2013.a6.032.14c final report prof hsu

PUBLIC POLICY RESEARCH FUNDING SCHEME

公共政策研究資助計劃

Project Number : 項目編號：

2013.A6.032.14C

Project Title : 項目名稱：

Enhancing Hong Kong's Competitiveness as a Regional Cruise Hub from a Policy Perspective 從政府政策的角度探討如何提昇香港作為區域性郵輪樞

紐的競爭力 Principal Investigator : 首席研究員：

Professor HSU Hui Chun Cathy 徐惠群教授

Institution/Think Tank : 院校／智庫：

The Hong Kong Polytechnic University 香港理工大學

Project Duration (Month): 推行期 (月) ：

15

Funding (HK$) : 總金額 (HK$)：

556,600.00

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PUBLIC POLICY RESEARCH FUNDING SCHEME

Project number: 2013.A6.032.14C

Enhancing Hong Kong’s Competitiveness as a Regional Cruise Hub from a Policy Perspective

Final Report

Principal Investigator: Professor Cathy Hui-Chun Hsu

The Hong Kong Polytechnic University

1

Abstract in English

The newly launched HK$8.2 billion Kai Tak Cruise Terminal represents the government’s

determination to establish Hong Kong as a regional cruise hub (Hong Kong Tourism

Commission, 2013). The 2014 Chief Executive Policy Address further emphasized the

government’s support to ensure timely completion of the second berth in 2014 and develop Hong

Kong into a leading cruise hub in the region. Hong Kong has been a must-see destination for

international tourists and the most popular outbound destination for Mainland Chinese. However,

Hong Kong faces fierce competition from neighboring ports (e.g., Shenzhen and Guangzhou).

Singapore and Shanghai have also declared their plan of being a regional cruise hub.

Neighboring economies (e.g., Vietnam, South Korea, and Taiwan) are also aggressively

expanding their cruise port infrastructure and trying to capture the rapidly growing Asian cruise

traveler market.

Formation of the Northeast Asia Cruise Circle (China-South Korea-Japan) and the Southeast

Asia Cruise Circle (with Singapore as the core port) may marginalize Hong Kong’s importance

as a cruise homeport. The traveling distance between Hong Kong and the next available port-of-

call (e.g., 17 hours to Xiamen, 23 hours to Sanya, and 28 hours to Keelung) could make Hong

Kong-based travel itineraries less attractive. In 2012, the number of cruise passengers in Hong

Kong decreased 11.6% from that of 2011 (Hong Kong Tourism Board, 2013). With the launching

of the new Kai Tak Cruise Terminal, the number showed an 8.7% year-on-year increase in 2013

(Hong Kong Tourism Board, 2014) and a 7.8% increase in 2014 (Hong Kong Tourism Board,

2015). However, it is necessary to have a comprehensive understanding of what it takes to

become a competitive regional cruise hub.

2

Such an understanding should include at least four dimensions: (1) travelers’ cruise preferences

and behaviors, (2) cruise lines’ decision-making criteria in selecting ports (e.g., supportive host

government policies), (3) tourism businesses’ readiness to accommodate cruise travelers (e.g.,

professional competency in selling/handling cruise tourism and capacity), and (4) the

competitive landscape particularly in the Pearl River Delta region and in Asia. Armed with a

thorough understanding of these key aspects, the government will be able to draw policy

implications to support its development. Without proper government policy support, the goal of

becoming a regional cruise hub may have difficulty to be realized, and the investment in the

Cruise Terminal may be scrutinized. This study used rigorous methodologies, including in-depth

interviews, focus groups, telephone survey, and benchmarking global best practices, to draw

conclusions and provide policy implications.

3

Abstract in Chinese

2013 2014

2013 8.7% 2014

7.8%

1 2

3 4

4

Cruise Industry Development

The cruise industry has experienced a stable growth with an average of 7.6% annual growth rate

of passenger numbers since 1980 (Cruise Lines International Association [CLIA], 2011). The

popularity of cruise vacation among the public can also be reflected in the full occupancy of

cruise lines and the continuous increase of supply (CLIA, 2013a). Data from the 26 member

cruise lines of CLIA indicated that 13 more ships were introduced in 2013, with over 14,000 new

beds (CLIA, 2014).

Despite the increased revenue of cruise tourism, only a very small percentage of people in the

world have cruised. Taking the U.S. for an example, only 3.55% of Americans traveled with

cruise in 2014 even with the country’s dominant role in the global cruising arena. Therefore,

there is ample room for further development of cruise tourism in the global market.

Although the development of cruise tourism is not a recent phenomenon, the focus of

development has been on North America followed by Europe. In 2012, as much as 68% of cruise

passengers were sourced from North America (CLIA, 2013b). The European cruise source

markets also maintained a double-digit annual growth rate between 2007 and 2011 (European

Cruise Council, 2013).

While remaining active in North America and Europe, the cruise industry has started to explore

new markets in Asia in recent years. The rising role of Asia in the global economy has drawn

much attention to the Asia Pacific region. Although Asia comprises of only a small portion of the

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current cruise tourism business (representing merely 3.4% of global itineraries and deployment),

its growth potential can be reflected in the 302% increase of ship deployment in the Asia Pacific

region between 2008 and 2013 (CLIA, 2013b). Cruise Industry News (2013) reported that,

compared with the previous year, the worldwide market share of Asia Pacific increased from 6%

to 9.1%, a more than 50% increase.

Take Mainland China as an example, China Cruise and Yacht Industry Association (CCYIA,

2013) reported 285 cruise ship arrivals in 2012, an 8.8% growth over the previous year. The

number of cruise passengers reached 660,000, a 31.9% increase over 2011. The number of cruise

ships using Mainland China homeports increased to seven. In 2013, the cruise ship arrivals were

expected to increase 34% in Shanghai and 289% in Tianjin (CCYIA, 2013).

Seeing the business opportunities in Asia and the huge potential demand from Asian tourists for

cruise travel, governments and industry partners including cruise companies, port authorities and

travel agencies are eager to form strategic alliances for exploring and attracting new Asian

customers on board. Consequently, several facilitating tactics have been initiated to nurture such

collaboration including building homeports to accommodate cruise ships, formulating more

encouraging policies to attract international cruise companies, and strengthening the social

networks among industry partners. The recent cruise conferences and forums in Tianjing (7th

China Cruise Shipping and International Cruise Expo in September 2012), Shanghai (The 3rd

Seatrade All Asia Cruise Convention in September 2012), and Hong Kong (Hong Kong Cruise

Forum in January 2013) demonstrate the interests of destinations and industry partners in

developing cruise tourism in Asia. Participants are eager to strengthen the regional collaboration

6

to respond to the rising demand of cruising.

Competitive Landscape in Asia

The newly completed HK$8.2 billion Kai Tak Cruise Terminal represents the government’s

determination to establish Hong Kong as a regional cruise hub (Hong Kong Tourism

Commission, 2013). To become a cruise hub, the city needs to attract cruise lines to operate their

cruises using the city as a base, or a homeport. For example, Miami is the homeport of 30 ships

from 13 cruise brands (Port Miami, 2014). Homeports have the advantages of a constant flow of

visitors, stable revenue for cruise terminals, and significant impacts on local economies. For

instance, cruise industry generated 11,017 jobs, US$1.6 billion business revenue, and US$4.3

million of state and local taxes for Port Canaveral, another popular homeport in the United States

(Martin Associates, 2013).

Located at a strategic geographical position in Asia Pacific, Hong Kong has been a must-see

destination for cruise passengers and other international tourists visiting Asia. The rapid growth

of the cruise industry in Asia provides great opportunities as well as raises big challenges to

Hong Kong. On one hand, the development of port infrastructures in Asian cities and the growth

of the Chinese outbound travel market can enhance Hong Kong’s role as a regional cruise hub.

The latest incentive policy from the central government, which allows Mainland cruise

passengers to board a Hong Kong-based cruise ship, visit intermediate ports in Taiwan, sail to

Japan or Korea, and directly go back home, creates broad space for developing new itineraries

with Hong Kong as the homeport.

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On the other hand, Hong Kong is facing fierce competition from major neighboring ports. For

example, both Singapore and Shanghai have declared their plan of being a regional cruise hub.

