He made Otis elevators a household name in Asia-Pacific. Can Pier Luigi Foschi do the same for Carnival Corporation, which wants a 50 per cent share of the Asian cruise market in 2017 by setting up Carnival Asia in Singapore? By Raini Hamdi
How did you move from elevators to cruising?
That happened about 16 years ago, when Carnival acquired Costa (Crociere) in Italy. I was EVP of Otis (Elevator Company) in Asia-Pacific with operational responsibilities for 14 countries, based in Singapore. Elevators and cruise lines are different products of course, but running a company is the same. I had learnt a lot about how to manage and develop business, and I wanted to give back what I received, do something good for a small company (Costa) at the time and my country.
You retired as Costa’s CEO in July last year and they roped you back as Carnival Asia’s CEO in September 2012. So there goes the retirement.
At 65, I wanted to reduce the day-to-day commitment, so I retired as CEO but remained as chairman of Costa. Then Carnival had this commitment to invest more in Asia and asked me to supervise it, so I said yes.
This role is more strategic and long-term in nature. It is about establishing good relationships with all the Asian governments, understanding the investment opportunities available, be they in developing ports or destinations, developing partnerships with other tourism sectors – there are a number of things we can do to create a solid base for Carnival in Asia.
But Carnival is not new to Asia. Costa was a pioneer in China, thanks to you. Other Carnival lines have been calling on ports here. So what is the significance of opening a Carnival Asia in Singapore?
It’s a business unit which includes all of Asia. Today, China is the largest source for Carnival in Asia. But if our projection is for 3.7 million Asian cruise passengers by 2017 from 1.5 million now, and if we want to have the same market share for Asia as we do worldwide, which is 50 per cent, we have to start somewhere.
Why Singapore and not, say, Hong Kong, which is closer to China and also has a new cruise terminal at Kai Tak?
We believe Singapore is going to be a good hub for year-round cruising. If you want to station ships in Asia, you need customers throughout the year. Singapore has good surroundings, stable weather conditions through the year, solid infrastructure. Our success will be in bringing people from North Asia to Singapore through fly-cruise programmes when we’re not able to send ships in North Asia because of the climate conditions, e.g. rough seas. This is our intent. If that happens, more cruise ships will be based in Singapore.
Out of 20 million cruise passengers worldwide today, around 1.5 million are sourced from Asia. But the majority of Asians are not sailing into Asia. They want to experience other destinations by sailing around the world, Alaska, Europe and so on.
And here you are trying to get Asians to cruise Asia.
The development of cruising goes hand in hand with the development of tourism, with a higher purchasing power among Asians and with an understanding that you can have a good percentage of your satisfaction on board, along with the voyage of course and the destinations, which make products complete. So we need to have Asians not working so hard and taking more holidays or, if they want to start a family, a cruise is a good place for honeymooners!
Should your prices be cheaper to encourage Asians to ’test’ cruising?
No, in fact, we aim to increase prices in Asia. It’s not a question of price; it’s a question of getting Asians to know about cruising and the product. It’s to do with communications, marketing, working with travel agencies to promote and tailor the product – it’s not much difference from anywhere else.
Do you have to tailor the product to suit a younger clientele in Asia?
Our product is tailored for all generations, from families to young people. Yes, in certain countries, young people are actually the ones who have more money than the old people; sometimes they invite their parents to cruise.
Since you’ve managed to get Chinese to cruise on Costa, surely playing a role in getting 3.7 million Asians to cruise by 2017 is a piece of cake?
No, not at all. China is a large country with the opportunity resting on a huge population base. Singapore is smaller but can be a good market if we train travel agencies to market cruises better. We also have a concept of tailoring and catering the ship to serve Asians, so that their expectations are not just met, but exceeded.
Every market comes with its own challenges.
Other international lines such as Royal Caribbean International and Silversea Cruises have been developing the regional markets both as a source and destination for the past decade. Surely you’re looking at what these competitors are doing?
They came after Costa. Costa Allegra homeported in Singapore in winter 2006/2007.
We’ve always been the pioneer – we opened cruising in Dubai, South America, certain locations in Central America, Mauritius, China, etc.
It does not matter whether you’re first or second, although certainly it’s part of our DNA to be a pioneer.
But Carnival Corporation has 101 ships and only four are based in Singapore for regional cruising. You ought to be ashamed (jokes).
(Laughs) Don’t be so impatient. You need a lot of ingredients to have a good soup, and it is not just on our part, but everyone.
I’ve heard international cruise lines say that of Asia for the longest time now. So how can Carnival Asia be the game-changer?
In other parts of the world, particularly the Caribbean and Central America, Carnival operates cruise terminals, opens new destinations. There are a number of examples where they (destinations or ports) got US$40-US$50 million each to start from scratch, and remote beaches and islands have been transformed into cruise destinations by us. Other cruise lines have done this too in those places. If they see us having a presence here and committing resources here, I am sure they will follow suit and that’s how we can change the game.
But it won’t be easy and it will take years. We need to work with governments as typically the land is owned by the government. We need to convince both the public and the private sector that cruising is a good investment.
We are here to show the example, commit capital and find supporters from both the public and private sectors to develop new destinations in South-east Asia, which is our primary focus for the time being.
There are also policy issues to discuss – visa requirements, for example, need to be more relaxed. Cruise passengers typically stay 12 to 24 hours; they rely on cruise lines to gain the cooperation of governments to give special passes most of
the time, instead of visas. This ease of travel is a priority and will benefit land-based products, yet there are a number of examples around the world where it is a barrier to the development of the cruise business.
In this part of the world especially, a one-day visit might require a 15-day visa application. But Asians decide to cruise or travel 10 days before departure!
Where in South-east Asia would you develop ports/destinations?
I need a bit longer time to answer that. We can’t change the geography of the world, or the demand. If the demand is for short cruises, we can’t go too far away.
We’ve already started to do preliminary assessments of certain areas. But there are still many technical requirements to consider – nautical, prevailing weather, wind situations, etc; to choose a destination that can be reached by a ship is not an easy task. It also depends on the ability of the destination, the political commitment, the capital investment, as I mentioned before.
We’ve started talking to a number of governments in the region and we will revisit them to see what they can put on the table.
How long will it take for South-east Asia to be the Caribbean of the East, you figure?
It will take years, not months.
How badly have the traditional North American/European cruise markets been affected by the debt crisis?
For the US market, only to a limited degree, ie, there has not been a bust. For Europe, people are still concerned about the economy so that may affect business, however, we do not notice so much impact on passenger numbers, although prices must be leveraged.
How did the Costa Concordia tragedy last year affect you personally?
It’s a tragedy that will always be with us. It affected families of the deceased, our company, our employees. It was a human failure, not a technical error. Cruising remains a safe product.
We’re not really behind it, but we have an obligation to develop and grow the business, and time will help us leave this tragedy behind although we will never forget it.
So how often do you cruise?
I take one seven-day cruise a year. My companion and I like cruising. I love everything about it – the ship decor, the experience on board, the spa, visiting places I don’t know, enjoying the sea breezes and spectacular sunsets, and so on.
