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-   -   What's Affordable???? (http://www.steamboats.org/forum/river-talk-cruises/5064-whats-affordable.html)

Jim Reising 10-08-2013 08:41 AM

What's Affordable????
 
We all agree that the DELTA QUEEN has some pretty high hurdles to jump over before it comes steaming around a bend near you. The boat has to be purchased, moved, dry docked, new boilers, main steam line, paddlewheel, generators, the MSD has to be working (I don't think the Coast Guard will let the ol' gal piddle in the river). Then, an office has to be established, a staff hired, boat advertised, a boat crew hired and trained and the boat outfitted. All of this before the first dollar from passenger revenue is available for spending. This is possible because all it takes is money.
The highest hurdle will be, can all this be done and still keep the ticket prices affordable? So, my question is "what's affordable"? How much are you willing to spend for a weeks cruise with your better half.....$10,00, $8,000, $5,000, $4,000, $3,000? Without folks like you and me being able to buy tickets, it'll never happen.

Bob Reynolds 10-08-2013 09:03 AM

Right you are, Jim. However, it can be looked at from the standpoint of comparing this project to building a new vessel, and setting up a new company to run passenger cruises. Not only has that been done, but it has been done recently. I'm no numbers person in any way, form or fashion, but logic tells me that if a company can build a new boat and operate it at some sort of profit (after a period of recouping startup costs), the proposed operators of the DQ can do the same thing. Yes, it will take a great deal of money, but as we know, it will still be cheaper than building a new boat, no matter how you look at it. All you have to do is look at the millions of dollars towing companies have spent in the last decade or so buying old towboats and taking them down to a shell, re-powering them and re-fitting from the bilge up. A different business, to be sure, but I think the principle is applicable.

As far as "how much would we be willing to spend", I personally would have to make that judgement when the time came. I still think that with the proper marketing of the product there would be customers, but as Dale would say, "what do I know"?

Tim Rubacky 10-08-2013 09:39 AM

Jim, Bob,

to operate profitably, the DQ needs to fetch a weighted average of approximately $360-$370 per person, per day. So you are looking at an average of about $2500 pp for a week-long voyage. At those fares, with a single-boat operation, she would need to operate approximately 270-290 days of the year at an average of 85% occupancy (150 pax per voyage) to net out a profit of approximately $200-250,000 per year.

The question is, will the public be willing to pay? If she operated primarily 7-day cruises, that equates to 40-42 voyages per year for a total of 6300 pax. Obviously, if you run shorter cruises, there are more cruises to fill, thus more pax to attract and that needs to be offset by higher marketing and operating costs which push fares up or profits down or some balance of the two.

My numbers are all predicated on them obtaining funding at a reasonable interest expense but I would hazard a guess this will not be the case. It will most likely be mezzanine or junk debt that will carry interest north of 15%. The higher the interest expense, the higher the fares need to be or lower the profit, and this boat operates on a thin margin on the best of days.

Best,

Tim

Jim Reising 10-08-2013 09:40 AM

There is one big difference, both recent operators had an established company behind the. The AMERICAN QUEEN had Hornblower and American Cruise Line had an established cruise operation on the East coast with established lines of credit and banking relationships. Of course, the AMERICAN QUEEN wouldn't be running today without the financing help from the City of Memphis.

Bob Reynolds 10-08-2013 12:25 PM

THEN you get into the conundrum of: do you operate shorter trips to get folks to "test drive" the experience, and work harder to fill those shorter trips? This has worked in the past. It does give those with a lesser amount of money to spend a chance to ride the boat and have the experience. I see marketing costs being a bit higher, but I'm thinking operating costs would be about the same.

Jon Tschiggfrie 10-08-2013 04:04 PM

Would there be anything to selling the extended 7-9 day trips first to a certain capacity, and at a certain date prior to a cruise begin to offer shorter 3-5 day stays? Certainly there would be more logistics involved (taking on/putting off passengers, stateroom turnover between shorter-stay guests), but it seems to me that the likelihood of filling the boat would be greater.

Greg Weber 10-09-2013 06:01 AM

Affordability is a relative thing. What I mean is, that there are some things in life so worthwhile that people will experience them whether they can afford it or not. The DQ is in that category. There were many who sacrificed, scrimped, and saved every penny to "live the dream". Then, there were the legions of repeaters, some riding as often as five times a year or more. No other boat or ship in the industry could match that.