Beside Shanghai, at least 15 other ports in Mainland China (i.e., Yingkou, Tianjin, Dalian,

Weihai, Yantai, Qingdao, Zhoushan, Ningbo, Xiamen, Shantou, Guangzhou, Zhuhai, Beihai,

Haikou, and Sanya) have hosted international cruise ships (CCYIA, 2011). The formation of the

Northeast Asia Cruise Circle (China-South Korea-Japan) and the Southeast Asia Cruise Circle

(Southeast Asian countries with Singapore as the core port) may marginalize Hong Kong and

make it a port-of-call, only used for seasonal repositioning of the ships. In 2012, the total number

of cruise passengers in Hong Kong decreased 11.6% from that of 2011 (Hong Kong Tourism

Board, 2013). With the launching of the new Kai Tak Cruise Terminal, the number showed an

8.7% year-on-year increase in 2013 (Hong Kong Tourism Board, 2014) and a 7.8% increase in

2014 (Hong Kong Tourism Board, 2015).

There has been several media reporting of the various unfortunate events happened on the

overnight gambling cruises over the past few years (Chong, 2010; Kao, 2013). In fact, 96.9% of

Hong Kong residents’ cruise experience from Hong Kong is on those cruises without destination

(Hong Kong Tourism Board, 2014). The proliferation of overnight casino cruises departing from

Hong Kong has caused confusion among local residents and visitors to the city about Hong

Kong’s cruise industry. Blog posts have discussed whether cruise ships operated by a particular

cruise line are all casino cruises. Many bloggers often showed difficulties in differentiating

between gambling focused cruises and other cruises (e.g., Angel, 2007; PN4X, 2007). Thus, the

impact of these events and reports as well as local cruise passengers’ past experience on the

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image of Hong Kong’s cruise industry need to be examined to identify any potential barriers in

developing cruise tourism.

The Asian cruise industry is now exploring more fresh and exotic destinations and itineraries to

attract more people on board. The industry is also expanding the customer base by promoting

cruise vacations to different segments of Asian travelers. With more and more Asian countries

and regions joining the cruise tourism business including Indonesia, Japan, South Korea,

Mainland China, Malaysia, Singapore, Taiwan, Thailand, and Vietnam, Hong Kong needs to

develop new product offerings, supporting services and other competitive advantages to expand

its customer base and consolidate its position as a preferred port for cruise travel.

For cruise lines to commit to a homeport, comprehensive analysis of the port and the city needs

to be done. Due to the competitive landscape now with many cities in the region trying to

establish themselves as the regional cruise hub, only the most competitive few will succeed in

this regard. Supportive host government policies have been highlighted as an important criterion

in considering future growth by cruise lines (Tercek, 2013). Thus, the Hong Kong government

needs to have a complete understanding of the cruise operators’ decision making criteria and

challenges, consumer market characteristics, and the competitive landscape particularly in the

Pearl River Delta region and in Asia to draw policy implications to support the development of

Hong Kong’s cruise industry. Without proper government policy support, the goal of becoming a

regional cruise hub may have difficulty to be realized, and the multi-billion dollar investment in

the Kai Tai Cruise Terminal may be scrutinized.

9

How tourism destinations develop, preserve, defend, and reinforce their competitive positions in

an ever more competitive environment is a challenge that has risen to prominence in the tourism

industry (World Economic Forum, 2013). The challenge is exemplified by several important

complexities. First, a tourism destination is very different from other commercial products

because the tourist experience provided by the destination is delivered by many different sectors

of the economy, including tourism businesses (e.g., hotels, restaurants, airlines, tour operators)

and other supporting organizations (e.g., entertainment, sports, recreation, public transport,

government agencies). Second, tourists come from different backgrounds and bring different

preferences and behaviors. Tourism products cannot and ought not to be standardized so that

each tourist returns home with a unique memorable experience. Third, different parties involved

under the tourism development umbrella have different goals; some are for private gains while

others are for the public good. Some relate to economic returns, while others concern about

environmental and social outcomes. Thus, managing the sustainability of destination

competitiveness has become a major topic of interest for private enterprises as well as

governments. The current body of research has concluded that destination competitiveness

cannot be attributed to a small set of determinants (Crouch, 2011).

The task of becoming a cruise hub is even more challenging than becoming a successful

destination due to the multiple “customers” involved. Not only does the cruise hub need to attract

travelers to the city, which is a primary aim of destination management organizations, a cruise

hub also needs to attract cruise lines to use its facilities and services.

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Learning from Best Practices

Well established, successful homeports from the world’s top cruise markets (i.e., the US and

Mediterranean) (Cruise Lines International Association, 2013a) were investigated thoroughly to

examine the required tourism infrastructure to support a similar size homeport facility. For

example, issues to consider include tour operator capacity, types and number of specialized tour

guides, and tourist attraction capacity needed to host thousands of visitors during a short period

of time (usually less than 8 hours). The number of employees needed for the terminal operations

and the number of cruise specialists in travel agencies needed to serve the main traveler origin

markets would have implications for human capital development needs, which may need to be

addressed by labor or education/training policies. Best practices from US and the Mediterranean

could also help identify workable regional cooperation and cross industry sector collaboration

models. Finally, Hong Kong can learn from those mature homeports’ critical success factors.

Regional Competitor Analysis

Neighboring cities, such as Shenzhen, Guangzhou, and Zhuhai, in the Pearl River Delta region

have also invested in their cruise terminal facilities and plan to expand their cruise tourism

industry. To develop a regional collaboration strategy to best utilize the “co-opetition”

relationship among Pearl River Delta region cruise ports, it is important to examine the role of

governments and cruise port policies (e.g., incentive to cruise lines, pricing of ports, any form of

subsidy) in nearby competitive ports. Such an understanding will facilitate the development of

competitive strategies and examine regional collaboration opportunities and challenges, which

11

may have policy implications. Operating under the “one country, two system” status, Hong

Kong’s challenges to form regional collaboration may include its different political and legal

framework from nearby ports, which create complexity in handling cruise lines and cruise

travelers. However, Hong Kong’s integrated logistics, including seaport and airport, provides the

city institutional advantages for international tourist flow. The study conducted a comprehensive

evaluation of the competitive landscape of cruise industry development in the Pearl River Delta

region.

Study Objectives

Based on the preceding background information, the following study objectives were developed:

1. To systematically analyze the supply and demand of cruise related infrastructure, cruise

product offerings, and associated tourist attractions and services regionally;

2. To develop effective strategies for Hong Kong’s development as a regional cruise hub

based on best practices of successful mature cruise hubs globally;

3. To draw necessary implications for the formulation of future tourism and tourist flow

related policies on the development of Hong Kong as a regional cruise hub in such a way

that the positioning of Hong Kong can complement that of other cruise ports in the Pearl

River Delta Region.

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Research Methodology

The study went through a four-stage process. Details of the research activities are summarized in

Table 1 and further elaborated in the following sections.

Table 1. Research process

Stage Activities

1. Literature review and background information

Desk research on Cruise tourism and product offerings Cruise travel behaviorsAsia regional cruise port infrastructure developmentTourism development plans in the regionAcademic publications and public press

2. Best practices analysis

Site visitsUS: New York, Florida (Miami, Everglades)EU: Rome, Venice, Barcelona

Desk researchProduct offeringsPort infrastructure

Interviews (13 in US and 7 in EU)Port authorityTravel agencyTourism bureauCruise service company

3. Regional competitor analysis

Desk researchProduct offeringsPort infrastructure

Interviews (11 in Hong Kong, Shenzhen, Guangzhou, Zhuhai)Port authorityTravel agencyTourism bureau

4. Evaluation of local and regional source markets

Focus group4 focus groups with residents in Hong Kong and Shenzhen

Survey Items review6 experts on cruise travel18 cruise travelers in Ocean Terminal before embarkation

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SurveyPilot study in Kai Tak Cruise Terminal with 276 cruise travelers before embarkation Online data collection with 406 Hong Kong residents, 413 Guangzhou residents, and 415 Shenzhen residentsTelephone data collection with 250 residents each in Hong Kong, Guangzhou, and Shenzhen

Phase I. Literature review and background information collection

The major task in this phase was to further review the existing literature on the supply and

demand of cruise tourism and product offerings, cruise traveler behaviors and demand patterns,

Asian regional cruise port infrastructure development, and tourism development plans of various

governments in the region. A comprehensive review of literature provided a solid foundation of

and direction for competitive strategy and government policy formulation. Research background

information was collected from both academic and professional publications, and relevant

associations’ and organizations’ websites.

Phase II. Best practices analysis

Research field visits were conducted to successful homeports in the US (i.e., Miami, Port

Everglades, and New York) and the Mediterranean (e.g., Rome, Venice and Barcelona) to

investigate their industry structure, capacities, and logistics regarding tourist flows, as the US

and the Mediterranean are top cruise itinerary deployment regions (CLIA, 2013a). Interviews

were conducted with port authorities, managers of major international cruise lines that used

visited ports as their homeports, local tour operators, tourism organization officials, and relevant

departments of the government (e.g., tourism bureau and chamber of commerce). Sample

14

interview guides are provided in Appendix A. Data collected during the site visits and interviews

were transcribed into text and content analyzed to identify government policies related to cruise

industry development, critical success factors of homeports, required tourism infrastructure,

human capital needs, and possibly travel trade regulations.

