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Quietly, Goldstein has helped oversee the global integration of cruise industry trade associations into one united entity. That re-organization will come in handy during the industry's expansion into emerging markets.

While it lacks in scale to Carnival Corp., which operates about half of the cruise ships in the world, Royal Caribbean Cruises has staked out a strong second position in the industry.

Royal Caribbean Cruises president and CEO Adam Goldstein told Skift that the nascent Chinese cruise market is vital to the company’s fortunes, but shouldn’t become a focus at the expense of North American cruisers, who represent the greatest source of existing demand for cruises.

Royal Caribbean Cruises’ Royal Caribbean International, Azamara Club Cruises, Celebrity Cruises, and SkySea joint-venture in China have been some of the most eager brands to break into the Chinese cruise market.

Goldstein also serves as chairman of Cruise Lines International Association (CLIA), the cruise industry’s global trade organization. CLIA experienced controversy early this year when former U.S. Coast Guard rear admiral Thomas Ostebo, who it had tapped to lead the organization as CEO, stepped down after two weeks on the job.

Skift spoke to Goldstein last week aboard Royal Caribbean International’s newest vessel, Anthem of the Seas.

Skift: So who exactly are these new Chinese cruisers? What do they want from their experiences?

Goldstein: There is a strata of Chinese traveler who has time, so older, wealthier Chinese who are absolutely scouring the earth for every interesting travel possibility. Chinese are clearly, for example, amongst the leaders in adventure travel right now, but in the volumes with which we deal, our focus right now is developing the Chinese coastal offerings out of Tianjin, Shanghai, Xiamen, Hong Kong where there’s significant volumes of potential cruisers and then hopefully over time that will cascade out to Singapore, to Alaska, to the Med and eventually to North America, to the U.S. and to the Caribbean.

Skift: What about the international Chinese traveler overall?

Goldstein: In China, during Golden Week and Chinese New Year, there’s more Chinese travel everywhere. It could very well be that just because of that, we will have to make some adjustments here in the next few years. I wanted to give you some numbers. Australia now has the high cruise penetration in the world. About four percent of all Australian’s will take a cruise this year, it’s number one in the world as far as we know. U.S. number is about 3.5 percent. In China last year, about 700,000 people cruised, about 119 million international trips were taken for whatever purpose.

The cruise industry had barely one-half percent of the people who traveled, never mind a percentage of the population. If we could just get to three percent or four percent of who’s traveling, the cruise industry would have to be very significantly larger than it is. We don’t necessarily need to be convincing people to leave China for the first time, we need to be competitive amongst the population who want to leave China, are leaving China.

Skift: What are the challenges in reaching Chinese travelers?

Goldstein: It’s tough because most consumers have no clue what a cruise means. Most travel agents have no clue of how to sell it or why would they sell it. You don’t have a distribution system that reoriented itself to our category, like it happened in North America. Even in Europe where they didn’t reorient themselves around cruising in Europe, it went from a product that if it was sold at all, was exclusively sold on a few pages on some big tour operators brochure that very young people working in the retail shops would just hand you and if it happened, it happened. Cruising is understood there as a real vacation product now, and six million people are cruising in Europe now. It’s real.

Then on the infrastructure side, I give the Chinese very significant credit for the home port infrastructure that they have created and they’ve done it themselves, which is nice. The port of call diversity and availability and scaling up to be able to handle the amount of cruise demand that we believe will develop over the next five to ten years is not there yet.

Skift: How do Chinese vacationers even book a cruise? Travel agents?

Goldstein: Back in the day, let’s say before ten years ago, their ability to travel was restricted entirely to traveling in a group with special visas escorted by a licensed travel agent. That was the basis for everything. Over time, things are liberalizing, there’s more diversity in distribution, there’s more options for the consumer, but fundamentally distribution is still about travel agents taking risk positions and inventory and remarketing to the consumers. That is evolving, but it’s still much more that way than in other places.

Skift: But the story of cruising in Asia also includes ports in countries other than China, right?

