Buoyed by steady growth, it’s full steam ahead for cruise lines operating in the region

Mariner of the Seas; Azamara Journey; Costa Altantica

Kelvin Tan
Regional director, Asia Pacific
Royal Caribbean Cruises 

Homeporting, deployment plans in Asia
The 3,807-pax Mariner of the Seas will kick off her maiden Asian season in Singapore in June 2013 with cruises to Malaysia, Vietnam, Hong Kong, Japan and China. She will be deployed to China for summer and autumn, joined by the 3,840-pax Voyager of the Seas, before returning in November to offer a series of South-east Asian cruises. The 2,076-pax Legend of the Seas will complete her Asian deployment next April.

The 2,158-pax Celebrity Millennium will embark on her maiden Asian season this December for winter/spring 2012/13, featuring cruises from Singapore and Hong Kong with overnight stays in ports like Bangkok, Ho Chi Minh City, Halong Bay and Hong Kong.

The 694-pax Azamara Journey will sail in Asia for the first time for winter/spring 2012/13, offering voyages from Singapore, Hong Kong and Tianjin with overnight calls at destinations such as Bangkok, Hong Kong, Shanghai and Kobe.

Asia as a source market
We average 30-40 per cent year-on-year growth. Our fastest-growing markets are China, Singapore and Indonesia due to the emerging middle class, growing awareness of cruising and our brands, and our regular deployments to homeports such as China and Singapore.

Asian consumers tend to have later booking patterns, but over the years we are seeing more bookings coming in earlier, for instance, eight to nine months before the sailing dates.

For our Asian markets like Indonesia and Thailand, MICE business is also growing from year to year and makes up almost 50 per cent of our total sales, and we expect this to grow further. Incentive travel is a popular trend for companies in these markets. With the recent opening of the new cruise terminal in Singapore, we are also able to deploy larger ships here such as the Voyager of the Seas and Mariner of the Seas, which have more MICE facilities.

Investment on marketing and training
Training is one of our key focuses in our Asian business, to familiarise travel consultants with our cruise products. We are spending significant resources in travel consultant training, such as seminars, workshops, ship tours and cruise previews.

We have identified some markets in Asia, such as China, Singapore and Japan, where our cruise products are very well received. We will continue to invest in these markets by participating in tradeshows and events.

Greatest challenges 
As we deploy bigger ships with better hardware to the region in response to market demand, the port infrastructure in Asia, especially South-east Asia, needs to be upgraded urgently, in order to accommodate these bigger ships and passenger load.

Michael Goh
Senior vice president, sales
Star Cruises

Homeporting, deployment plans in Asia
SuperStar Gemini, which was formerly known as Norwegian Dream, will commence service in 2013. Currently undergoing a major US$50 million refurbishment, she will have a passenger capacity of 1,532 pax. She will start her deployments in Penang in January, Sanya in February and March, and then be homeported in Shanghai from April, calling at North Asian destinations. In addition, SuperStar Aquarius will return to Sanya for a second seasonal deployment, calling at Halong Bay and Danang. After that, she will be based in Taipei, calling at destinations such as Ishigaki and Naha.

Asia as a source market
The source markets for our current homeport cities (Hong Kong, Singapore, Penang, Taipei and Sanya) are Greater China, South-east Asia, India, Japan, South Korea and Australia. Among these markets, we are seeing particularly encouraging growth from India as we understand their holiday preferences, especially in F&B, entertainment and shopping. China also represents a good source with the growing spending power of the middle class and easier application process for travelling on cruises. We entered China in 1994, and have cultivated an intimate understanding of what Chinese passengers expect.

Investment on marketing and training
In 2013, Star Cruises will celebrate its 20th anniversary with a series of celebrations across our fleet. This will be supported by advertising & sales promotion campaigns. In addition, we will also celebrate the launch of SuperStar Gemini in Penang, Sanya and Shanghai with on-ground activities as well as publicity campaigns.

Since the announcement of SuperStar Aquarius’ second deployment to Sanya, we have conducted more than 30 cruise seminars and training sessions for travel agencies in major cities in China. Topics include how to promote cruises to individual travellers and MICE groups.

