The promise of China, with its growing middle class and still-healthy economy, looms large for cruise executives, who have invested in a market they believe could become the industry’s largest.

But entry into China has not been smooth for cruise operators. Natural disasters, political tensions, contagious diseases, and that age-old problem of oversupply have all shown that patience is required.

“There’s been tremendous growth during this period of time, and we’re finding that China is starting to behave more like a typical market,” Royal Caribbean Cruises CEO Richard Fain said during an earnings call this month. “Most markets have ups and downs, and we’ve seen both in China.”

This year was supposed to allow demand to catch up to supply after massive increases in capacity put pressure on once-stellar prices. Capacity growth was finally tapering off, especially in Shanghai, where the bulk of ships make their homes.

But a dispute between China and South Korea over the deployment of a U.S. missile defense system geared to combat the North Korean threat led to travel restrictions for Chinese citizens. Operators with ships based in China had to quickly adjust itineraries to remove South Korean destinations and replace them with less popular stops.

There was an immediate impact: Cruise companies reported confusion among passengers and said they noticed a slowdown. The CEO of Norwegian Cruise Line Holdings, a newcomer to the market, said said contracts from travel agents for new charters just stopped.

“For a good six weeks, there was nothing,” Norwegian CEO Frank Del Rio said in May.

But in more recent calls with analysts, leaders of Carnival, Royal Caribbean, and Norwegian said the situation had improved. And, perhaps unexpectedly, passengers were still showing a big desire to cruise — albeit at lower prices.

Below are five takeaways from conversations about China that cruise executives had with analysts during earnings calls between late June and August.

PASSENGERS ARE CROWDING ONTO SHIPS

All three cruise operators, the world’s largest, said their ships have been crowded, starting with Carnival Corp. executives in June who said recent sailings had been “at very high occupancy levels.”

Earlier this month, Royal Caribbean Cruises Chief Financial Officer Jason Liberty said the company had achieved “record load factors” in the quarter that ended June 30 and expected to meet or surpass prior-year occupancies in China for the third and fourth quarters of 2017.

And Norwegian Cruise Line, making its entry into China, saw similar trends.

“Load factors for voyages in the last six weeks have been some of the highest we have ever experienced,” Del Rio said. “We look to build on this momentum with the hopeful return of sailings to South Korea at some point in the near future.”

NEW SHIPS ARE STILL THE WAY TO GO IN CHINA

Western cruise operators first waded into China with smaller, older ships, not wanting to devote new tonnage to a market that was still being tested. Not anymore.

Since Royal Caribbean International sent its nearly new Quantum of the Seas to Shanghai in 2015, cruise lines have been devoting new vessels to the market. In recent years, they’ve been building them with China in mind from the beginning rather than adapting them after the fact.

Just in the past few months, two new ships were christened in China: the 3,560-passenger Majestic Princess, from Princess Cruises, and Norwegian Cruise Line’s 3,883-passenger Norwegian Joy.

And Royal Caribbean has already announced it plans to send the new Spectrum of the Seas to the region in 2019, the first in the Quantum Ultra class.

“With the Quantum class of ships, we’re giving the most technologically advanced hardware to a market that is very digitally focused,” said Fain, the Royal Caribbean Cruises CEO. “This move is a continuation of our strategy to have premium hardware in China. And that strategy is what has enabled us to gain and to hold a leadership position in the eyes of the Chinese consumers, such that today, Quantum is essentially synonymous with cruising in China.”

Norwegian Joy was christened in Shanghai in late June after what the company described as a “year-long marketing campaign,” that included TV commercials, billboards, and a sweepstake with e-commerce site Alibaba to introduce the ship to the market. Del Rio said coverage before the launch resulted in 5 billion impressions, which doubled to 10 billion after the kickoff activities.

Del Rio said the company expected the South Korea disruptions to be damaging, but the ship’s has performed better than Norwegian thought it would, given the challenge.

Princess Cruises, owned by Carnival Corp., held a christening ceremony for Majestic Princess in July in Shanghai. Carnival Corp. CEO Arnold Donald said the company was excited about the ship, which was purpose-built for China.

“Majestic features the largest shopping experience at sea — high-end and unrivalled, an experience tailored for Chinese preferences and many other distinct pleasures for our Chinese and our international guests,” he said.

LONG-TERM OPTIMISM MEETS CURRENT REALITY

But new ships heading to China aren’t necessarily staying there long term, and executives have said they will adjust deployment as necessary.