Goldstein: We have a co-marketing relationship with the Singapore tourism board. We’ve now encompassed Asia Pacific in our commercial development work in a variety of ways. Some are still on the drawing board, not announced, but some we’re moving forward. We’re working on certain tender port capabilities and in the South Pacific we’re looking for ports of call that we can develop or enhance all around the ASEAN countries. Then in Korea and Japan, which are, of course, way more developed economies, richer countries that are more capable of, say, acting on their own behalf, we’re engaged in dialogue about where we see the growth opportunities and where we would use infrastructure if they built it.

Skift: You’re also chairman of CLIA, in addition to your role at Royal Caribbean. What’s going on there? The organization has been quiet since its last CEO resigned in something of an industry shocker.

Goldstein: CLIA’s been great. The only issue is that we hired a CEO and unfortunately he had a family situation that required that he give up the post he had just taken. It was very sad and unfortunate. I wish both him and his family the best…

A lot of good things are happening at CLIA right now. However, eventually we need to decide on who the permanent CEO is and it better be a good one. One of my biggest undertakings at the moment, definitely in the CLIA world, my biggest undertaking is the search for a new CEO. I have high hopes. We’ll see.

Skift: It seems like CLIA has evolved from an organization supporting travel agents to one more concerned with global legal issues surrounding cruising. Do you agree?

Goldstein: The first merger was, let’s say, old CLIA, which was exactly what you said and the International Council of Cruise Lines, which was the advocacy association of the industry. The idea of the merger was the cruise industry can be more effective if it’s speaking with one voice, either to travel agents or to government or whoever. Then three years ago, we got to the point where it was a little bit ridiculous that there were more cruise associations than there were major cruise companies. The fragmentation was not helpful to us, and so the second wave of merger was the consolidation of, I think, 12 organizations into one and that’s what really put the global footprint for CLIA.

Now, if there’s a hearing in front of the Australian parliament, and experts show up from CLIA they’re not some weird interlopers from the other side of the world because Australia is CLIA too. That’s been very effective and CLIA is much more prepared as an entity today to represent the industry around the world. It’s hard work.

To be prepared to deal with [legislative issues] is a global chore and a big chore, it could be in Brussels, it could be in Canada, or it could be in Shanghai, Beijing. It could be in Washington.

Skift: Sometimes, it seems talk about the North American market gets lost in the shuffle. Are they still core to Royal Caribbean’s business?

Goldstein: More than half of Royal Caribbean International’s customers and about half of the companies customers overall are coming from the U.S. We are not forsaking this market. Our business model is quite dependent on the further development of this market. Our big brands with their marketing campaigns are absolutely trying to pull new people into the category and will continue to do so. It is true, especially as the baby boomers are aging and the Millennials are coming more into the center of the bulls-eye, that there is less of a characteristic response to go and find a travel agent to book a cruise.

Skift: Would you say agents are becoming less integral to the cruise booking process, then?

Goldstein: Now, travel agents are still producing, easily, the majority of our business, so they’re not going anywhere fast and we stand by them. We do say that we abide by channel of choice. However the consumer wants to book with us, we need to be available, which now includes mobile, web, direct consumer call into our call centers, or travel agency distribution and we need to be really excellent in all of those avenues. They’re all meaningful, so we can’t really prioritize one over another.

I talk to people sometimes who find out I’m in this business and we talk about if they’ve ever cruised before. If they haven’t, of course they’ve heard about it, and then sometimes they say, when I tell them, “Consult your travel agent.” Then they look at me like, “I don’t have one and why would I have one?”

First of all, there’s a bewildering array of vacation choices in the world, so there are advantages to talking to a professional who immersed in that all day, every day and cruising is a really important decision. A professional travel agent is a key person to help you with that, but there are other types of consumers. There are the consumers that just can’t comprehend an intermediary for any reason. The technology can connect them to the supplier, why would they want somebody in the middle? Then there are ultra-frequent cruisers who think they know as much about it as any travel agent.

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Tags: china, clia, royal caribbean

Photo credit: April 16, 2013 - Royal Caribbean International President and CEO Adam Goldstein unveils the line's newest ship, Quantum of the Seas, at an announcement at the IAC building in New York City. Tim Aylen / Royal Caribbean Cruises

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