Signed, Sailed, Delivered: Sunny Skies in the APEC Region

With an average of about 5 percent of the region unemployed, tourism probably isn't high on lists of national concerns¹. But maybe it should be.

According to the World Travel and Tourism Council, the industry accounts for 9.4 percent of GDP; 7.6 percent of total employment (that is, one in every 13.1 jobs) and is expected to reach 8.4 percent in the next ten years.

Okay, it's not all rainbows and unicorns. Overall, reports the Pacific Asia Travel Association, international visitor arrivals to the Asia Pacific decreased by about 7 percent in the first quarter of 2009.

But the desert is not without an oasis. Rather than having dissolved, travel patterns have shifted. The Middle East, for example, enjoyed a 5 percent increase of international visitor arrivals and regards tourism with such optimism that regional air carriers have expanded seat capacity². And traffic via low cost carriers - throughout the entire world - is as robust as ever.

In fact, evidence suggests that what consumers want now is good old-fashioned value-for-money. In April this year, Newsweek dedicated a special issue to "The Case for Luxury", arguing that the economic crisis has lead to a transformative shift in purchasing trends. Consumers are now tempering their taste for luxury with a Spartan sensibility: One high-quality item is more practical than five low-quality items. Dollars will still be spent, but not without some form of cost-benefit analysis.

As a key economic driver for the Asia-Pacific region, travel and tourism have been a priority to APEC, which operates on the assumption that economies function more successfully as a unified body than as competitors.

At present, regional tourism accounts for one-quarter of all international visitor arrivals throughout the world, more than one-third of international tourist expenditure and currently generates over US$ 2 trillion in travel and tourism-related demands³. That tourism has been a relatively consistent performer in spite of recent setbacks due to natural disaster, terrorism and pandemic is remarkable; and recent travel patterns suggest that in the Asia-Pacific, things may only get better.

Seeking value-for-money, many tourists are considering cruise vacations which appeal to a broad demographic and are rated higher in customer satisfaction rates than land-based or resort vacations. In addition, Americans - the drivers of the holiday cruise market for decades - are now declining in relation to Europeans and Asians.

"The industry's centre of gravity has shifted," explains Dario Rustico, Director of Sales and Marketing Pacific Asia Operations at Costa Cruises. North American passengers, who drove the holiday cruise market for decades, are quickly declining while Asians and Europeans have been cited for growth.

Noting synergistic developments in tourism, an APEC Cruise Forum (28 May 2009) was held in the margins of the APEC Tourism Working Group meeting, providing an arena in which members of public and private sectors could examine trends specific to Asia's cruise industry.

When it comes to cruising, say experts, Asia is the future - both in terms of newly appealing destinations and the concentration of economic wealth⁴. As an example, one British study⁵ projects that the Northeast Asian cruise market will continue to grow at a constant rate, from an estimated 440,000 cruise passengers in 2005 to 720,000 in 2010.

Not wanting to miss the boat (pardon the pun), three of the world's most prominent cruise lines recently signed a Memorandum of Understanding toward the establishment of an Asia Cruise Association. The association is to promote development, professional growth and commercial success of the cruise industry in the region, and position Asia as a key destination on the global cruise map.

Governments also recognise an opportunity when they see one and images of happy travellers tossing fistfuls of confetti from decks are being taken very seriously. Overall, says the WTTC, the travel and tourism economy is expected to maintain an average of 4 percent growth per annum over the next ten years and among APEC economies, plans are well under way to reap the benefits of a growing cruise industry.

"Asia is set to become the new cruise playground," says Mr Chew Tiong Heng, Director (Cruise) at the Singapore Tourism Board, adding that Singapore is a natural "gateway to the region, given its prime location between major international maritime routes, and more than 80 international airlines passing through its national airport."

Reputed for an ability to spot and capitalise on market growth, Singapore will complement two already-existing berths with a new International Cruise Terminal at Marina South to accommodate a new generation of larger cruise ships.

And Singapore is not alone: Korea opened a new international cruise terminal this year. Malaysia will open two new terminals in September; Indonesia will develop a port to accommodate a cruise terminal in Bali; and Vietnam will build a new cruise terminal on Tuan Chau Island. China opened a new cruise terminal in Shanghai last year and will open a second next year (2010). An artificial island is currently under construction in order to build a new terminal in Tiajin; several ports have been cited for terminal expansion and in Hong Kong a new terminal will be ready by 2014-15. Ports in Cairns, Darwin and Fremantle will receive upgrades totalling $18.7 million and even Sydney - Australia's busiest port and awarded for "best turnaround port operations" in 2008 - is being considered for upgrades.

Proximity and accessibility are defining factors for tourists in selecting a destination. It's pretty straight-forward: the easier they are to get to, the more people come. The market is supply-driven. Observes Rustico, the occupancy rate on cruise ships is much higher than airlines and hotels. In 2008, Costas Cruises finished with an average of 109 percent occupancy, meaning that every room accommodated at least two people and some accommodated additional guests on spare beds. Such figures suggest that greater capacity would lead to greater consumption. Aware of this promising correlation, suitably optimistic hospitality-providers have 34 additional ships on order.

According to Kris Lim, Associate Director, Strategic Intelligence Centre at the Pacific Asia Travel Association, the cruise industry offers tremendous potential, even in the light of current challenges, but any long-term success is dependent on regional cooperation. Lim insists both on the need to address issues - ranging from viruses to oil shortages - and to anticipate future challenges as a region: "Collective efforts in promoting awareness of our industry sector, in sharing best practices in safety, crisis management, human resource development and fundamental business areas will be much stronger than an irregular assortment of inpidual efforts."

Often, it is in problem-solving that positive initiatives are inspired and that tourism between economies is enhanced.

New Zealand established a number of best industry practices when its lucrative cruise industry6 was seen as a threat to its NZ$ 3.8 billion fishing industry. Rather than allowing one revenue stream to trump the other, government drew inspiration from the tenuous relationship between nature and tourism and ultimately strengthened both industries. At once promoting environmental sensitivity and sharing an important aspect of its own heritage, New Zealand promoted itself as "clean and green," designing a tourism strategy around Kaitiakitanga, a Maori concept whereby nature is approached with a sense of innate kinship and responsibility. Tourists understand that in order for their experience to be truly authentic, these indigenous values must be respected. By extension of the principle, cruise lines have adopted a number of environmental practices including the use of bio-fuels, recycling of solid waste, onboard desalination units, solar panels and satellite systems to help avoid dropping anchors on sea beds and coral reefs.

To expand a consumer base and ensure repeat business, the whole experience - and not just parts of it - must be excellent. The cruise experience isn't just about the ship. It's about value, convenience and a sense of freedom. Hassles with visas, quarantines, inefficient infrastructure are things that burden travellers and can lead to negative experiences. Lim is emphatic, "We must join forces if we are to successfully operate in such aggressive environments - and the sooner the better."

Member economies echo Lim's sentiments, fortifying instruments, developing infrastructures, and finding innovative ways to add value to the travel experience. The future in Asia is bright - particularly on the upper-deck.