Lexie Palmore 10-09-2013 01:21 PM

My $.02 worth
 
At least one DQ trip I took was a last minute booking for a few days on a longer trip. This used to be done a lot. People could do an overnighter even when there was no room and sleep on a sofa. Then the company was sold and the new suits didn't like that last minute stuff. Too bad. Back in the 1970's when I was a passenger on the DQ, I think I was paying about $50 to $75 a day from a $5000 a year salary. Today that would be about $300 to $400 a day on a $30,000 salary. That is a very average income, but affordable for only a few days. I was also single. (When a few days isn't enough, you get a job on the boat. At least that's what I did. See above about being single.)

Turnover days are hard on the staff, but they get paid the same, regardless. Technically, passengers are paying by the night, so what they don't want to do is have a non-paying night. That is why turnover day is so hectic - passengers going and passengers coming with only a couple of hours in between.

It is too bad, and will probably never change, that offshore cruises are a fraction of the price of US flag vessels. They herd 'em on like cattle, and even a major disaster is like a bump in the road. However, Viking River Cruises has apparently solved the cost problem by some very, very good advertising. They are not cheap. And they keep building new boats. I have a sister-in-law who has been on a few Viking cruises, and she would go again. So there is good service to back the lush ads. That is where the new DQ people are going to have to step up to the plate. Advertisng, service, and flexibility are all key. Also, a variety of fares.

I noticed when I worked on the DQ that the passenger list consisted to a large extent of ardent repeaters and people from California. I wonder if that still holds true today.

Wesley Paulson 10-09-2013 02:41 PM

Kentucky Lake Soapbox
 
Besides money, one of my frustrations was trying to get the boat's schedule to line up with my work schedule. The concept of staying based for an extended time in Cincinnati for a series of weekly Kentucky Lake trips models the weekly milk runs of many blue water ships. This format also also the passenger to take advantage of Southwest Airlines or other round trip airlines (or maybe drive?) without having to do an open jaw return trip. Then the boat could do a repositioning cruise to move to the next extended home base port.

I also recall that AQ was fairly successful staying put in NOLA for a series of 3/4 night introductory cruises. One or our .orgers noted this was hard on the crew but well received for marketing and purposes.

As far as access to travel markets I wonder how the trips from Ottawa, IL worked to reach the Chicago market? I would also think staying in Pittsburgh for a while would be helpful to reach the east coast markets?

Wesley

Bob Reynolds 10-09-2013 04:21 PM

Jon, Greg, Lexie and Wesley all have what I think are good ideas. I'm not sure the "deck passage" (no assigned room, sleep on a couch) thing would still work - Homeland Security, for one thing. However, I see nothing wrong with a shorter trip-within-a-trip, like going from St. Louis to Davenport on a St. Louis-St. Paul trip or Memphis-Paducah on a Memphis-Cincinnati trip. As Lexie said, it used to be done quite often.

When the Greene's started the "tourist steamer" idea (no freight), all trips originated and ended in Cincinnati, period. You booked what you wanted according to that schedule. I don't advocate a return to that concept, but something like Greg mentions would work nicely, especially if you allowed partial trips.

I also thought Betty Blake's idea of the weekend trips was excellent, and it certainly allowed me to cruise for the first couple of times. I simply would not have had the time or money to take a week-long trip, period. As it was, I did take two weekend trips and then (as Lex also mentions) that was not enough to suit me so I got a job on the boat. They could run weekenders out of NOLA, Memphis, St. Louis, Cincinnati, Pittsburgh and St. Paul as they used to. They could even do one out of Paducah, Nashville and/or Chattanooga. Advertising costs can be reduced by concentrating on local and regional advertising for those trips instead of national ads (except for the main brochure).

Speaking of brochures, they should put the fares up where folks can see them and not have to dig and search. It is what it is. Either people want to go and can afford it (or will find a way to afford it) or they don't. Let them have the info up front. List the trips in chronological order -- folks know when they can travel and when they can't -- have it out there so they can see what's what and say, "OOOH, they're going to be running a trip out of St. Louis (or wherever) that week we'll be off!" Put pictures of real passengers on the boat in the brochures (not models) and have the crew included in that.

We all know this is not the 1970's anymore. We know mistakes were made in the past and people get their information differently now. However, they're selling an early 20th century experience on an early 20th century boat. The market they're trying to capture still thinks in "20th Century" terms. Why not market in that way, at least partially?

Steamboat cruises have never been cheap. Those who want to go will go, and those who cannot will dream, scrimp and save or they will wish. As Lexie said, the fares will never be what the Caribbean cruises are.


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