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Royal Caribbean sails into Chinese cruising trend

With China shaping up to be a major cruise market, operator Royal Caribbean International docked the $1 billion Ovation of the Seas in Hong Kong Thursday in a bid to sail on the tourism trend.

That's despite economic growth slowing on the mainland. In the first quarter, growth in China's gross domestic product (GDP) slowed to 6.7 percent on-year, down a tad from the previous quarter's 6.8 percent. For 2015, Beijing logged 6.9 percent growth, its slowest pace in 25 years.

"We all recognize that the Chinese economy is going through a transition... but the fundamentals are very positive," the company's CEO, Michael Bayley, told CNBC's "Squawk Box."

He added that the company has witnessed nine years of strong growth in China.

Chinese tourists are an attractive target for the cruise industry.

Popular Chinese actress Fan Bingbing attends the maiden voyage press conference of Ovation of the Seas on April 12, 2016 in Beijing, China.
Visual China Group | Getty Images
Popular Chinese actress Fan Bingbing attends the maiden voyage press conference of Ovation of the Seas on April 12, 2016 in Beijing, China.

Amid a rise in discretionary spending power on the mainland, the Chinese have developed itchy feet.

Outbound tourism grew at a "breakneck" 16.6 percent compound annual growth rate (CAGR) from 2009 to 2015 to 120 million trips, DBS said in a note earlier this month. DBS added that outbound tourism expenditure grew at a 31.8 percent CAGR over the same period to $229 billion in 2015.

According to the China Cruise and Yacht Industry Association, there was a 35 percent increase in the number of cruise ships passing through 10 major ports in China last year. Some 1.24 million Chinese traveled overseas on these ships.

Royal Caribbean is planning to sail to new destinations, including the Cuban capital of Havana, although it has not received approvals yet, said Bayley.

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