Greatest challenges 
To further develop cruise markets, local tourism bureaus have to develop an in-depth understanding of the cruise industry in order to help promote cruising as a holiday option in their regions. In addition, governments should provide cruise-friendly policies to make it more attractive for cruise lines to deploy vessels in their markets and grow their local cruise economies.

Buhdy Bok
Vice president
Pacific Asia & China, Costa Cruises

Homeporting, deployment plans in Asia
This year we replaced Costa Classica with the 2,394-pax Costa Victoria, boosting passenger capacity by 40 per cent. We will have the 2,680-pax Costa Atlantica in addition to Costa Victoria in 2013. This will boast a combined daily passenger capacity of 5,074 pax – more than double the capacity in Asia from 2012. Costa Atlantica has 1,057 cabins, including 54 suites and 620 cabins with private balcony.

Asia as a source market
Demand continues to grow at double digits, which coming off a relatively small base and penetration rate is achievable for the foreseeable future. Our major source markets continue to be Singapore, Indonesia, China, Hong Kong and other South and North Asian countries, depending on the programme and embarkation ports. Asia is expected to continue to grow at a rate that is faster than our other markets.

Investment on marketing and training
We look to differentiate our product through an ‘Italy at Sea’ theme, while uniquely positioning a European experience to the Asian market. Advertising campaigns and cooperation with our preferred sales agents remain crucial. We also look to enhance our products regularly, through special Italian themes. Training for travel consultants and staff also plays a key role. We encourage interaction and seek feedback.

Greatest challenges
In Asia, we believe that the cruise market, despite registering strong growth, is still relatively underpenetrated. The goal of cruise liners is still to actively promote the benefits of a cruise holiday. However, on top of marketing efforts, cruise operators should work hand in hand to develop attractive itineraries, ports and destinations to bring out the uniqueness of a cruise vacation.

Jan Swartz
Executive vice president
Sales, marketing & customer service, Princess Cruises

Homeporting, deployment plans in Asia 
In March, Carnival Japan was set up to sell Carnival Corporation brands, with a large focus on promoting the new Princess voyages. In 2013, we are launching the first short season of round-trip cruises from Japan. From April to July, the 2,022-pax Sun Princess will sail from Yokohama and Kobe, calling at ports in South Korea, Taiwan and Russia; many of these cruises are designed around festivals or onsens that are of interest to Japanese and other Asians that fly to Japan.

We also have usual Princess itineraries and deployments in the region, such as the classic Diamond Princess sailing between Beijing to Bangkok. Ocean Princess will make some calls in Asia in April and October, while Dawn Princess will offer some Asian cruises from Fremantle, Western Australia in May and June.

Asia as a source market
Asia has grown quite considerably over the last few years. We don’t share statistics about exactly how many passengers we are sourcing, but there has been a large growth for us, and that’s true not just for a single country in Asia but across the region. There are many Asian countries where consumers are increasingly interested in cruising as a way to see the world.

Investment on marketing and training
We spend considerable amounts to build awareness of our cruises and promote our brand in Asia through our GSAs. We do that in the form of creating local market brochures, local market cooperatives and marketing investment at times with travel agency partners who spend their own money to promote our brand.

We recently launched the Polar Online booking engine in Japanese and simplified Chinese, so there are increasingly opportunities for us to use (existing) tools in other markets and help travel agencies learn more about cruises they can offer their clients.

Greatest challenges 
The big challenge is port infrastructure: besides homeports, ports of call should have sufficient room to deliver a great passenger experience. Some ports may not know how to configure their facilities to handle the required volume of people, so that’s why we need to partner together to build the setting so that many ships can be accommodated – often on the same day – and consumers will be given an experience that they enjoy so much that they will want to cruise with us again.

Ann Sherry
CEO, Carnival
Australia 

Homeporting, deployment plans in Asia 
Besides Princess Cruises’ sailings to Asia, we are looking at deployments into Asia in 2014 for P&O ships, partly because we see many Australians flying into (South-east Asia), so obviously one of the ways to build your market is to follow the people who already know your brand. Carnival Australia represents international cruise brands operating in the local market namely P&O Cruises, P&O Cruises World Cruising, Princess Cruises, Cunard, Holland America Line, Seabourn and Carnival Cruise Lines.

