China’s rising middle class is re-shaping the cruise industry

China’s rising middle class is re-shaping the cruise industry

Confirmation of our investment themes can come from a variety of places, including CEO interviews and how we love it when they do just that. The cruise industry is benefitting from several thematic tailwinds, including the Aging Population as well as Affordable Luxury, but it’s the push-pull inside our Rise & Fall of the Middle Class — falling inside the U.S. and rising in the emerging economies — that is re-shaping the cruise industry. In the coming years, much like we’re already seeing in airline traffic and even at the box office, we expect to see a much greater focus on cruises catering to the Chinese audience.

Will more than these three markets be re-shaped by this demographic and psychographic shift? In a word, yes.

From the deck of the Carnival Horizon, docked at New York City’s Pier 88, Carnival Corp. CEO Arnold Donald told CNBC that, eventually, his cruise line’s U.S. business would shy in comparison to China.

“China, someday, will be the largest cruise market in the world,” the CEO told “Mad Money” host Jim Cramer on Wednesday. “It’s in their five-year plan, so if cruising is in their five-year plan, … they’re going to make it happen.”

Passenger volume from China has been increasing sharply over the last five years, with cruise capacity increasing across all metrics, according to a 2017 report from Cruise Lines International Association and Chart Management Consultants.

Conservative estimates from a 2017 report by Cruise Industry News, an independent news and research organization, predicted that China would deliver more than 5.6 million domestic cruise passengers by 2024.

For context, Cruise Lines International Association estimates that 27.2 million passengers around the globe will go on a cruise in 2018.

Source: Carnival Corp CEO: China to be the largest cruise market in the world

About the Author

Chris Versace, Chief Investment Officer
I'm the Chief Investment Officer of Tematica Research and editor of Tematica Investing newsletter. All of that capitalizes on my near 20 years in the investment industry, nearly all of it breaking down industries and recommending stocks. In that time, I've been ranked an All Star Analyst by Zacks Investment Research and my efforts in analyzing industries, companies and equities have been recognized by both Institutional Investor and Thomson Reuters’ StarMine Monitor. In my travels, I've covered cyclicals, tech and more, which gives me a different vantage point, one that uses not only an ecosystem or food chain perspective, but one that also examines demographics, economics, psychographics and more when formulating my investment views. The question I most often get is "Are you related to…."

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