Phase III. Regional competitor analysis

Desk top research was conducted and tourism bureau officials of Hong Kong, Guangzhou,

Shenzhen, and Zhuhai were interviewed to identify the role of governments and their respective

cruise port policies (e.g., incentive to cruise lines, pricing of ports, any form of subsidy).

Managers of cruise lines that have decided to use Hong Kong and other nearby ports as their

homeport were also interviewed to find out the reasons and determining factors of the decisions.

Such an understanding facilitated the development of competitive strategies and examined

regional collaboration opportunities and challenges. Each port was assessed based on its

strengths and weaknesses as a homeport.

Local travel agencies selling cruise products and tour operators providing shore excursion

services were also interviewed to understand local trade practices, challenges faced, and any

knowledge/skill gap. Hosting capacities were further analyzed based on data collected from

various sources in Phases I, II, and III of the project.

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Phase IV. Evaluation of local and regional source markets for Hong Kong’s cruise industry

Focus groups and surveys were used to collect information from Hong Kong residents and the

main source market, Guangdong residents (Hong Kong Tourism Board, 2013), on the image of

Hong Kong’s cruise industry and their cruise preferences and future plans. In 2012, overnight

visitors to Hong Kong from Guangdong Province accounted for 50.9% of the total overnight

visitors from Mainland China. Among them, a significant portion was from Guangzhou (17.6%)

and Shenzhen (12.2%), which together accounted for almost 30% of the total overnight visitors

from Mainland China (Hong Kong Tourism Board, 2012). Therefore, the focus group and survey

samples were drawn from Hong Kong, Guangzhou, and Shenzhen residents.

The study conducted two focus groups in Hong Kong and two in Shenzhen as an initial step to

understand potential cruisers’ perceptions, motivations, and preferences. Focus group discussions

were audio recorded and transcribed. Text data were content analyzed using Altlas-ti software.

The survey questionnaire was design based on the literature (e.g., Fan & Hsu, 2014) and focus

group results. A total of 92 motivation items were identified from these two sources. An expert

panel of six academics with cruise research experience and an understanding of Chinese travelers

was invited to comment on the relevance of each of the 92 items, using a 3-point scale (1 = low

relevance, 2 = medium relevance, 3 = high relevance). In addition, 18 travelers who were ready

to embark on a cruise journey in the Ocean Terminal were invited to comment on the relevance

of each of the 92 items as well using the same scale. The consumer average, expert average, and

overall average of each item was examined. For items with an overall average of 2.0 or lower,

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the average of the experts and average of consumers were reviewed. When both averages were

2.0 or lower as well, the item was removed. When either expert or consumer average was higher

than 2.0, the item was retained. This process removed 26 items, resulting in 66 items.

To further reduce the number of motivation items, a pilot study was conducted in Kai Tak Cruise

Terminal among passengers who were waiting for their embarkation. The survey was completed

by 276 respondents. Exploratory Factor Analysis was used to identify potential dimensions of

cruise travel motivation and reduce the number of measurement items. After the measurement

refinement, 24 items were retained.

The 24 motivation items were included in the final questionnaire, along with perceptions and

intention of taking a cruise holiday, past travel and cruising experience, and demographic

questions. Two waves of data collection took place. The first wave was conducted online (with a

target of 400 completion per city) to generate some initial results, followed by a telephone survey

with a smaller sample size (with a target of 250 completion per city). The two different data

collection methods reduced common method bias, reached more diverse populations, and

speeded up the data collection process. The online survey, with a larger sample size, also reduced

the total costs of data collection due to the higher unit cost of telephone survey.

The online questionnaire was completed by 406 Hong Kong residents, 413 Guangzhou residents,

and 415 Shenzhen residents. Strict quality assurance measures were in place for the online

survey to enhance the reliability and validity of the data collected. For example, the order of the

question items within a category (e.g., motivation) was set as random, thus each respondent

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answered the questions in a random order to avoid sequence bias. Respondents who provided

80% or more of the same response (e.g., selecting 4 on a 5-point scale) in any category of

questions were disqualified; that is, the survey session ended once the 80% threshold was

reached. A speed check was also included in the online survey. Respondents who completed the

whole questionnaire within three minutes were disqualified due to the potential of not reading the

questions carefully as the survey should normally take approximately 10 minutes to complete.

Other measures include breaking long sections into multiple parts with an irrelevant question

(e.g., how many days are in the month of November) located between the sub-sections to ensure

that respondents were paying attention.

Based on the actual geographical distribution of population in these three cities, a quota sampling

method was used for the surveys. Based on the report from the Census and Statistics Department

of the Government of the Hong Kong Special Administrative Region (2013), the population

figures in the Hong Kong Island, Kowloon, and the New Territories in 2012 were used to

calculate the sample size of the various regions. The population and sample size are presented in

Table 2.

Table 2. Sampling in Hong Kong

District Population Percentage of Total (%)

No. of Online Survey

No. of Telephone Interviews

Hong Kong Island 1,277,200 17.9 72 45Kowloon 2,146,800 30.0 120 75New Territories 3,729,600 52.1 208 130

Total 7,153,600 100.0 400 250

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The same quota sampling method was applied to Guangzhou and Shenzhen. Data obtained from

the Guangzhou Statistics Bureau (2011) and the Shenzhen Statistics Bureau (2012) were used to

derive the study sample. Tables 3 and 4 present the calculation.

Table 3. Sampling in Guangzhou




Town center 7,727,163 60.9 244 152New town 3,343,491 26.3 105 66County level districts

1,630,146 12.8 51 32

Total 12,700,800 100.0 400 250

Table 4. Sampling in Shenzhen




Futian 1,325,200 12.7 51 32Luohu 931,000 8.9 36 22Yantian 211,000 2.0 8 5Nanshan 1,099,900 10.5 42 26Bao’an 4,548,400 43.4 173 109Longgang 2,351,900 22.5 90 56

Total 10,467,400 100.0 400 250

For the telephone survey, 250 completed responses were obtained as planned. Survey data were

analyzed using SPSS software. Descriptive statistics (e.g., frequency, means, and standard

deviation) were calculated to provide sample profile and basic information on respondents’

perception of Hong Kong’s cruise industry and its image, cruise travel preferences, and future

cruise travel plans. Additional comparisons, using Analysis of Variance (ANOVA), were made to

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identify differences among sample groups.

Results

Findings from Desk Research and Interviews

The forecast by McKinsey & Company shows that cruise travelers in Asia will represent 20% of

the global market, with approximately 7 million cruisers in 2020. The demand for cruise holidays

is expected to increase, with Mainland China as the primary source market in Asia. Secondary

source markets include Hong Kong, Singapore, Vietnam, Taiwan, and Japan, among others.

In terms of supply, cruise lines will continue to add capacity to Asia with more ships, larger

ships, and new ships. The following ships have been confirmed to be introduced to the China

market over the 2015-2018 period:

• Royal Caribbean' Quantum of the Seas (4,000+ guests) to Shanghai in 2015

• Star Cruises' new ship, Genting Dream, (3,400+ guests) in South China and Hong Kong

(triple homeports) by Nov 2016

• Costa Fortuna, built in 2003

• MSC Lirica, built in 2003, 1,500 guests

• Carnival Miracle, built in 2003, 2,000 guests

• Ovation of the Seas(RCI), newly built, 4,000+ guests

• Majestic Princess, newly built, 3,600 guests

• AIDA new ship, AIDAbella, likely 2,700 guests

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• Norwegian new 2017 ship, name TBD, 4,000+ guests

• Star Cruises new 2017 ship, World Dream

• Carnival Splendor new 2018 ship

Asia holds particularly strong potential in developing the cruise industry with the following

strengths:

• Market expansion and penetration (esp. in Mainland China)

• Tremendous development in infrastructure (e.g., Mainland China)

• Cruise lines adding capacity into Asia (more, bigger, newer ships)

• Plenty of beautiful and potential cruise destinations

However, Asia also has it challenges in developing the cruise industry:

• Dated and insufficient infrastructure (e.g., Vietnam)

• Awareness and understanding of cruise tourism (customers, governments, travel agents)

• Operational challenges (visa and paperwork)

• Political conflicts (e.g., China–Japan and China–Vietnam)

• Pollution (affects the sustainability of the industry)

The major source markets of Hong Kong's cruises are Hong Kong and Southern China.

