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Is Now A Good Time To Buy Cruise Stocks? The Latest Data Out Of China Certainly Makes The Case

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Is Now A Good Time To Buy Cruise Stocks? The Latest Data Out Of China Certainly Makes The Case
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Is now the time for cruise investors to buy shares of cruise companies? The latest data out of China, the world's fastest growing cruise market, certainly makes the case for such a move.

According to a Bloomberg report, around 2 million consumers in China cruised in 2016. While this represents an increase of tenfold from just five years ago, it is less than half of the 4.5 million cruise-goers expected by the end of the decade.

American Cruisers Hoping To Hop On Board China

Needless to say, American cruise companies are looking to conquer the Chinese market. For instance, Royal Caribbean Cruises Ltd (NYSE: RCL)'s 4,905-passenger mega-ship called "Ovation of the Seas" now calls the port of Tianjin home for the summer season.

But it will take much more than a mega-ship to win over the Chinese market, as the contrasts in culture is vast between American and Chinese consumers. For example, Chinese consumers demand authentic Chinese food offerings and Broadway-style entertainment loved by Americans won't pass for a Chinese audience.

"We have still a huge challenge ahead of us to create more consumer awareness of what a cruise is, what that experience is like," Bloomberg quoted Adam Goldstein, president of Royal Caribbean as saying.

Perhaps an easier problem for American cruise companies to solve is adding more in-board stores to boost revenue. Chinese consumers tend to spend two to three times as much as American consumers typically spend on cruises.

While American cruise companies aren't taking anything for granted, they also need to compete in the Chinese market against local cruise companies who have a better understanding of the local market. There is, however, one more statistic that makes the bullish case for all cruise companies. Over time, the Chinese cruise market could expand beyond the coastal regions and increase the number of cruise-goers from millions to tens of millions.

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