Bayley: ‘Uptick’ in China with Price Gap

Following the introduction of the new Spectrum of the Seas in China earlier this year, demand for the Royal Caribbean International product has been very strong, noted Michael Bayley, president and CEO, speaking on the company’s second quarter earnings call.

“We’ve made great progress with the evolution of the distribution channels and we’re feeling pretty good about where we currently are in the journey that we’re on,” Bayley said.

CFO Jason Liberty noted that the company’s China program helped drive second quarter earnings, helping to offset Cuba-related itinerary changes.

Once a full-ship-charter only market, China is moving to more diversified sales channels, with group and block bookings now growing at a fast clip, according to industry sources, as well as FIT (frequent independent traveler) business growing.

“The product has been exceptionally well received,” Bayley said. “We’ve got a very — I’d say a fairly significant price gap between competitors and the market.

“And we’ve seen a real uptick in the onboard revenue,” he continued. “I think we’ve got the right product and we’re attracting the right demographics. And we’re seeing that with the onboard spend. So I would say we’re certainly seeing a recovery from a couple years ago. We’re feeling good about Spectrum. We’re feeling good about China.”

With the Spectrum positioned year-round in the Chinese market, the Quantum of the Seas sails seasonally in China, spending this coming winter out of Singapore. A third ship, the Voyager of the Seas is also positioned in the market seasonally.

Added Chairman and CEO Richard Fain: “Conventional wisdom suggests that bringing a new ship into a market whose economy is weakening ain’t such a good idea. But Spectrum and our other ships there are doing very well, despite the softer economy.”

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