IAG March 2016 - page 11

Cover Story
Cruise prices in themainland start aroundRMB3,000 (US$460)
in low season for a basic package, high by global standards, CLSA
says, withbetter rooms, alcoholic drinks, premiumdining and shore
excursions available at extra cost.
On board, however, the vessels offer an extraordinary range of
activities, from6amdancercise to lastdancewitha livebandpushing
2am. Depending on the ship, passengers can select from a menu
that usually includes yoga classes, Sudoku tournaments, Zumba
classes, arts and crafts geared to destinations, mahjong, child and
youth programs, lucky draws, indoor and outdoor pools, duty free
shopping plus livemusic throughout the day and evening shows in
different locations.
And, yes, there’s gaming. International cruise ship casinosmay
have 50 tables and 30machines on the main floor, plus a VIP club
withup toa coupledozen tables andprivate rooms. Thatmaynot be
up toMacau or Las Vegas standards, but the customers are leisure
travelers who want gaming as part of a broad entertainment menu,
thesamegroupMacau iscourtingas it addsnon-gamingattractions.
Cruise operators list their casino revenue under onboard revenues,
along with payments for alcohol, internet, spa, retail and other
passenger spending. Last year, Royal Caribbean’s onboard revenue
was typical; 27% of its total cruise revenue (the rest is passenger
ticket sales) or US$2.2 billion out of US$8.3 billion. An industry
source says perhaps 10% of international carriers’ onboard revenue
now comes from gaming, although the proportion is higher in Asia
and rising. For Carnival, meanwhile, onboard revenuemade up 25%
of itsUS$15.5 billion total cruise revenue.
“I think that quietly the big international cruise operators are
very happy these days with the revenues from the onboard casinos
of cruises originating in mainland China,” Union Gaming’s Mr
Govertsen says. “I suspect it is still a very small proportion of
revenue, but seems tobe growingnicely.”
Asiahas helpedopen the eyes of international cruise executives
to the revenue potential of their casinos. Carnival, which has cross
marketing deals with casinos for some of its brands, says it is
instituting a program aimed at expanding casino revenue. Royal
Caribbean names expanding Asian casino revenue as a growth
driver in last year’s fourth quarter and is working to develop that
side of the business.
Cruise line executives aren’t the only ones innovating to grow
revenue through shipboard gaming. Central Vietnam’s port of
Danangannounced in January that itwouldallowvisitingcruiseships
to keep their casinos open while docked. Only passengers can play,
so there’s no looseningof Vietnam’s domestic gaming restrictions.
“Thegoal issimply togetcruiseships toanchoratDanang,”Global
MarketingAdvisorsPartnerAndrewKlebanowsays. “Every timeaship
makes port, it disgorges 2,000 passengers, which has a significant
economic impact on the communities surrounding the port. In this
situation, some passengers will take a day trip to Hue, others will
play a roundof golf whileotherswill just go to abeach resort.”
Imagine using a casino, even someone else’s casino, to attract
visitors for non-gaming activities.Maybe it’ll catchon.
Asiahashelpedopen theeyesof
international cruiseexecutives to the
revenuepotential of their casinos.
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