“The bottom line is things are stronger for sure than they were last year at this time,” said Arnold Donald, president and CEO of Carnival Corporation, touching on China on the company’s Monday morning second quarter earnings call.
Donald said he still believes China will eventually be the largest cruise market in the world, and putting in new hardware (ships) still made sense.
“The market there is very large in terms of overall travel, both from cities in China and, of course, as a huge potential source market for fly/cruise all over the world,” Donald said.
“In terms of the distribution system itself, yes, we’ve moved from full-ship charters primarily now to group sales and partial ship charters,” he continued. “We’ve added a large number of additional distributors. All of that kind of de-risks things a bit from being overly concentrated and what, in effect, today is still pretty much a B2B market. The direct sales component is slowly growing a bit there. There’s opportunity to grow that over time. But a time line in China, we’ll see. It’s a small market.
“I don’t see a dramatic increase in percent of total capacity in the short term there. And the reason is not so much because of China, but because of the demand everywhere else in the world. And then as I mentioned, there’s large addressable markets everywhere in the world that are under penetrated, including the United States.
“And so it looks positive for the year on a relative basis so far. But China’s China, and we have to see how things play out for the full year,” Donald said.
“But right now, conditionally, things definitely look stronger. In terms of sanctions, we haven’t heard of any sanctions on either side that would directly impact the cruise industry.”
Travel to Korea is still unofficially restricted, and Donald said if that opens up, it could help the situation.