company said in a statement.

Adjusted Net Yield increased 1.2% on a Constant Currency basis or 0.8% on an as reported basis on Adjusted Net Revenue of $917.8 million

Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 4.1% on a Constant Currency basis or 4.0% on an as reported basis. The increase was primarily due to four scheduled Dry-docks in the quarter compared to one in the prior year.

"While successive geopolitical events dampened North American consumer demand primarily for our Mediterranean itineraries, our management team worked diligently to identify cost saving opportunities to partially mitigate these impacts and generate solid Adjusted EPS growth of 13%," said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings.

"It was a challenging booking environment where we remained mindful of our go to market strategy to minimize discounting and maintain our hard-fought pricing gains, resulting in lower occupancy, which in turn lowered onboard revenue and overall Net Yield growth compared to our expectations earlier in the year, " he said.

Lindblad plunges to loss as dry dock costs exceed yield rise

  • Written by Kari Reinikainen

Lindblad Expedition Holdings, Ltd., the listed expedition cruise operator, has plunged to a loss in the second quarter as the cost of dry dockings exceeded a rise in net yields.

Group net loss in the second quarter of the current year amounted to $4.9 million compared to a $8.8 million profit a year earlier. Revenues rose to 453.8 million from $49.5 million.

In the first six months of the year, Lindblad’s net profit narrowed to $5.9 million from $15.7 million. Revenues rose to $115.5 million from $104.9 million.

Net yield in the quarter for the Lindblad segment amounted to $999 as compared with $963 in the second quarter of 2015. The increase in Net yield was primarily related to price increases, the company said in a statement.

The Lindblad segment had 41,213 Available Guest Nights in the second quarter of 2016 compared with 44,193 in the prior year quarter, and an occupancy rate of 92.0% in the second quarter of 2016 compared with 91.9% in the 2015 quarter.

Adjusted Net Cruise Cost per Available Guest Night for the Lindblad segment amounted to $858 in the second quarter of 2016, as compared with $691 for the same period in the prior year. The increase was primarily driven by higher cost of tours due to the additional drydock days and more extensive maintenance work during the drydocks, as well as an increase in charter hire expense related to additional voyages

“In 2016, both of our blue water vessels, the Explorer and the Orion were drydocked in contrast to 2015 when only one vessel was wet docked for a much shorter period. Our drydock schedules are subject to cost and timing differences from year to year due to the availability of shipyards for certain work, drydock locations based on ship itineraries, operating conditions experienced especially in the polar regions, and the applicable regulations of class societies in the maritime industry, which require more extensive reviews periodically, “ said said Sven-Olof Lindblad, President and Chief Executive Officer of Lindblad.

“The combined effect of lower revenue from fewer operating days and the operating costs of these planned drydocks is the key factor with regard to the year-over-year comparison of revenue and EBITDA in the period,” he added.

“We are currently at 94% of projected guest ticket revenues for 2016 as of July 31, 2016, compared to 103% in the same time in 2015 for the 2015 fiscal year, a reduction of approximately $5.3 million. The reduction is primarily for voyages during the fourth quarter” Lindblad continued.

“We have employed a variety of tactical marketing opportunities for this period to counteract effects seen in specific geographies relating to concerns over the Zika virus and a slowdown in activity on the National Geographic Endeavour, where segments of our audience are waiting for the introduction of our new vessel, the Endeavour II, for our Galápagos operation.”

“We have historically been adept at isolating challenges and developing an effective tactical response while staying focused on our long-term objectives. However, we may be unable to fully eliminate all the effects of the various challenges we face in the short term,” he concluded.


CBR 1/2016 contents

CBR 3/2015 contents