Despite Carnival’s enthusiasm for the new Princess ship, it is staying in Shanghai only until the end of March and will then spend four months cruising from Taiwan. After about a month back in Shanghai, the ship will go to Australia at the end of August 2018.

“Princess Cruises is pleased to see Majestic Princess so well-received with the ship sailing with high guest load factors during her inaugural Asia homeport season,” a spokeswoman said. “This deployment follows Princess Cruises’ desire to provide our newest and best product to guests in key homeport markets. Princess Cruises remains committed to deployment in mainland China, as well as other homeports in the region, and will increase our presence within Asia as we continue to review our options throughout the region over time.”

Donald told analysts that the company always optimizes deployments and saw an opportunity for Majestic Princess in China and outside of it.

While he said he expects additional Carnival Corp. ships to move to China in the coming years, the industry still has to work on the way cruises are sold in China. Travel agents typically charter entire ships or portions of ships and then sell to consumers.

“Hopefully the fact that there is less capacity next year will create the opportunity for yield improvement in China,” Donald said. “But you can’t even guarantee that because there’s still a B2B business. This isn’t actually selling to consumers where consumers are saying, ‘Oh, if you drop the price, I would cruise more.’ It’s really a business-to-business transaction still at this stage.”

Royal Caribbean will also see capacity in China decrease next year.

During the company’s call, analyst David Beckel of Sanford C. Bernstein asked whether cruise lines were sending mixed messages.

“I’ve had a lot of questions from investors that are having difficulty reconciling the message from you and other operators and participants about the potential of the Chinese market, while, at the same time, witnessing capacity withdrawals for 2018,” he said. “Can you walk us sort of through how the two reconcile going forward?”

Michael Bayley, president and CEO of Royal Caribbean International, said the company is being strategic and tactical.

“I think it’s more of a looking at it as a long-term opportunity,” Bayley said. “And then, of course, year-by-year, there’s puts and takes, but we see it is a good opportunity and we continue our development.”

For Norwegian, some expectations are still not being met. Del Rio said the company had anticipated that onboard revenue on Norwegian Joy would be up to 20 percent higher than the average fleet — which he acknowledged was “a high barrier.”

The South Korea restrictions hurt both ticket prices and onboard spending, though Del Rio said there are efforts being made to get passengers to spend more once they’re sailing.

While the company said in February — before the issue with South Korea — that it would design a new ship coming at the end of 2019 for the Chinese market, executives aren’t giving specifics on where that ship will go.

Asked by an analyst about his confidence level for 2019, Del Rio said it was too early to discuss.

“We’re committed to the Chinese market,” he said. “Obviously, there have been some bumps in the road the last year or so. We’ve seen what others have done in terms of deployment in the future. We’re committed to being in this market, and like any market it will have ups and downs. Perhaps the Chinese market is a little more volatile than some of the other more mature ones, but we’re committed to being in China in the long term.”

FUELING GROWTH EXPECTATIONS

Donald, the Carnival CEO, said new ports are in varying stages of construction or planning all over China, giving cruise lines more destinations to call on eventually.

“There are quite a few ports being developed, which again reinforces the point we’ve been taking that over time: We expect China to be the largest cruise market in the world,” he said. “We’ll obviously take advantage of those. We have to build the distribution. But as you know, China often builds in anticipation of demand coming. But we are obviously in discussion with all those ports about existing tonnage that we have in the country and possible new tonnage that we will bring in future years.”

And, Donald said, other parts of Asia including Malaysia, Vietnam, and Thailand could provide additional destinations as well as passengers for regional cruises.

“We have an overall strategic footprint in place and have strategic plans in place to take advantage of both the fly cruise opportunity as well as sourcing more from those regions,” he said.

ALIBABA PARTNERSHIP HELPS NEWEST PLAYER

Norwegian announced a partnership with Chinese online retail site Alibaba in May, but hasn’t said much about the deal.

Asked to elaborate on the relationship, Del Rio said the cruise company worked with the site on marketing leading up to the launch of Norwegian Joy but hopes to evolve beyond that.

“We continue to have discussions with them on how we can commercialize, if you will, our partnership,” he said. “We are still waiting for certain licenses that will allow us to sell our cruises directly to the consumer in China. And I think once that happens, we will be able to monetize that relationship a little bit better.”

Photo Credit: Royal Caribbean International's Ovation of the Seas is shown in Tianjin, China in 2016. Business has been challenging in China for cruise lines this year, but passengers are still crowding into ships. Royal Caribbean International