Secondary markets include the rest of Mainland China; Japan, Korea, Taiwan, and Southeast

Asian countries; and medium- (e.g., India) and long-term fly cruise markets.

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The cruise throughput statistics of Hong Kong from 2010 to 2014 shows a gradual increase

(Figure 1), with similar number of local and non-local passengers. Total throughput is the sum of

passenger arrivals and departures. The overwhelming majority of Hong Kong residents' cruise

activities are onboard the "Other" type of cruises, primarily the overnight cruises to the open sea

with no destination. The "homeporting" passenger number did show an increase from 2013 to

2014 after the opening of the Kai Tak Cruise Terminal.

Figure 1. Cruise throughout statistics

Source: Hong Kong Tourism Board (2015).

The competition among regional ports is becoming fierce. Shanghai primarily serves as a

homeport for Northeast Asia itineraries to South Korea and Japan, while Singapore serves as a

homeport for Southeast Asia itineraries to Thailand, Cambodia, and Vietnam. Hong Kong,

located between these two major homeports, serve two main roles: (1) as homeport for round

- 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000

1,000,000

2010 2011 2012 2013 2014

Non-local Passengers

Transit Homeporting

Other Total

-

200,000

400,000

600,000

800,000

1,000,000

2010 2011 2012 2013 2014

Hong Kong Residents (estimated)

Homeporting Other

Total

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trips to Taiwan, Japan, and Xiamen (northbound) and Sanya and Vietnam (southbound) and (2)

as port-of-call and turnaround port for itineraries between Southeast Asia and Northeast Asia.

Based on site visits, interviews, and desk research, the success factors of homeports include

location, transportation/accessibility, destination image, port condition, commercial and

entertainment facilities, customer service, innovation, collaboration with different entities, and

promotion. Details of the factors are outlined in Table 5, with best practice examples provided.

Table 5. Success factors of homeports

Factors Characteristics Examples

Location 1. Distance to other popular cruise destinations

2. Availability of a large population base

1. Miami

2. Miami

Transportation/accessibility 1. Access to the city, including road and airport infrastructure

1. Miami, Barcelona

Destination image 1. The city is a famous tourist destination in itself

2. Attractions and hotels

1. New York, Miami, Venice, Barcelona

2. Miami, Barcelona

Port condition 1. Multiple berths2. Efficient facilities (e.g., two

loading bridges per terminal)

1. Manhattan Terminal2. Everglades

Commercial and entertainment facilities

1. Shopping 1. Everglades

Customer service 1. Quality service of all segments

2. Efficient visa processing3. Multilingual tour guides

1. Barcelona

2. Venice3. New York

Innovation 1. iPad check-in 1. Barcelona, FranceCollaboration with different entities

1. Cruise lines, government, tour operator

1. New York, Miami, Barcelona

Promotion 1. Events and festivals 1. Venice

23

Regional competitiveness of Hong Kong was investigated and compared with the ports of

Guangzhou and Shenzhen. The advantages and disadvantages of Guangzhou and Shenzhen ports

are summarized in Table 6.

Table 6. Regional competitiveness

Guangzhou Shenzhen

Future outlook

1. Uncertain status of Guangzhou as a homeport

2. Cruise will remain an area of focus for travel agencies

1. Taizi Bay will be positioned as a homeport, although it takes time

Pros

1. Large population base, and outbound travel is popular among Guangzhou residents

2. Transportation hub in the province3. Plenty of tourism resources4. Nansha is expected to receive

policy support, and it has sufficient land area

1. Economic development & quality of life

2. Comprehensive transportation system

3. Cruise lines are willing to come, convenient for Mainland passengers

4. China Merchants Group :a state-owned enterprise has good relationships with government

Cons

1. Nansha cruise terminal is away from city center

2. Lack of experience in handling international cruise lines

1. A late comer in the business2. Frequent traffic jam in Shekou area3. Relatively weak in shopping,

dining, and MICE

Relationships with Hong Kong

1. Cooperation in terms of cruise itineraries

2. Competition in terms of the source market

1. Hong Kong will draw more international passengers, while Shenzhen will rely more on domestic market

2. In the long run, direct competition as a homeport

24

Compared to Guangzhou and Shenzhen, the competitiveness of Hong Kong is outline as follows:

Advantages:

• World class facilities

• International name recognition

• Big emerging market of Hong Kong and Mainland China

• Positive image from source markets

• Infrastructure (e.g., air connectivity, service quality, hotels)

• Support from the government

• Travel agencies’ training and marketing

Disadvantages:

• Residents’ understanding of cruise holidays

• Extra time and money for people coming from Guangzhou and Shenzhen

• Main source market’s entry permit issue

• Location: limited port of call choices; long sailing time to attractive destinations

• Regional competition

• Inadequate transport arrangements near Kai Tak

Findings from Surveys

After cleaning and screening, data collected through online and telephone surveys were

compared to identify potential differences caused by the different data collection methods.

However, no significant differences were found, thus the data were combined for further analysis.

25

Table 7 reports the profile of respondents, which shows that the surveyed residents represented a

mix of gender, age, and income groups. Respondents were generally well educated.

Table 7. Demographic Characteristics of Respondents

Characteristic Percentage

Hong Kong Shenzhen Guangzhou

Gender Male 37.7 41.2 44.8Female 62.3 58.8 55.2

Age<18 - - -18-25 22.4 14.5 16.526-35 39.4 46.5 45.836-45 22.9 28.9 28.346-55 12.6 9.9 7.056-65 2.7 .2 2.2>65 - - .2

EducationSecondary/high school or below 24.9 3.9 3.9College diploma or university degree 68.2 85.5 87.4Postgraduate degree or above 6.9 10.6 8.7

Monthly household income< HK$10,000, or < CN¥4,000 9.9 .7 1.0HK$10,000-14,999, or CN¥4,000-7,999 13.8 2.4 3.6HK$15,000-19,999, or CN¥8,000-11,999 21.4 7.0 14.8HK$20,000-24,999, or CN¥12,000-15,999 18.0 13.0 16.2HK$25,000-29,999, or CN¥16,000-19,999 15.5 10.4 14.3HK$30,000-39,999, or CN¥20,000-29,999 11.6 26.0 24.2HK$40,000-49,999, or CN¥30,000-39,999 9.9 20.2 13.3HK$50,000-59,999, or CN¥40,000-49,999 - 9.9 6.3HK$60,000-69,999, or CN¥50,000-59,999 - 7.0 3.1>HK$69,999, or>CN¥59,999 - 3.4 3.1

Marital statusSingle 58.9 20.2 23.0Married without child(ren) 13.3 12.8 14.0Married with child(ren) 27.8 67.0 63.0

Household size1 2.2 1.9 2.22 18.7 10.1 15.73 28.3 65.5 55.0

26

4 34.7 14.9 16.05 9.9 6.0 8.7>5 6.2 1.4 2.4

Respondents' self-perceived travel experiences are quite high, especially for domestic travel

among Guangzhou and Shenzhen residents (Table 8). For outbound travel, Hong Kong residents

reported the most experience, followed by Shenzhen and Guangzhou respondents. As for cruise

travel, Hong Kong respondents reported the lowest mean. Generally speaking, Shenzhen

residents are more well traveled compared to Guangzhou residents.

Table 8. Travel experience

Type of Tour Hong Kong Shenzhen Guangzhou

Meana SD Meana SD Meana SD

Domestic tour (by all means) - - 4.38 .694 4.26 .728Outbound tour (by all means) 3.98 .876 3.76 .960 3.59 1.014Cruise tour 2.50 1.217 3.38 1.159 3.03 1.217a Scale: 5 = rich experience and 1 = no experience.

In terms of respondents' perceptions of cruising, significant differences were found among Hong

Kong, Shenzhen, and Guangzhou residents (Table 9). Shenzhen and Guangzhou residents

appeared to have more positive perceptions of cruise holidays than Hong Kong residents did.

Shenzhen and Guangzhou residents reported higher means of most perception items. However,

Hong Kong residents held the perception that cruises take much longer than other forms of travel,

cruise holidays' costs are high, and they may feel bored and uncomfortable at seas. They also

held the believe that existing cruise itineraries are not attractive, cruising keeps them confined,

cruises are for senior citizens, and food served on cruise ships are not very tasty.

27

In terms of the top perceptions of cruise travel, Hong Kong respondents indicated that cruising

normally takes much longer than other modes of travel and that cruise holidays cost a lot of

money. On the positive side, Hong Kong respondents believed that cruise holidays take care of

the needs of all generations in the family and take the hassle (e.g., with luggage transfer) away.

