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What is the DQ worth?

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    What is the DQ worth?

    Hello All,

    I've been pondering the fate of the DQ a lot lately because of all the talk about her moving to Florida. I've been trying to remove the sentimental thoughts about this and look at it strictly from a business perspective. So with that thought process in mind what is the DQ worth A: as a dockside hotel and B: as an operating overnight steamboat. It seems to me with my limited knowledge of hotel operations that profit margins are low, especially based on the "capacity" of rooms on the boat. The age of the boat also lends itself to lower profits in upkeep versus that of a newer all steel boat. I guess where I am going with this is that from a business standpoint it seems like a very risky venture to operate the DQ as a hotel without a long term goal of making it a more profitable (operating) enterprise. Maybe I am wrong about the profit margins, seems hard to believe though when I feel land based hotels share these low margins. It's only magnified by having the maintenance cost of something that floats and is made primarily of wood. Will someone pay more to stay on the DQ versus a land based hotel, some would, we would, but I think most, especially in today's climate would choose the cheaper alternative or a hotel with more amenities. Are there steamboat fans in Florida, yes! Are there more in the Midwest within traveling distance of Chattanooga, I think so! So weigh in you other bean counters out there. Financially is the DQ worth more as an operational overnight boat or as a hotel? I look forward to everyone's opinions, but for the sake of this post, leave the sentimental, historical value, out of this equation.


    Room size

    How profitable is a 6.5 x 11 ft. hotel room with bunk beds? That's what I had when I rode the DQ, and there are about a dozen of those rooms. Next class up is a couple feet wider. Even the grandest suite on the DQ doesn't match a normal hotel room size. So if sentiment is taken out, it would seem the rooms would have to be gutted and enlarged to be attractive as hotel rooms. This would lower the 88 available by probably half. How much money can you made off of 40 hotel rooms?


      How Much Is the Delta Queen Worth Today?

      You both make absolute sense and from a business sense owning the Delta Queen as a hotel, or even a stand alone sailing vessel, would not make sense. But there is something innate, especially with Americans, about holding onto our historic past and that is what the Delta Queen represents. She has earned the status of being a National Historic Landmark, but mostly she has left her mark on the people who have grown to love her and the towns along the river who welcomed her with open arms. Historic landmarks and events cannot be replaced by modernization and because the past of the DQ is not so old, her effect on people has an impact that no profit and loss statement can relay. She is both our past and present history.

      I fear that trying to make a business case out of this will leave us with no icon, but keeping our nostalgic and romantic feelings for her, with good substantive work to keep her alive is what we are forced to make work.

      As many of you know, I've been holding passenger/crew reunions twice a year since 2009 and though that alone doesn't work to provide enough revenue, it shows that with some creative ingenuity and genuine passion we can pull off something that people have doubted would be the case unless she were to sail again.

      I, personally, would love to see someone find a way to fund her enough for repairs, create some good marketing that will deliver programs and events that will help to keep her history alive. She won't sail again without much needed repairs and that takes money. She could sail again with loving care and if she were to become part of a fleet as she was in the past. Alone, it is difficult to make the business argument, but alone or together she can continue to bring joy and nostalgia to many. I will continue to plan future reunions and will bring them to wherever the DQ happens to be, but I love her place now in Chattanooga, on the river, in a place filled with history and in proximity to other historic places, and within driving distance of so many of her fans and with an airport to support the rest.


        Aaron I would not speculate what the DQ's real market value is, however the amusing scenario to this story is that SEVERAL river companies are hoping the DQ groupies win and the boat stays at Chattanooga. The reason is that they are betting on failure and the boat will be sold cheap. If Florida deal is successful it will just delay the process due to Heller's deep pockets. Why are they interested, THEY WANT THAT NEW HULL.


          DQ's worth

          I will take a stab at the original question. First off though I am not an accountant, but do understand a little bit about numbers and the value of a business. This is a strictly a numbers approach and takes the emotion out of the first equation.

          Option A as a hotel:

          Assume you left the 88 rooms as is.

          Assume an overall occupancy rate for the entire year at 50% (which I think could easily be argued as both a low and high estimate), but none the less equals 16,060 rooms rented per year.

          Assume a blended room rate of $99/ night.

          (Note though, with a good bit of New Smyrna on the beach and a lot of families looking for beach front value this has to be a consideration. Will they really want to be in a small room on the ICW, as in the case with the Hellar's?)

          16,060 X $99 = $1,600,000. Round it up to $2,000,000 if you are optimistic.

          Assume that after all expenses are paid they net 10% profit, or roughly $160,000 to $200,000 per year.

          Common business practice would suggest EBIDT (earnings before interest, depreciation, and tax), at no more than 5-8 X (times) earnings, and maybe less.

          This leaves a range of $800,000 (low) to $1,600,000 (high).

          If it were me, I would discount that for other expenses to apply like moving it, and whatever repairs are needed to bring it up to acceptable business standards for the intended business.

          My best guess, no more that $1,000,000, and possibly less to be used as a hotel. This does not take into other considerations like selling souvenirs, or running a restaurant, both of which could either make or loose money.

