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Carnival Corp. will launch a Chinese cruise brand with financing from a Chinese sovereign wealth fund, bringing the cruise giant’s portfolio to 11 global cruise brands.
China State Shipbuilding Corporation (CSSC) and China Investment Corporation (CIC) have entered into a 25-year joint-venture with Carnival Corp. on the creation of a multi-ship domestic Chinese cruise brand featuring both new and existing ships.
Carnival Corp. is already slated to sail six ships in China by the end of 2016 and operate four cruise brands by the end of 2017.
The Chinese partners will own 60 percent of each ship, while Carnival Corp. will own the remaining 40 percent. The groups signed a memorandum of understanding in Tianjin last year; the first ten years of the deal will involve an investment of $4 billion in total.
Carnival Corp. will operate the ships once the new brand launches. The deal to build the new ships, which will entail a separate joint-venture between Carnival Corp., CSSC and Fincantieri in Italy, has yet to be finalized.
“Cruising has been specifically listed by the Chinese government as an industry they want to encourage in ship building and creating domestic cruise brands,” said Carnival Corp. global COO Alan Buckelew. “If the Chinese government is going to encourage state-owned enterprises to start building cruise ships and develop brands, we felt it was in the best interest for the industry for Carnival to be involved.”
Carnival Corp. executives conceded that the first ship under the new brand may be a rebranded existing vessel. No decisions have been made on the flagging of the new brand, but the company is leaning toward the U.K. flag.
The size of the vessels has yet to be determined, as well. Carnival Corp. is now conducting market research to figure out its target consumers and the type of cruise experience they want.
“In China, it appears to us that our target audience is doubling over the next five years,” said Buckelew. “And if China was to slowdown in terms of outbound travel, we can move our ships somewhere else.”