Cruise giants grew by acquisition; the one that bought a shipyard to build its ship went bankrupt
Over decades Carnival bought up storied lines one by one — White Star, Cunard — and at its peak held roughly 100 ships. Genting bought a German shipyard to build a 200,000-ton giant, got its capital trapped inside, and went bankrupt.
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The "mail" in mail ship comes from a postal contract
Cruise ships were not originally built for pleasure. In the 18th century the North Atlantic route was mainly about carrying cargo, with passengers along for the ride, and functions beyond food and lodging were added only gradually. White Star Line, founded in 1845, won a contract with the British Royal Mail to carry letters and parcels for the government under contract, and only then did ocean liners that had carried just cargo and passengers become mail-carrying ships flying a signal flag — hence the term "ocean mail ship." White Star built Olympic in 1908 and Titanic the following year, and was Titanic's parent company. In 1912 Titanic sailed from Southampton to New York on its maiden voyage, displacing 46,000 tons, carrying more than 2,200 passengers, at a speed of about 26 knots.
— Liu JianbingCarnival grew big by buying companies
Carnival Group has only about 40 years of history, but nearly all of its dozen-plus brands were acquired: White Star was bought by Cunard, Cunard was bought by Carnival, and Princess Cruises and Costa, which operates in China, are also under Carnival. The guest says buying White Star and buying Cunard were considered "huge sums" at the time, but looking back they may have been only a few million to a few tens of millions of dollars — whereas now building a single ship can cost several hundred million dollars, partly because prices have risen and partly because ships keep getting bigger, so the cost of buying a ship keeps climbing. On scale, Carnival at its peak had roughly 100 cruise ships, Royal Caribbean about 50, Norwegian about 25, MSC more than 20, and Genting a dozen or so.
— Liu JianbingBuying a shipyard to build a giant, then going bankrupt
Genting Cruise Lines had bought shares in Norwegian, later sold them at a profit, and used that money to buy a German shipyard and build ships in Germany. It wanted to build a 200,000-ton "World Dream" planned to operate in China, but to build that giant to its own design requirements it first had to acquire the shipyard — otherwise the yard and the cruise line are just client and contractor. The German government also required it to pay certain shipyard costs, and a large amount of capital got stuck in shipbuilding. Meanwhile the Chinese market showed no movement for three years, and even though markets abroad had reopened it could not get in. Cash flow and financing were squeezed from both sides. The guest's judgment is that the pandemic effectively dragged this cruise giant down, and five giants became four.
— Liu JianbingWhen a new ship launches, the champagne bottle must break
When navigation technology was poor, shipwrecks were frequent, and people believed shipwrecks were the sea god's anger, so a new ship's launch called for a bottle-smashing ceremony: the captain's wife or a noblewoman of high standing would throw a bottle of champagne at the bow. The bottle had to break, for the sake of "shattered, shattered, safe and sound"; if it did not break, everyone would feel a shadow cast over them. That woman is the ship's godmother. Queen Elizabeth was named by Queen Elizabeth, and Queen Elizabeth 2 by Elizabeth II; Audrey Hepburn, Margaret Thatcher and the Princess of Wales have all served as godmothers. Today the range has widened to outstanding women in all fields, and Sophia Loren has been MSC's godmother for more than 20 years. The ceremony has changed too: a big screen projection, the godmother presses a button to cut the bottle and then cuts the rope, and the livestream shows it more clearly.
— Liu JianbingQueen Mary 2 is the only ship that can take dogs
Ordinary cruise ships hug the coastline, and even China to Japan is not really ocean crossing; Queen Mary 2 runs from Southampton to New York with no stops in between, a true ocean liner, and it keeps this old route precisely to give passengers a sense of nostalgia. It follows an aristocratic tradition over a century old: the lamp posts and oil drums on the top deck are there so dogs can pee somewhere familiar to them. Very few cruise ships allow pets, and pets have to buy tickets too, starting at several thousand dollars, only a little cheaper than a person. The dress code on board is also the strictest, with men basically expected to wear tuxedos, and casual dress may get you barred from the dining room. Most people on this ship are old money.
— Liu JianbingThe dividing line for high-end ships is two ratios
On small luxury cruise ships, the steakhouse hangs an authentic Picasso, the Asian restaurant has an entire gilded copper wall made of copper, caviar is all you can eat, and on Ponant's ships even the butter served with bread is the French court supplier's. But the guest says none of that is the point: doing high-end is not about how good, how big or how new the facilities are, but about the service-to-guest ratio and the space-to-guest ratio. Mass-market cruise ships run about 3 to 1 or a bit over 2 to 1 crew to guests, while small luxury can reach 1 to 1, with someone ready to serve at any moment during meals; rooms start at thirty or forty square meters, while a large cruise ship's base cabin is only 17 square meters. On price, mass-market cruises run one or two hundred to two or three hundred dollars per person per night, while small luxury runs 500 to over 1,000 dollars per person per night.