Asia as a source market
Asia is a growing source market because there are a lot of flights coming into Australia from the region. We are seeing groups incorporating cruises as part of their holidays in Australia and New Zealand. The growth is very visible now, from almost none to quite big groups of 200 pax on some cruises, so it would be double digit over the past two years, particularly in the last 12 months, when we saw the arrival of several Asian airlines. The strongest growths are from Singapore, Malaysia and Indonesia.

Investment on marketing and training
Once we publish our 2014 itineraries, we will be embarking on a much bigger marketing campaign. We are looking at (investing in) South-east Asia as this part of the Asian market has a lot of air access, expats and Australian-educated Singaporeans, so we already have a connection that works, rather than go into a market where we have to start from scratch. We are looking at a market we already have some understanding of, as that makes it easier to get growth.

Greatest challenges 
The greatest challenges in Asia for us are probably where to go and how to start growing local as well as Australian demand. It’s really getting the balance right between offering a product that Australians already know versus a product that also works for the Asian market. We are watching what all the other brands are doing in terms of what changes are needed to made to the product, how do you work your onboard dynamics and what works for the market.

Additional reporting from Linda Haden

Gracia Chiang gets a behind-the-scenes peek at the Amadeus Data Centre in Germany, which powers over a billion transactions a day 

The Amadeus Data Centre in Erding; infrastructure manager, Matthias Koll, explaining how every corner of the facility is closely monitored

Dubbed the ‘brain behind travel’, the Pentagon-like global data processing centre in Erding offers an interesting insight into what happens when a travel consultant in Bangkok, Sydney or anywhere else in the world attempts to make a booking for his client through the Amadeus platform.

Stepping into the 24-year-old facility, which sits close to the Munich airport, one is immediately struck by how security and safety are the cornerstones of the highly resilient structure. For instance, its exterior walls and roof are made of 1m-thick steel reinforced concrete with no windows, its external doors are 50cm-thick solid steel, and there is round-the-clock staffed security, with video cameras both inside and outside the premises.

“There is redundancy in all critical areas and no single point of failure”, said Eberhard Haag, executive vice president, global operations, Amadeus, explaining that a back-up component will kick in when one temporarily fails.

We are told that Erding is an area with no risk of floods, tornadoes, hurricanes or similar calamities. However, Haag revealed that there was a disaster centre sited nearby, where quarterly rehearsals are conducted as part of contingency plans.

The lengths taken to ensure continued service delivery is not surprising considering that the centre handles as many as  17,000 transactions per second at its peak, out of which around 2,000 are from Asia-Pacific. Among the technology provider’s clients are over 700 airlines, 110,000 hotel properties and 207 tour operators spanning more than 195 countries. It is not just travel bookings that are processed here; the data centre also delivers mission-critical services such as departure control and flight management for airlines who use Amadeus’ IT systems.

Our group of eight was ushered into one of six server rooms, where we were shown how efforts were taken to ensure optimal temperatures all day long, by use of room configurations that faciliate hot/cold air flows and cooling floor vents.

The building is separated into three individual data centres with three independent technical zones, served by nine diesel power generators in four locations and four uninterrupted power supply systems. To support growth in its IT solutions business, Amadeus also recently announced the opening of a new ‘energy annexe’, roughly doubling the data centre’s overall power and cooling capability.

When asked if there have been occasions when the centre has been stressed, Haag admitted that the “storm of transactions” that occur when airlines run promotions is “highly dangerous”, but he said that there was enough buffer for every airline. “If the promotions are not coming at the same moment, we can easily cover six times more traffic than usual.”

Said Haag: “We are extremely scalable…year by year our capacity growth is 30 per cent. It’s not just coming from pure bookings, it’s coming from transactions: the number of customer inputs and requests are driving our capacity load.”

