Arnie WeissmannFor those who were still fuzzy-headed on the subject of Asia's importance to the cruise industry, the wake-up call came in April when Royal Caribbean International announced that its Quantum of the Seas, still under construction, would move to Shanghai after spending only six months based in Bayonne, N.J., its originally announced homeport.

It was not welcome news in all quarters. Given the high percentage of repeat cruisers on any sailing from a U.S. port, American travel agents had come to rely on new ships to spur interest from clients who have all but memorized the well-worn shipping lanes in the Eastern and Western Caribbean.

While Royal Caribbean executives took pains to underscore the continuing importance of the U.S. market, it's clear that the potential for growth in the cruise industry is greatest in Asia. When, last week, I asked Larry Pimentel, CEO of Azamara Club Cruises, about the potential in China in particular, he simply looked at me and said, "It'll explode."

As a brand of Royal Caribbean Cruises Ltd. (RCCL), Azamara is a sister company to Royal Caribbean, and although he didn't mention the Quantum by name, he began elaborating by saying, "Big, sexy, cool ships for the mass market -- it's going to be big. Keep your eye on developments there."

But where there? Pimentel currently uses Singapore as a base for organizing Asia shore-excursions for all RCCL brands, in his role as corporate head of global tour operations, but when we spoke, his focus was clearly on China.

Rival Carnival Corp., on the other hand, has indicated that Singapore will play a big role in its future. Before Pier Luigi Foschi retired last year as CEO of Carnival Asia, he had pointed out Singapore's attributes as a homeport.

He first noted that Asia presented infrastructure challenges for cruise lines: "What we really need is integration with the airport, railroads and roads. Easy access to the cruise terminals. We need a government effort to clear the luggage [at the airport] and dispatch it to cabins."

But Singapore, he said, was central to Carnival's "dream" for development in Asia. "Singapore is fortunately situated," he said. "The weather is good for ships year-round, the sea is relatively calm. From Shanghai, we can position ships and head south. From Singapore, you can go to Thailand, Malaysia and Indonesia."

Pimentel countered that Foschi "had commercial reasons to point to Singapore. You don't have a 90-person office there and not point to Singapore." Pimentel easily articulated Singapore's assets -- "efficient, stable, excellent infrastructure. It's a class act" -- but added that he did not "see Singapore as the [ultimate] hub."

"Keep your eye on how this develops," he continued. "What we have today is not what will be tomorrow. Look at how the Caribbean developed. The lines bought islands and created experiences. In my view, you'll see similar things happen [in Asia] over time."

Both Foschi and Pimentel also indirectly indicated that they have moved to step two of the industry's 12-step program for expanding into Asia. After the initial burst of gold-rush enthusiasm about China's staggering potential, based on predictions that a billion more Chinese will move up to the middle class by 2027, I am increasingly hearing that there is perhaps a "long runway" before that potential takes off.

"They still have a long way to go," Foschi had said about Asian destinations and their suitability as ports of call. At the same time, he conceded that Carnival Corp. did not yet have the scale it needed in Asia to attract major partnerships.

Similarly, Pimentel described cruising in Asia as "embryonic," but he also voiced a belief that the potential for growth in Asia is so great that today's cruise industry is baby-size compared with where it will be once Asia is up and running.

"The market is just so big, so powerful," he said of Asia. "I'm toward the end of my career, but cruising is just at the beginning."

What interested me most about Pimentel's commentary was the thought that Asia might develop in ways similar to the Caribbean.

The development of private islands seemed to me to grow out of a need for both new stops on otherwise repetitive itineraries and a desire for absolute control over a port environment, similar to the control the lines have onboard. Repetition isn't yet an issue in Asia, but private islands would certainly address Foschi's concerns about whether enough Asian destinations are ready to receive cruise passengers.

Such private islands might also represent a hedge against the vagaries of Asian government policies. In the Caribbean, the cruise lines have wielded their economic leverage to gain the cooperation of island governments, but they find themselves in a less favorable negotiating position in Asia. For example, recently, due to territorial disputes between China and Japan, China informed the cruise lines that ships leaving Chinese ports could no longer include Japan on their itineraries.

Ultimately, Asian governance might be the single greatest factor determining the development of cruising in Asia. I doubt that Pacific Rim cruising will ever be thought of as Caribbean East.

Email Arnie Weissmann at [email protected] and follow him on Twitter.


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