Mainland respondents, on the other hand, thought that cruising is romantic, taking cruises allows

them to take plenty of photos and instantaneously share them on social networking sites, and

cruising is rising in popularity, thus they want to keep up with the trend.

Table 9. Perception of cruising in general

Perception Hong Kong Shenzhen Guangzhou F value


I get to visit multiple destinations and have both onboard and onshore experiences.

3.92 b .633 4.19 b .686 4.06 b .797 15.3***

Cruise ships are huge and equipped with an array of great facilities.

3.90 b .652 4.33 b .672 4.16 b .765 38.5***

Cruising normally takes much longer than other modes of travel.

3.82 .802 3.74 .908 3.75 .890 1.0

Cruise holidays offer a brand new experience and allow me to experience a destination from a different angle.

3.81 b .663 4.29 b .695 4.14 b .728 50.8***

Cruising relaxes my mind and body.

3.77 b .695 4.31 b .678 4.16 b .762 62.0***

Cruise holidays cost a lot of money.

3.71 bc .861 3.22 b .929 3.35 c .983 30.2***

There are special/themed programs onboard which I do not get to experience by other travel modes.

3.64 b .712 4.27 b .742 4.13 b .803 78.8***

Staff members onboard are kind and pleasant, making me feel warm and welcome.

3.64 b .652 4.17 b .703 4.05 b .826 60.3***

28

Cruise holidays take care of the needs of all generations in my family.

3.62 b .698 4.09 b .673 3.90 b .809 42.8***

Cruise ships are large social networking platforms where I can socialize with other passengers.

3.62 bc .726 4.21 b .681 4.17 c .702 89.4***

Cruise holidays take the hassle (e.g., with luggage, transfer) away.

3.62 b .727 4.06 b .700 3.87 b .841 35.0***

Cruising is romantic. 3.54 b .784 4.36 b .707 4.13 b .884 114.4***By taking a cruise, I can go to

places that are difficult to get to by other travel modes.

3.51 bc .891 4.08 b .741 3.96 c .813 55.2***

Compared to package tours, cruise holidays let me decide when to do what.

3.43 b .818 4.12 b .714 3.89 b .774 85.9***

Cruise ships provide reliable medical care onboard.

3.41 b .692 4.03 b .717 3.89 b .767 81.8***

Taking cruises allows me to take plenty of photos and instantaneously share them on social networking sites.

3.39 b .826 4.21 b .731 4.07 b .813 126.2***

Cruising is rising in popularity and I want to keep up with the trend.

3.33 b .846 4.18 b .727 3.95 b .823 123.4***

I might get bored while at sea. 3.29 b .918 2.57 b 1.114 2.84 b 1.100 48.7***Cruise seems to be a safe way to

travel compared to some other options (e.g., by air).

3.18 b .762 3.99 b .731 3.69 b .846 112.7***

I might feel uncomfortable mentally or physically being away from land.

3.10 b .960 2.63 b 1.107 2.91 b 1.113 20.7***

Existing cruise itineraries are not attractive.

3.03 b .881 2.52 b 1.167 2.75 b 1.078 23.9***

I do not have to worry about the safety of my belongings during a cruise holiday.

2.94 b .955 3.80 b .943 3.53 b .969 87.4***

Cruising keeps me in a confined environment and could be depressing.

2.91 b .932 2.39 b 1.122 2.64 b 1.137 24.6***

The cruise products are targeted at senior citizens.

2.88 b .973 2.63 b 1.060 2.77 1.017 6.4**

Food served on cruises does not taste good.

2.82 b .824 2.47 bc 1.105 2.68 c 1.000 13.8***

a Scale: 5 = strongly agree and 1 = strongly disagree.

29

b c Means in the same row followed by the same superscript are significantly different at p < .05.*p < .05, **p < .01, ***p < .001

When respondents were asked what comes to their mind when thinking about cruises in Hong

Kong, Hong Kong residents thought of short-haul and long-haul cruises (Table 10). However,

residents in Guangzhou and Shenzhen reported the highest means of ferries sailing on the

Victoria Harbor. Gambling cruises to nowhere had the lowest means among all three groups.

Table 10. Perception of cruise products in Hong Kong



I think of short-haul cruises to nearby Asian destinations.

3.69 b .806 4.01 .705 3.90 b .834 3.1*

I think of luxury long-haul cruises to Europe or America.

3.54 .974 4.06 .785 3.85 .965 1.9

I think of ferries sailing on Victoria Harbor.

2.98 b 1.150 4.11 b .771 3.92 .950 4.8**

I think of gambling cruises to nowhere.

2.85 1.093 3.11 1.069 3.15 1.061 .1

a Scale: 5 = strongly agree and 1 = strongly disagree.b c Means in the same row followed by the same superscript are significantly different at p < .05.*p < .05, **p < .01, ***p < .001

Regarding the perception of cruises sailing from Hong Kong compared to those from Shenzhen

and Guangzhou, Shenzhen residents consistently rated Hong Kong cruises the highest, while

Hong Kong residents reported the least favorable perceptions (Table 11, Figure 2). The only

exception is about the time-consuming nature of the journey to cruise terminal in Hong Kong, of

which Guangzhou residents rated the highest in agreement.

30

Table 11. Perception of cruises sailing from Hong Kong compared to those from Shenzhen and Guangzhou



Overall speaking, I can have a good travel experience.

3.72 b .632 4.25 b .644 4.12 b .775 65.3***

Passengers onboard the ships represent diverse nationalities.

3.69 b .796 4.20 b .707 4.03 b .828 44.9***

Supporting facilities and services are sufficient and efficient.

3.69 b .698 4.21 b .629 4.02 b .796 57.5***

The terminal premises are kept clean and hygienic.

3.67 b .791 4.07 b .777 3.91 b .812 25.4***

The cruise ships convey a feeling of elegance and luxury.

3.65 b .761 4.26 b .696 4.07 b .832 68.7***

Services provided are satisfactory. 3.63 b .630 4.22 b .686 4.03 b .758 76.7***I can be assured of a high level of

security. 3.60 b .822 4.05 b .716 3.85 b .836 32.8***

Quality of food is satisfactory. 3.54 b .732 4.07 b .722 3.88 b .838 51.4***The cruises are mostly punctual. 3.52 b .765 4.14 b .714 3.96 b .748 75.4***I can find a wide variety of

itineraries from these cruise products.

3.47 b .755 4.15 b .716 3.98 b .818 88.1***

The cruise products are good value for money.

3.37 b .790 3.98 b .791 3.77 b .839 61.0***

It is an arduous and time-consuming journey to get to the cruise terminal.

2.91 b 1.006 2.88 c 1.119 3.15 bc 1.035 7.8***


31

Figure 2. Perceptions of cruises sailing from Hong Kong compared to those from Shenzhen and Guangzhou

Respondents were asked to indicate their motivation for taking a cruise. Again, significant

differences were found among the three groups on all motivation items (Table 12). Shenzhen

residents consistently reported the highest motivation, followed by Guangzhou respondents.

Hong Kong residents reported the lowest scores for all motivation items. In terms of the top

ranked motivation items, Hong Kong respondents were motivated by reducing stress and getting

away from usual demands of life. Mainland residents were mostly motivated by being close to

and harmonious with nature.

32

Table 12. Motivation for taking a cruise

Motivation Hong Kong Shenzhen Guangzhou F value


I cruise to rest and relax. 4.06 b .634 4.43 b .625 4.31 b .779 31.9***I cruise to experience something

different.4.02 b .612 4.44 b .614 4.31 b .703 44.7***

I cruise to give my mind a rest. 3.90 b .659 4.36 b .643 4.18 b .732 46.7***I cruise to reduce stress. 3.90 b .656 4.21 b .659 4.04 b .803 20.1***I cruise to get away from everyday

physical stress/pressure.3.85 b .711 4.25 b .661 4.04 b .778 31.6***

I cruise to get away from everyday psychological stress/pressure.

3.83 b .664 4.19 b .689 4.05 b .830 26.3***

I cruise to have diverse experiences (onboard/onshore, multiple destinations).

3.81 b .678 4.29 b .654 4.16 b .773 50.8***

I cruise to get away from the usual demands of life.

3.78 b .705 4.14 b .728 3.94 b .787 23.9***

I cruise to have fun through cruise activities and facilities (e.g. bar, swimming pool, gym, basketball, jogging, yoga, karaoke).

3.77 b .748 4.25 b .739 4.10 b .791 43.7***

I cruise to get a better appreciation of nature.