This is due in part to how Amadeus’ role has evolved. In the past, when its services were mainly delivered to traditional travel agencies, there would be around five transactions before one booking; now that Amadeus is also rolling out its products to websites, there can be some 2,500 transactions to one booking, noted Haag.

As for his 2020 prediction, Haag said he saw Amadeus having multiple data centres – one in Europe, one in Asia-Pacific and one in North America – to mitigate risks. This may not be far off, considering that there are already teams sitting outside of Europe who manage the data centre remotely during their respective time zones in a follow-the-sun concept. A typical operations day starts in Erding, and by 16.00, handovers to colleagues in Miami are carried out, who work until day breaks in Sydney, where the final shift kicks in.

Data processing is hardly sexy, but this was honestly a fun excursion into the heart of travel IT. Plus, visiting the hometown of one of German’s best breweries had its perks. Erdinger for lunch, anyone?

GDSs and travel consultants watch out. Full-fledged airlines are finding more direct routes to Internet-savvy travellers

From left: Lawrence Chai, Vice president, commercial systems, Malaysia Airlines; Gerry Oh, Vice president, Asia-Pacific, Jet Airways; Tom Nishihata, Vice president, web sales & marketing, Japan Airlines

Full-service airlines in Asia-Pacific are cruising towards more direct distribution, following in the jet streams of their low-cost counterparts.

At the recent Web in Travel conference in Singapore, Malaysia Airlines, Jet Airways and Japan Airlines representatives said they were targeting for web sales to account for about half of all ticket revenue in a few years, up from an average of between 20-30 per cent now.

Malaysia Airlines (MAS), vice president, commercial systems, Lawrence Chai, for example, said the airline was in the midst of enhancing its Internet booking engine to encourage customers to book direct. Besides boasting a higher performance, the platform will eventually allow MAS to increase its ancillary income from items such as excess baggage and meal selections.

Gerry Oh, vice president Asia-Pacific, Jet Airways, revealed that the Indian carrier’s web sales out of Singapore was as high as 60 per cent of total revenue.

“In Singapore, where we were once held hostage by some (travel consultants), we told them sorry and asked them to go fly a kite,” he quipped, explaining that he refused to let them stop him from selling tickets online.

However, Oh said the situation in India was slightly different, due to the strong lobbying power of agencies there, explaining that the airline has had to “take it slow and easy”.

In the case of Japan Airlines (JAL), vice president, web sales & marketing, Tom Nishihata, said the proportion of tickets purchased through the web by its domestic passengers was higher (about 50 per cent) compared to international ones (over 20 per cent).

He added that mobile transactions were on the rise, with more than a tenth of JAL’s web sales coming from mobile. Within this year alone, the airline launched 10 apps covering the entire travel cycle from booking to boarding.

Not all were convinced about mobile as a transaction platform though, with Jet Airways’ Oh questioning the ROI on apps. He said his mobile sales were insignificant, and that while an app was “nice to have”, the cost of investment had to be weighed against how well it could actually translate into sales.

Similarly, MAS’ Chai said only a small volume of business currently comes from mobile.

Despite efforts to go direct, all three airlines acknowledged that trade relationships would continue to be vital.

“We have to be realistic. Being a full-service carrier, a large percentage of our distribution still comes from our GDS and travel trade partners,” Chai pointed out.

Oh concurred. “You can’t dismiss all the (travel agencies). Many of them sell multiple segments and groups,” he said, adding that the web was more suitable for sales of FIT, point-to-point tickets due to the limitations posed by legacy systems.

IATA, which has come out to say that the age-old GDSs that travel consultants rely on to book tickets do not enable enough product differentiation, is currently developing new industry-wide distribution standards. These will be open standards that can be used by any party, including GDSs, resulting in increased competition in the distribution space.

However, this has ruffled the feathers of some travel consultants, who feel that their position as the largest single airline distribution channel will be shaken.

It remains to see how the controversial IATA’s New Distribution Capability initiative will play out, but the airline industry body has said it will actively engage the trade in the formation of the new standards, which is supposed to offer travel agencies greater access to ancillary products and a simplified booking process, among other benefits.