— Liu JianbingChina's cruise market went from 2.9 million to zero
The first cruise ship entered China in 2006, and after that the number of Chinese taking cruises rose from tens of thousands a year to over a hundred thousand, then several hundred thousand, with the peak year seeing 2.9 million Chinese take a cruise. But 2.9 million is still a small number against a population of over a billion, and many people neither know what a cruise is nor how to spend time on board; cruise culture is only a dozen or so years old in China, while abroad it is already 100 or even 200 years old. Then the number came to an abrupt halt. The guest expects cruises to start resuming in June or July this year, with river cruises recovering in March, while outbound trips to Japan and Korea will still take time; the domestic large cruise ship Adora Cruises already has two ships, Adora Magic City and Adora Mediterranea, and plans to operate in the fifth, sixth and seventh months.
— Liu JianbingTrading photos for income, replacing the hunting rifle
The guest believes the travel industry's next opportunity is in ecotourism: Chinese tourism has already passed the stage of chasing only luxury, and next comes protecting the environment. His example is the ecotourism protection work that teacher Xi Zhilong did in Naren village at the foot of Baima Snow Mountain in Shangri-La — the village became famous 20 years ago because of a photograph by teacher Xi Zhilong titled "the last pure land on earth," which later became the cover of a National Geographic book in the United States, making the village well known internationally, though in China maybe 99 out of 100 people have never heard of it. What teacher Xi did was hand out cameras to people in the reserve and teach them to take photographs, so they could trade photos for income instead of, as before, trading hunting rifles for income — in effect changing the income structure of the reserve's residents.
— Liu JianbingIn their own words · checked verbatim
Right, maybe it was a few million or a few tens of millions of dollars, and at that scale you could buy it, but now if you build a ship, you might need several hundred million dollars.
对,可能就是几百万几千万美金, 这个规模就可以买了, 但是现在你如果造一条船, 你可能都需要几亿美金了
Liu Jianbing16:08
And the champagne bottle has to break, just like we say, shattered, shattered, safe and sound — if the champagne bottle doesn't break, everyone will feel a shadow cast over them.
而且呢 必须香槟瓶子得碎掉 就像我们说 碎碎平安一样 如果香槟瓶子不碎的话 大家都心里会蒙上阴影
Liu Jianbing23:11
The aristocrats of the time could bring their pets on board, and these two fixtures were there so dogs could pee somewhere familiar to them.
当时的贵族呢 是可以把自己宠物带上船的 这两个设施呢 是为了方便狗狗 在自己熟悉的地方撒尿的
Liu Jianbing27:18
Because when you do high-end, it's not about how good, how big or how new your facilities are, but about the service-to-guest ratio and the space-to-guest ratio.
因为你做高端的时候 不是说你这设施有多好 有多大 有多新 而是在乎这个人均的服务比 人均的空间比
Liu Jianbing32:19
More than that, I think it's like a utopia at sea, an ideal world at sea — and when you go back to land, you feel like you've returned to reality.
更多的我觉得 是不是就算一个 海上的乌托邦 海上的这个 理想世界的 回到陆地 你就感觉回到现实了
Liu Jianbing38:23
In 2006 the first ship entered China, and in the peak year 2.9 million people a year took a cruise, but 2.9 million is still a small number against China's over a billion people.
2006年最早的一条船进入中国 最多的年份呢 一年有290万人乘坐游轮旅游 但290万人对中国十几亿人口来说 还是个小数字
Liu Jianbing45:28
And then they can use these photos to trade for some income, instead of, as before, trading hunting rifles for income — so it changed the income structure of the residents of the ecological reserve.
然后呢 他们可以用这个照片 去换取一些收入 而不是以前 是靠猎枪去换取收入 所以改变了这个 生态保护区 居民的收入结构
Liu Jianbing57:38
Figures
| Titanic's specifications | 46,000 tons displacement, more than 2,200 passengers, about 26 knots | 8:04 |
| Fleet size of the five cruise giants | Carnival at its peak about 100, Royal Caribbean about 50, Norwegian about 25, MSC more than 20, Genting a dozen or so | 18:08 |
| Genting Cruise Lines market value | one to two hundred billion Hong Kong dollars | 20:09 |
| Ticket price per person | mass-market cruises one or two hundred to two or three hundred USD per person per night; small luxury cruises 500 to over 1,000 USD per person per night | 29:18 |
| Service ratio | mass-market cruises 3 to 1 or a bit over 2 to 1; small luxury cruises 1 to 1 | 32:19 |
| Base cabin size | large cruise ships 17 square meters, small luxury cruise ships from thirty or forty square meters | 32:19 |
| Royal Caribbean Oasis class | 220,000 tons, tickets from over 1,000 USD | 34:22 |
| Tickets to Antarctica | about 20,000 USD flying to King George Island; 10,000 USD or even less by ship from Ushuaia | 41:26 |
| Peak Chinese cruise passengers | 2.9 million a year | 45:28 |
Glossary
- White Star
- British shipping company founded in 1845, parent company of Titanic
- old money
- the old aristocratic class with generations of accumulated wealth; many such passengers are on Queen Mary 2
- freestyle
- the dress rule on modern cruise ships: wear what you like on board, as long as you don't enter the dining room in swimwear
- godmother
- the woman who smashes the bottle and names a new ship, regarded as the ship's representative on land
How to listen
Founders and investors in travel and consumer who want to understand the cruise business; people about to take their first cruise who need to pick a ship and work out a budget.
The rapid-fire Q&A from 54:59 on is mostly personal preference; skip it if you only want industry judgment.