3.71 b .762 4.38 b .644 4.21 b .784 91.9***

I cruise to be free to do whatever I want.

3.68 b .713 4.16 b .754 4.03 b .813 43.0***

I cruise to strengthen relationships with my family/friend(s).

3.66 b .709 4.15 b .699 3.97 b .825 46.3***

I cruise to strengthen relationships with my companion(s).

3.65 bc .714 4.06 b .716 3.95 c .794 33.7***

I cruise to be harmonious with nature.

3.65 b .751 4.35 b .656 4.11 b .852 90.3***

I cruise as I do not need to worry about time.

3.65 bc .818 3.96 b .774 3.85 c .859 15.4***

I cruise to be close to nature. 3.59 b .783 4.36 b .658 4.16 b .817 114.7***I cruise to explore the unknown. 3.50 bc .756 4.04 b .740 3.92 c .835 55.0***I cruise to observe other people in

the area.3.42 bc .796 3.79 b .858 3.71 c .857 22.8***

I cruise to meet people with similar values/interests.

3.37 b .731 4.17 b .731 3.97 b .868 115.8***

I cruise as I need not constantly worry about the safety of my belongings.

3.31 b .820 3.94 b .808 3.67 b .894 58.3***

33

I cruise to have daring/adventuresome experience.

3.27 bc .823 3.88 b .891 3.74 c .934 52.8***

I cruise to meet the locals. 3.17 bc .872 3.72 b .829 3.66 c .877 50.5***I cruise to follow the current trend

of cruising.3.13 b .895 4.07 b .771 3.85 b .878 138.4***

I cruise to follow current events. 2.93 b .848 3.88 b .815 3.65 b .822 146.3***a Scale: 5 = strongly agree and 1 = strongly disagree.b c Means in the same row followed by the same superscript are significantly different at p < .05.*p < .05, **p < .01, ***p < .001

When asked about their intention to take a cruise in the next three years, significant differences

were found among all three groups (Table 13, Figure 3). Shenzhen respondents reported the

highest intention, followed by Guangzhou and Hong Kong respondents.

Table 13. Intention to take a cruise

Intention Hong Kong Shenzhen Guangzhou F value


I intend to take a cruise from Hong Kong in the next three years.

3.55 b .898

4.42 b .639 4.08 b .889 116.8***

I intend to take a cruise in the next three years.

3.50 b .910

4.39 b .588 4.18 b .796 146.3***


34

Figure 3. Intention to take a cruise

A factor analysis was conducted using the Principal Axis factoring method and Oblimin with

Kaiser Normalization rotation. The analysis resulted in a seven-factor solution explaining

63.82% of the variance, as shown in Table 14. The seven motivation factors were named Nature,

Personal interaction, Escape/relax, Novelty, Hassle free, Fashion, and Relationship, with

Escape/relax, Relationship, and Nature having the highest means.

Table 14. Factor analysis of motivation items

MotivationFactor

LoadingEigen-value

% of variance

Nature ( = .866, Mean = 5.85a) 8.955 35.809I cruise to be harmonious with nature. .839I cruise to be close to nature. .756I cruise to get a better appreciation of nature. .646I cruise to be free to do whatever I want. .570I cruise to experience something different. .532

35

Personal interaction ( = .856, M = 4.69) 2.394 8.684I cruise to meet the locals. .950I cruise to observe other people in the area. .784I cruise to meet people with similar values/interests. .594

Escape/relax ( = .871, Mean = 6.00) 1.576 5.198 I cruise to get away from everyday psychological

stress/pressure..782

I cruise to get away from the usual demands of life. .702 I cruise to get away from everyday physical

stress/pressure..669

I cruise to reduce stress. .662 I cruise to give my mind a rest. .634 I cruise to rest and relax. .444

Novelty ( = .778, Mean = 5.55) 1.388 4.279 I cruise to have daring/adventuresome experience. .714 I cruise to explore the unknown. .628 I cruise to have diverse experiences

(onboard/onshore, multiple destinations)..592

I cruise to have fun through cruise activities and facilities (e.g. bar, swimming pool, gym, basketball, jogging, yoga, karaoke).

.453

Hassle free ( = .759, Mean = 5.32) 1.233 3.618 I cruise as I need not constantly worry about the

safety of my belongings.-.660

I cruise as I do not need to worry about time. -.513

Fashion ( = .885, Mean = 3.88) 1.118 3.333 I cruise to follow current events. .932 I cruise to follow the current trend of cruising. .852

Relationship ( = .792, Mean = 5.97) 1.057 2.898 I cruise to strengthen relationships with my

companion(s)..690

I cruise to strengthen relationships with my family/friend(s).

.663

Total variance explained 63.819Total scale reliability .874a Perception scale: 7 = strongly agree, 1 = strongly disagree

36

Policy Implications and Recommendations

This study analyzed the supply and demand of cruise related infrastructure, cruise product

offerings, and associated tourist attractions and services regionally. With a good understanding

of the market size and characteristics, competitive landscape particularly in the Pearl River Delta

region and broadly in Asia, and best practices of successful mature cruise hubs globally,

competitive strategies and policy implications were derived based on a triangulation analysis of

the information collected from various sources. The recommendations are classified into three

categories:

Demand side:

1. Market to a 3-hour radius region to maximize benefits from the Hong Kong-Zhuhai-

Macau Bridge and high speed rail

Guangzhou and Shenzhen residents reported positive perceptions of cruising from

Hong Kong and strong motivation to take a cruise holiday. As the transportation

network and accessibility to Hong Kong becomes enhanced, the primary source

market could be expanded to beyond the Guangdong Province. The 3-hour radius can

be redefined.

2. Increase Shenzhen and Guangzhou residents’ awareness of short-haul and long-haul

itineraries

37

When asked about what comes to their mind when thinking of cruises in Hong Kong,

ferries on the Victoria Harbour had the strongest image. Efforts should be stepped up

to inform Mainland residents of the variety of short- and long-haul cruise itineraries

so as to increase their desire and behavior of taking such cruises from Hong Kong.

3. Increase awareness/interest among Hong Kong residents of cruise holidays

Hong Kong residents generally reported lower perception, motivation, and intention

to take a cruise holiday from Hong Kong. More promotions could be launched to

inform residents of the variety of activities and facilities on modern day mega-cruises

to generate their interest in taking a cruise holiday. Cruise lines and travel agencies

could work with the media to produce television programs or community road shows

to increase awareness and interests.

4. Educate Asian consumers about the nature of cruise

Hong Kong residents reported the perception that cruises take longer than other forms

of travel and they would feel confined and uncomfortable while onboard cruise ships.

More consumer education may be required to inform Hong Kong and other Asian

residents that cruises are not merely a mode of transportation that takes passengers

from point A to point B. Instead, cruises are “floating resorts” that offer all-inclusive

vacation experiences. In addition, recent incidents of consumer boycott about the

change of cruise destination/itineraries due to poor weather conditions happened due

to the lack of understanding of the nature of cruise holidays.

38

Supply side:

1. Continue to promote Hong Kong and bring ship deployment

Efforts should be continued to bring more ship to Hong Kong, in particular to use

Hong Kong as a homeport, which could generate more economic benefits than port-

of-call.

2. Transportation to/from Kai Tak Cruise Terminal

The current transportation network around Kai Tai is insufficient during cruise days

when thousands of visitors arrive and depart. Public transportation options should be

explored to improve its accessibility.

3. Onboard immigration clearance

While there are cost and time issues involved, efforts should be made to facilitate

cruise lines and immigration department to work out feasible options so as to reduce

disembarkation time. This will allow travelers to spend more time in Hong Kong and

make the cruise journey more enjoyable.

4. Explore/develop new ports to expand itineraries

39

Distance between Hong Kong and the next available port creates a challenge for

Hong Kong as a homeport. The limited options available (e.g., Taiwan and Hainan)

also restrict the variety of itineraries that could be offered, which may reduce the

number of repeat cruisers starting their cruise journey from Hong Kong. It would be

worthwhile to work with cruise lines and neighboring governments to explore new

and or exotic ports to expand future itineraries. The variety of connecting ports and

itinerary options are also helpful in attracting cruise line to use Hong Kong as a

homeport.

5. Attract more cruise lines to use Hong Kong as their regional headquarter

Having one of the most attractive business environments in the world, Hong Kong

could be attractive to cruise lines to use the city as their regional headquarter. Once

they are headquartered in Hong Kong, it is more like that they will use Hong Kong as

a homeport and bring ships to visit Hong Kong as a port of call.

