Coronavirus analysis

Coronavirus and the impact on cruise retail

MSC Cruises Head of Retail Adrian Pittaway discusses the deep impact that the coronavirus outbreak is having on the cruise retail sector, notably on Chinese itineraries.

The coronavirus outbreak is profoundly impacting travel, tourism and duty free, and is also having a significant effect on the cruise retail sector, points out MSC Cruises Head of Retail Adrian Pittaway.

“As of last week, the entire outbound Chinese mainland cruise market has been suspended and there are currently no cruises operating from China,” he notes. China represents nearly 7% of the global cruise market and all operators are affected, along with other cruise ships due to call to China as part of longer regional itineraries.

He says: “The large retail offerings on all of these cruise ships targeted at Chinese consumers are now as empty as those of the land-based operations so widely reported in the last week.

“Cruise retailing in China is one of our most important and highest growth markets as an industry, with strong operations across the different cruise ships operating out of the country and onboard retailing a key reason to go cruising.

MSC Cruises Head of Retail Adrian Pittaway says the coronavirus outbreak is presenting “unprecedented” challenges

“Chinese travellers are now the second-biggest source market of cruise passengers globally. That means any external crisis, such as the coronavirus, will have significant implications for us, as a channel.”

“It is also unprecedented: when the SARS crisis occurred in Asia in 2003, the cruise industry in China simply didn’t exist. Today, China cruising is an exciting and high-growth marketplace with many new ships built specifically for the market, representing significant investment and expectations.”

Crucially, he says, a key issue in the short term will be stock. “Cruise retail supply chains are generally slower and less flexible than that of our airport and downtown duty free contemporaries, with the most obvious implications now being on stock forecasting, sell-out, transportation, onboard storage and meeting ship locations. Local suppliers and our crew are also equally affected with such uncertainty as to how to react.

“There are short-term solutions of course. MSC, for example, has deployed MSC Splendida away from China with the already planned positioning cruise back to Europe now starting from Singapore rather than Shanghai. Other regional locations including South Asia, Australia and the Pacific could benefit as cruise ships are well designed to be redeployed quickly.”

Even with such solutions, cruise retail remains heavily reliant on a strong Chinese market, he adds, and this has been severely disrupted in the short term.

“For us as operators, along with our suppliers and partners, we must be prepared for an unprecedented few weeks of challenges ahead. We will need to work together and be ready for real cooperation together to rebound as quickly as possible.”

*This article features edited highlights from LinkedIn, in which Adrian Pittaway discusses the impact of the coronavirus outbreak.

The Moodie Davitt eZine

Issue 276 | 7 February 2020

The Moodie Davitt eZine is published 20 times per year by The Moodie Davitt Report (Moodie International Ltd).

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