Major cruise lines plan on cutting Chinese cruise capacity in 2018 by an estimated 13.3 percent according to a report in Cruise Industry News. Royal Caribbean, MSC Cruises, Norwegian Cruise Line, and Princess Cruises are among the firms scaling back efforts in China.
The reasons for decreased capacity in 2018 were supply shortages as well as the ongoing the troubles with the so-called “travel ban” to South Korea.
In the wake of the THAAD missile defense system to South Korea to help defend South Korea from North Korean missile attacks, the Chinese National Tourism Administration banned travel agencies from selling packages to South Korea.
With growing tensions between North Korea and the U.S., the dispute will likely continue and travel restriction will remain. However, it is still unclear exactly what the “ban” on Chinese travel to South Korea actually means. Although it is still legal for Chinese to travel to South Korea, many online travel agencies (OTAs) in China do not list South Korean destinations.
Some cruise lines removed South Korean ports from itineraries in East Asia altogether to appease Chinese authorities. Nonetheless, it seemed that international cruise lines still hoped to increase engagement in East Asia and with Chinese tourists.
This predicted cutback on cruise capacity next year comes as a bit of a surprise. It is still unclear if this cutback will affect the itineraries of some of the new ships being built for specifically for the Chinese market, like Royal Caribbean’s Spectrum of the Seas.
South Korea used to be a popular cruise stop for Chinese tourists, especially Jeju Island. Jeju Island has comparatively lax visa restrictions for Chinese tourists compared to the rest of South Korea. The travel ban for South Korea has meant that cruise companies have had to dramatically shift their itineraries, swapping out South Korean destinations for Japanese.
Some cruise companies are shifting capacity currently designated for East Asia to Europe, with seasonal itineraries in Asia. Other ships are being transferred to the Caribbean or will have more scheduled time outside of East Asia.
In many ways, this latest news is a testament to the volatility of the overall Chinese tourism industry, which can experience drastic changes in very short periods of times due to political and diplomatic upheaval. Chinese diplomatic disputes with Taiwan and Vietnam have also raised concerns over the long-term viability of Chinese tourism to those destinations.
The THAAD dispute has caused much more substantial losses over a longer period of time than any previous dispute. For example, South Korean duty-free shops have lost a reported $528 million.