6. Cross-governmental agency collaboration

To develop Hong Kong into a regional cruise hub, various government departments

need to work together to resolve various issues, including transportation, visa/travel

permit, tourism related services, safety and security, and economic development.

40

Cross-community collaborations:

1. Regional collaboration

• Avoid duplication of offerings and promote distinctive positioning of each

port

Governments, port authorities, cruise lines and the travel trade of the Pearl

River Delta region should devise strategies and plans to avoid

homogeneity of cruise product offerings, which will cause direct

competition. By positioning each port differently and collaborate with

each other, win-win situations could be developed to collectively grow the

regional cruise market.

• PRC passport holders’ travel permit regulation

The current travel permit and visa regulations make the travel

cumbersome for PRC passport holders. Long lead time is required due to

multiple visa/travel permit application processes, which requires stronger

travel motivation to overcome these barriers and prohibits spur of the

moment travel decisions. As a main source market for Hong Kong,

Mainland Chinese cruise travelers’ visa requirements have a significant

impact on the development of Hong Kong as a regional cruise hub.

• Special visa arrangements for cruise passengers

41

Cruise itineraries in Asia are likely to include the visit of several countries

and economies. For many cruise travelers, multiple visa applications are

required. If governments in the region can discuss and agree on a special

“cruise visa” with which cruise travelers can apply for one visa and visit

all ports of call, that will greatly facilitate the cruise industry development

in the region.

2. Trade association

It would be helpful to have a platform for various stakeholders to communicate and

collaborate. The trade associations could include members from travel agencies,

cruise lines, Tourism Commission, Tourism Board, Travel Industry Council,

transportation sector, tourism educators, etc. to discuss and develop mutually

beneficial strategies and actions. The trade association could facilitate the

development of the cruise industry and may be regulate the trade.

3. Cruise research and education

The current suite of training programs is limited to cruise product selling. Most

tourism management related degree programs in Hong Kong only offers one elective

subject, if any, on cruise tourism. More training opportunities at the tertiary level

could be developed to nurture future cruise management professionals. This project

42

represents one of the few cruise related studies conducted in Asian context. More

research is required to further understand the supply and demand of this new form of

tourism and to monitor the growth and development of this segment of the tourism

industry.

With the four-stage process, all proposed research objectives have been successfully

accomplished.

Public Dissemination

The project results have been disseminated through the following means:

1. A public seminar was conducted in Hong Kong attended by more than 50 tourism and

cruise industry practitioners, government officials, the media, and university

students/staff. The seminar announcement is provided in Appendix B. Subsequent press

coverage of the seminar is summarized in Appendix C)

2. A press release was distributed reporting major findings of the study (see Appendix D).

3. The paper “Competitive Landscape of Asian Cruise Ports” was presented at the 2015

Travel and Tourism Research Association Annual Conference in Portland, Oregon, USA.

4. The Project leader has presented preliminary research results at the National Kaohsiung

University of Hospitality and Tourism, Taiwan and Macau Polytechnic Institute, Macau.

5. One manuscript has been submitted to the Journal of China Tourism Research. Another

paper is under preparation for submission to the Journal of Travel Research. Additional

journal papers could be prepared for information dissemination.

43

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Issues in Tourism, 6(5), 369-414.

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Fan, Daisy, & Hsu, Cathy H.C. (2014). Potential Mainland Chinese Cruise Travelers’

Expectations, Motivations, and Intentions. Journal of Travel and Tourism Marketing,

31(4), 522-535.

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Retrieved on 21 January, 2014 from

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Hong Kong Tourism Board. (2012). Visitor profile report 2012. Retrieved from

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paper/Visitor-Pro/Visitor_Profile2012/Full_Report_2012_2.pdf

Hong Kong Tourism Board (2013). Cruise Passenger Statistics by Nationality/Territory Jan-Dec

2012.


2013.


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Hong Kong Tourism Commission (2013). Develop Hong Kong as a Leading Regional Cruise

Hub. Retrieved on January 2, 2014 from

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Switzerland. Retrieved on January 2, 2014 from http://reports.weforum.org/the-global-

competitiveness-report-2013-2014/#=

46

Appendix A: Interview Guides

47

Interview Guide (Tourism Authority/Operator)

Infrastructure capacity

1. From the tourism infrastructure perspective, what is the maximum number of passengers

and crew that your city is prepared to handle simultaneously?

Probe: could you give us a brief introduction of tourism facilities in your city?

# of hotel rooms at different star ratings

# of eateries

# of travel agencies and tour buses

# of travel information points

Capacity and types of attractions

2. Are there any specialized human resources in your city that can support the development

of cruise tourism? If yes, please elaborate.

Probe:

# of specialized tour guides?

# of cruise specialists in travel agencies?

3. What is the annual (current or potential) economic contribution of cruise tourism to this

destination?

Strengths and Challenges

4. What role(s) do you think your city (port) plays in the development of cruise tourism in

the region (e.g., PRD, Florida, Mediterranean)?

5. What are the advantages and disadvantages of your city (port) compared to neighboring

ports in the region?

6. What (do you foresee) are the challenges that constrain the development potential of

cruise tourism in your city?

Probe:

Human capital knowledge/skills gap

The markets’ receptiveness to cruise tourism

Regional competition

48

Cruise passengers

7. What is (do you foresee will be) the approximate composition of cruise passengers

departing from your city in terms of their places of origin (State/Province, Country)?

8. How do cruise passengers usually (do you foresee the cruise passengers will) arrive at

your city (%)?

Probe: could you give us a brief introduction of intermodal transports in your city?

Airport capacity

Rail connections

Road infrastructure

9. Are you involved in selling cruise products (e.g., itineraries, shore excursions, etc.)? If

yes, what are your usual practices in selling these products?

Probe:

Are your marketing strategies effective? How are the markets responding to your

marketing effort?

Policies and regulations

10. What role(s) does/will your government play to support the development of cruise

tourism?

11. Are there national/regional policies that support the development of cruise tourism in

your city? If yes, please elaborate.

Probe:

Cabotage policy

Incentives to cruise lines, berth charges, subsidy

National tourism policy (incl. visa policy)

12. What are the major factors that negatively affect the growth of the cruise tourism in your

port/city? Any suggestions on how these constraints can be removed in the near future?

Others

13. Can you describe some cooperative (marketing) activities among cruise lines, the port,

and the city?

14. Please share your views on any other cruise-related issues.

49

Interview Guide (Port Authority/Management)

Port condition and management

15. From the port infrastructure and management perspective, what are the critical factors

that contribute to your (potential) success as one of the world (region)’s top cruise

homeports?

Probe:

Port infrastructure (berth, passenger terminal, etc.)

Port natural condition (weather, distance to nearby ports-of-call, etc.)

Port services to cruise lines and passengers (service range, quality, and efficiency)

Cost of port services

Port marketing (CRM)

Port governance (public vs. private; parent companies, etc.)

16. What is the maximum number of cruise ships, passengers and crew that you can handle

simultaneously?

Probe:

How do you come up with your human capital planning? (Staff-passenger ratio?)

How do you manage the people flow?

17. How do you attract cruise lines to use your port/terminal as a homeport?

18. Please list 2-3 ports/terminals that you consider as your major regional competitors.

19. Please name some distinctive competencies of your port/terminal comparing to

neighboring ports/terminals. What are your competitors’ core competencies?

20. Besides competition, do you cooperate with rival ports to promote regional cruise tourism?

Policies and regulations

21. Are there national/regional policies that support your development as a homeport? If yes,

please elaborate.

Probe:

Cabotage policy



50

City infrastructure

22. Beyond the port/terminal, is there any support from the city that is also critical to your

success? If yes, please elaborate.

Probe:

Economic development (proximity to source markets)

Tourism infrastructure (attractions, accommodation, restaurants)

General infrastructure (intra-city transport, inter-city transport)

23. What is the annual (current or potential) economic contribution of cruise tourism to this

destination?

Others

24. Compared with your port, what do you think are Hong Kong’s advantages and

disadvantages?

25. Can you describe some cooperative (marketing) activities among cruise lines, the port,

and the city?


51

Interview Guide (Cruise Lines)

Major considerations

27. When selecting homeport, what are the major considerations that are included in your

decision making model?

Probe:

Attractiveness and infrastructure development of the city

Economic development (proximity to source markets)

Tourism infrastructure (attractions, accommodation, restaurants)

General infrastructure (intra-city transport, inter-city transport)

Port infrastructure and management

Port infrastructure (berth, passenger terminal, etc.)

Port natural condition (weather, distance to nearby ports-of-call, etc.)

