The Super Bowl, shale gas, suds and LED lights are adding a little sparkle to an otherwise fair-to-middling post-recession recovery for passenger vessels.
Refurbishments have been healthy, and buying and selling has picked up, but corporate business is still spotty.
“We’ve done a lot of vessel renovations over the last two years, and it’s been pretty busy,” said Andy Lebet of naval architects DeJong & Lebet, Jacksonville, Fla., whose design work includes four hybrid conversions for Hornblower Cruises & Events. “You have to think once people are done modifying boats they’re going to start building new ones — hopefully.”
That is the trend in other parts of the workboat industry now seeing a newbuild spurt. And one passenger vessel operator — American Cruise Lines (ACL), whose CEO also owns a shipyard — has four new riverboats in the works for the growing inland cruise market.
Among the upgrade trends are LED lights. “They’re trying to get the interior of these dinner cruise vessels to look more like land-based restaurants,” said Ed Vaughn, a vice president with DeJong & Lebet. While the bulbs cost $20 or $30, “the power savings is so great that it helps.”
All of the Hornblower Infinity’s 600 to 700 lights are LED as is one hybrid conversion, while three other hybrids are a blend, said Cameron Clark, vice president and general manager of Hornblower in New York.
Passengers care about the LED lighting with its 16 million color options, and about plastic floors and counters made out of recycled glass. “They can say, ‘Gosh, I can do that at home.’ It’s way more exciting than batteries and solar panels,” Clark said.
Energy consumption is cut nearly 90 percent with additional payback in lower labor costs since the bulbs can burn for 50,000 hours or more versus a few thousand hours for incandescent lights.
San Francisco-based Hornblower has been raising its profile in New York. The 210' Infinity, for example, hosted one of the city’s mayoral debates last year. And this year the company is getting a piece of the Super Bowl business. The Infinity was scheduled to serve as an extension of the Brooklyn Cruise Terminal event headquarters and the Hornblower Hybrid was booked to shuttle people from Manhattan to the terminal.
VESSEL PURCHASES PICK UP
Current events are also a plus for other passenger vessel operators.
Pittsburgh’s Gateway Clipper Fleet is just beginning to see the “tremendous opportunity” for its corporate business from the shale gas industry. “We’ve seen an increase in that already,” said president and owner Terry Wirginis.
The public side of Gateway’s business was up about 15 percent in 2013 over 2012. Weddings and private events were stable, and Wirginis expects 2014 to be “the best since 2008 in private events.”
The company acquired the 88'×30'×7'2", 338-passenger Arkansas Queen — now the Three Rivers Queen — and gave it a snazzy paint job that makes it stand out. “I always liked that boat,” he said. “She came available, and I bought her this past spring.”
Indeed, transactions are increasing.
Rob McMahon has been in the passenger vessel brokerage business for the past 30 years “and the last two years have been pretty darn good.”
From 2008 to 2010, it was “certainly a time when the passenger vessel industry was taking a wait-and-see attitude,” said McMahon, president of Pinnacle Marine Corp., Stoddard, Wis. “The passenger vessel market was hit as hard as the real estate industry, if not harder.”
Activity is spread out throughout the country, and interest from abroad is up.
“There are buyers out there. And lenders are now participating in our industry,” he said. “We feel pretty good.”
James Murray, general manager and owner, SunQuest Yacht Charters, Destin, Fla., said his outlook for 2014 is a little bit better than it was a year earlier. He runs the 125' Solaris and two years ago added the 49-passenger, 45' SunVenture I offering dolphin and sunset cruises.
“This past year, our wedding business took a little bit of a downturn, but corporate business has started to come back, especially with unique venues,” said Murray. “It seems they’re trying to get away from boring old ballroom scenarios for the big night.”
For Hoyt Purinton, president and captain, Washington Island Ferry Line in Wisconsin, 2013 began with a lot of uncertainty due to record low water levels on Lake Michigan.
But rain, dredging and use of an alternate dock gave them some breathing room. Additional dredging should be finished in the spring, said Purinton, whose fleet includes the 104'×38'×10' year-round icebreaker Arni J. Richter and a new addition, the 35'7"×16'×4'8" Karfi that runs from Washington Island to Rock Island State Park.
“We’re beyond the threat of being put out of business because of the lake levels, so that’s encouraging,” he said, while hoping for slightly better weather in 2014.
Few people are more optimistic about their niche than Charles Robertson, head of ACL, Guilford, Conn., and Chesapeake Shipbuilding Corp., Salisbury, Md.
“We expect to continue to experience significant growth in both capacity and demand,” he said. His aggressive newbuilding program includes four new riverboats, two of which already are under way at his yard. The first 280'×54'×8' vessel will start cruises in the spring of 2015 and carry 150-200 passengers. The rest will enter service between 2015 and 2017, ACL said.
“People are graduating from large ships to small ships,” Robertson said. Interest from abroad was “only a little drip but now is a steady stream,” especially from Western Europe, Australia and New Zealand.
The boats will sail the Mississippi River and Columbia-Snake River systems. ACL also operates Queen of the West on the western rivers as well as several coastal cruisers.
“It’s clearly an underserved market. It’s really what the category needs — new ships, well managed with a range of destinations,” said Rod McLeod, a cruise industry veteran now with Miami-based consultants McLeod Applebaum & Partners. “The greatest limitation the river cruise industry has is the rivers. They’re only so wide, they’re only so deep, and the bridges are only so high.”
Two years ago, ACL and American Queen Steamboat Co. returned regular overnight journeys to the inland rivers with ACL’s 230', 150-passenger newbuild Queen of the Mississippi and the 418', 460-passenger American Queen, bought from the Maritime Administration.
Memphis, Tenn.-based American Queen is buying the 360', 223-passenger Empress of the North from Marad to resume sailing in the Pacific Northwest under the name American Empress in April. Both boats were built with Title XI loan guarantees and were turned over to Marad after the 2008 collapse of Majestic America Line.
The Empress is at Vigor Industrial in Portland, Ore., undergoing $3.5 million to $4.5 million in work including paint and new carpeting, said Greg Brown, American Queen’s executive vice president. “She’s in fantastic condition.” The four Cat 4516 engines “are all in running shape” as is the paddlewheel, but it will get new bucket boards.
Brown expected the Empress deal to be wrapped up by the end of December, but a Marad spokesman subsequently said the $5.8 million sale was likely to close in late January.
The American Queen was due at Boland Marine in New Orleans in early January for six weeks and about $2 million worth of work including a new switching system for the generators, Brown said. “She’s a 20-year-old vessel. It’s just an ongoing maintenance life cycle.”
Looking ahead, Brown said a “significant amount” of capacity already has been sold for American Queen, and preliminary bookings for the Empress are looking strong.
As for where suds fit into the passenger vessel picture, Seattle-based Un-Cruise Adventures is offering a craft beer theme cruise in May on the 60-passenger Wilderness Adventurer. The week-long cruise with two local beer experts onboard includes a “special selection of Washington nautical themed beers,” brewery tours and tastings.
