Carnival eyes new China line for burgeoning cruise market

SHANGHAI, Jan 27 (Reuters) - Cruise operator Carnival Corp is in talks with state-owned China Merchants (HKSE: 0133-OL.HK - news) Group Ltd (CMG (Other OTC: CMGO - news) ) to develop a new cruise line for the fast-growing China market, the U.S. firm said in a statement on Tuesday.

Carnival (LSE: CCL.L - news) said the pair have agreed to look into setting up two separate joint ventures to tap into the local cruise business. The Chinese market for cruise travel could nearly double to $11.5 billion in sales by 2018, compared with $6.8 billion in 2013, according to researcher Euromonitor.

One potential venture would own and operate its own cruise ships for the China market, with ships that may be designed and built in China, Carnival said. The other venture would develop cruise terminals in China and around north Asia.

Alan Buckelew, Carnival's chief operating officer, said CMG's experience and local influence would help his firm expand in China.

"We are working with a strategic partner that can help us explore immediate ways to impact cruise growth in China, including the possibility of a new Chinese cruise brand and new destinations," he said in a statement emailed to Reuters.

Though growth is expected to be strong in China, cruises are a relatively new vacation option for Chinese travellers. Operators like Carnival have resorted to sometimes quirky measures to convince sceptical consumers of the value of cruising, ranging from a menu inspired by an ex-president to classes in foreign languages and silver service.

The U.S. firm expects to carry 500,000 cruise passengers in China this year, up 140 percent from 2013, it said. Rival Royal Caribbean Cruises Ltd plans to move one of its new, nearly $1 billion Quantum class ships to China this year.

CMG officials weren't immediately available for comment.

Carnival said last year it has signed a memorandum of understanding with China State Shipbuilding Corporation (CSSC) to build China's first luxury cruise vessel, with the eventual aim of forming a joint venture that would also include Italy's Fincantieri SpA. (Reporting by Adam Jourdan; Editing by Kenneth Maxwell)