Port services to cruise lines and passengers (service range, quality, and

efficiency)

Cost of port services

Port marketing (CRM)

Political and regulatory framework

Cabotage policy



28. How does XX (city) fit your criteria? What are XX (city)’s distinctive competencies

compared to neighboring ports/terminals?

29. Once you decide to select a particular port/terminal as homeport, what kind of support do

you need from various parties in the city?

Cruise passenger

30. What is the approximate composition of cruise passengers departing from XX (city) in

terms of their places of origin (State/Province, Country)?

31. How do cruise passengers usually arrive at XX (city) (%)?

32. Have you discovered any particular travel-related preferences of cruise passengers?

52

Probe:

Motivations

Activities/types of attractions preferred

Differences between Asian and Western cruisers

33. What is the annual economic contribution of your company using this destination as a

homeport?

Hong Kong’s competitiveness

34. Does your company plan to deploy more ships to Asia? If yes, what are your target

homeports?

35. Does your company plan to increase your Hong Kong coverage? By how much? Why?

36. Compared with other Asian ports such as Singapore and Shanghai, what are Hong Kong’s

advantages and disadvantages?

37. What are the major factors that negatively affect the growth of the cruise tourism in Hong

Kong? Any suggestions on how these constraints can be removed in the near future?

38. What suggestions can you provide to Hong Kong to develop it into a leading regional

cruise hub?

Others

39. Can you describe some cooperative (marketing) activities among your company, the port,

and the city?


53

Appendix B: Public Seminar Announcement

54

Appendix C: Press Coverage

Press coverage on the press release "PolyU Presents Strategies and Policy Implications to Enhance Hong Kong’s Competitiveness as a Regional Cruise Hub" on the following website:

1. Hospitality Financial and Technology Professionals (HFTP) -http://www.hftp.org/index.cfm?feedItem=http://hftp2.hsyndicate.com/news/4072693.html#fullArticle

2. American Hotel & Lodging Association (AH&LA) -http://ahla.hsyndicate.com/news/4072693.html

3. Hospitality Sales and Marketing Association International (HSMAI) -http://www.hsmai.org/details.cfm?id=http://cdn.hsyndicate.com/econnect/4072693.html

4. Hsyndicate - http://www.hsyndicate.org/news/4072693.html5. Hospitality Net - http://www.hospitalitynet.org/news/4072693.html6. Hotel Technology Next Generation (HTNG) -

http://htng.hsyndicate.com/news//4072693.html7. Wiredhotelier.com - http://www.wiredhotelier.com/news/4072693.html8. AMFORHT - http://amforht.campusgroups.com/platform/blog/press-release--polyu-

presents-strategies-and-policy-implications-to-enhance-hong-kong-s-competitiveness-as-a-regional-cruise-hub/5764/

9. ChinaReviewNews.com - http://hk.crntt.com/crn-webapp/touch/detail.jsp?coluid=92&kindid=0&docid=104002503

10. Oriental Daily - http://orientaldaily.on.cc/cnt/news/20151113/00176_017.html11. The Sun - http://the-sun.on.cc/cnt/news/20151113/00407_014.html12. ON.CC - http://hk.on.cc/hk/bkn/cnt/news/20151112/bkn-20151112163642939-

1112_00822_001.html13. Chinese Television System -

http://news.cts.com.tw/crntt/international/201511/201511131682401.html#.VkVFor8j6x814. Sina - http://news.sina.com.tw/article/20151112/15532413.html15. HK China News Agency - http://www.hkcna.hk/content/2015/1112/411923.shtml16. Asian American Hotel Owners Association (AAHOA) -

http://aahoa.hsyndicate.com/news/4072693.html

55

Appendix D: Press Release

Hung Hom Kowloon Hong Kong

E [email protected] T (852) 2766 5101 F (852) 2364 0246

Press Release

12 November 2015

PolyU Presents Strategies and Policy Implications to Enhance Hong Kong’s Competitiveness as a Regional Cruise Hub

The School of Hotel and Tourism Management (SHTM) of The Hong Kong Polytechnic University (PolyU) today (12 November) announced the findings of a study on “Enhancing Hong Kong’s Competitiveness as a Regional Cruise Hub from a Policy Perspective”. The study offers a comprehensive understanding of what it takes to become a competitive regional cruise hub.

Spearheaded by Professor Cathy Hsu, Principal Investigator and Chair Professor of the SHTM, and funded by the Central Policy Unit of the Hong Kong SAR Government, the project employed rigorous research methodologies, including interviews, focus groups, and survey, to systematically analyse the supply and demand factors, to develop effective strategies for Hong Kong’s development as a regional cruise hub and to draw implications for the formulation of future cruise tourism related polices.

The cruise industry has experienced a stable growth with an average of 7.2% annual growth rate of passenger numbers since 1990. The rising role of Asia in the global economy in recent years has drawn much attention to the Asia-Pacific region and the cruise industry has started to explore new markets in Asia. This is particularly true for the Mainland China market as the number of Mainland Chinese tourists taking cruises is expected to surpass 1 million for the first time in 2015. The rapid growth of the cruise industry in Asia provides excellent opportunities as well as raises big challenges to Hong Kong.

“The newly launched HK$8.2 billion Kai Tak Cruise Terminal represents the Hong Kong government’s firm commitment to establish Hong Kong as a regional cruise hub,” said Professor Cathy Hsu. “While the development of port infrastructures in Asian cities and the growth of the Chinese outbound travel market reinforce Hong Kong’s role, the city is also facing fierce competition from neighbouring ports such as Shenzhen and Guangzhou”, Professor Hsu observed. Indeed, Singapore and Shanghai have declared their plan of being a regional cruise hub. Neighbouring economies such as Vietnam, South Korea, and Taiwan are aggressively expanding their cruise port infrastructure and trying to capture the rapidly growing Asian cruise traveller market.

With a comprehensive understanding of the competitive landscape, the project team presented strategies and policy implications in an attempt to facilitate the Hong Kong government to formulate and implement cruise tourism related policies in support of the development of Hong Kong as a regional cruise hub:

Appendix D - English Press Release



Press Release

1. Demand side: o Market to a 3-hour radius region, maximising the benefits of Hong

Kong-Zhuhai-Macau bridge and high speed rail o Increase Mainland residents’ awareness of short-haul and long-haul itineraries o Increase awareness/interest among Hong Kong residents of cruise holidays o Educate Asian consumers about the nature of cruise

2. Supply side: o Continue to promote Hong Kong and bring ship deployment o Strengthen transportation to/from Kai Tak Cruise Terminal o Encourage onboard immigration clearance o Explore/develop new neighbouring ports to expand itineraries o Attract more cruise lines to use Hong Kong as their (regional) headquarters o Initiate cross-governmental agency collaboration

3. Cross-community collaborations: o Regional collaboration

Avoid duplication of offerings and promote distinctive positioning of each port

Relax PRC passport holders’ cruise travel permit regulation Arrange special visas for cruise passengers

o Trade association o Cruise research and education

Located at a strategic geographical position in the Asia-Pacific region, Hong Kong has been a must-see destination for cruise passengers and other international tourists visiting Asia. But with more and more Asian countries and regions joining the cruise tourism business, Hong Kong needs to further develop its competitive advantages and consolidate its position as a preferred port for cruise lines and cruise travel. “This study provides important information for the Hong Kong government to formulate strategic plans and draw policy implications to support the development of Hong Kong’s cruise industry” Prof Hsu remarked. “The SHTM is proud to be able to support the development of the cruise industry in this significant way.”

About PolyU’s School of Hotel and Tourism Management

For over 35 years, PolyU’s School of Hotel and Tourism Management has refined a distinctive vision of hospitality and tourism education and become a world-leading hotel and tourism school. Ranked no. 2 in the world, the School is a symbol of excellence in the field, exemplifying its motto of Leading Hospitality and Tourism.

With 65 academic staff drawing from 20 countries and regions, the School offers programmes at levels ranging from undergraduate degrees to doctoral degrees. A member of the UNWTO Knowledge Network, the School was bestowed the McCool Breakthrough Award in 2012 by



Press Release

the International Council on Hotel, Restaurant, and Institutional Education (I-CHRIE) recognising its breakthrough in the form of its teaching and research hotel – Hotel ICON – the heart of the School’s innovative approach to hospitality and tourism education.

*****

Press contact : Ms Pauline Ngan, Senior Marketing Manager School of Hotel and Tourism Management

Telephone : (852) 3400 2634 E-mail : [email protected] Website : www.polyu.edu.hk/htm



Press Release

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Appendix D - Chinese Press Release



Press Release

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(852) 3400 2634 [email protected]/htm

2013.a6.032.14c final report prof hsu

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