          This would provide for roughly a 20% return on the original investment, but most likely less for all the unexpected things that will likely happen with an 85 year old boat. That in my mind carries a lot of risk for a reasonably low return on my investment. In other words, if i had to move it or renovate it, it is not worth a million to me as an investment.

          Option B:

          $1,000,000 to $1,500,000.

          The boat then takes on a whole different meaning. Generations upon generations of families have touched or been touched by the DQ or some similar boat. It means even more now that it and for the most part a way of life has been taken away from them.

          I say the best option is for GASC to buy the boat, get it back into service on a limited basis with a mostly limited nostalgic (high end) schedule and dock it in Chattanooga during the layup period. Don't flood the market like before, closely monitor the demand and adjust. Preserve and take care of the "Goose" that helped get them there in the first place. It will be good for their brand, legacy, and so on. Another option would be to move it to Memphis and let it share hotel duty there. It could also run some shorter trips that might command a premium like Derby, Steamboat race, 4th of July in St Louis, and others. She might also run some local cruises as well or could be chartered, or rented for special events like the Belle of Louisville. Memphis might even take a share of ownership?

          In my mind the boat is worth more under this option than others. Selling price: 1.5M, or GASC partner with Xanterra on the deal. With all they are both aiming at there are a ton of ideas out there and there should be at least one that will work. I also think that GASC might be one of just a few, with a good solid plan that could help get a bill back in front of Congress again that might just get passed.

          Just my two cents, but to me a no-brainer. I dont think the boat can survive as a stand-a-lone but it sure has synergistic value to GASC and perhaps Memphis.

          The third option that (so far) has not surfaced (quite frankly I am baffled as to why?), is why the City of Chattanooga has not come up with a way to buy the boat and secure it's future right where it is. Still not as good as putting it back into service, but certainly better that some of the other options out there. One would think that there is enough money and ego floating around Chattanooga that a few phone calls and meetings could make that one happen.


            DQ feelings

            Aaron asked for comments leaving sentiment out of it, which I did. However anyone who knows me knows my feelings for the DELTA QUEEN. That first trip on Aug.20-23 1973 changed my life forever. 41 trips, countless lockhops, chasing her on the UMR, running errands for crew, and thousands of chocolate chip cookies later I have a profound gratitude for the DQ as a boat, as an anachonism, as an important part of American history, as a home to passengers and crew and as one of the most important influences in my life. However my affection for the DELTA QUEEN long predates that first trip - I go back to the September 1954 days of sitting on our levee nightly for a week, just looking at a 'wounded' boat, as she was laid up in Rock Island after running through herself. She was awesome to a little kid, even though she was just sitting there...she represented a world which I never thought I'd be part of, but I was, and am, and am so thankful for that opportunity. I never made a cent off of her, but I gained treasures which can't be measured monetarily. I am but one of a multitude who can proudly profess their sentimental lifelong connections to the DELTA QUEEN...


              Does anyone have any idea how much Xanterra is asking for the DQ? Is there a stated price or are they just looking for bids?


                Jim, I have no clue if Xanterra has a stated price or taking bids. If you can find out though, I'd be glad to empty my piggy bank...

                Ditto to what Judy said. I watched thd DQ pass my home place on the Ohio River just down river on the Indiana side from Rock Haven. My Great, Great Grandfather from New Albany was involved in steamboats in the 1850-1870's. My grandmother used to go to school in New Albany, living with two old maid aunts and come home for holidays on a steamboat. And my dad came home from being born in the hospital in New Albany on the SOUTHLAND. The river and steamboats are in my blood. It's been a hopeless addiction, but such a rewarding one. I tell folks when they find out my disease that I have literally made friends from all over the world, hi Franz, Carmen and Leonie and from one end of the U.S. to the other, some of whom I've never met face to face. As Judy says, our memories are treasures for a life time! The value of the DQ - PRICELESS!!!!

                Sorry Aaron, it's just too hard not to be sentimental!


                  *RE: Value & DQ's hull depreciation allowance*
                  Steamboating colleagues:
                  Just catching up after four days in Baltimore attending the SSHSA 'ShiPosium' and National Maritime Day celebrations in port on the retired nuclear ship N/S SAVANNAH.

                  Present value would in part be based on the assessment of the DQ's present hull for depreciation.

                  Capt. Bill Judd correct on dificulty of making a full assessed value of the DQ. And he should know. Letha Greene discussed this with me way back about 1960 stating then "The DELTA QUEEN had been fully depreciated some years before." This with the old original hull.

                  I may be vague, but I dimly recall the year 2002 'Category G' stipulation on inland vessels with metal hulls over 100 ft. rate a 5% depreciation allowance per year. This subject to a minimum assessment of 25% of the original cost.

                  Those of you with long memories and quick minds calculate the depreciation value on the DQ's present hull. Ocean ship hulls, until recently, were often written off after 23 years even if the vessel continued in operation beyond that.

                  R. Dale Flick
                  Coal Haven Landing, Ohio River, Cincinnati


                    AMEN, Judy and Jo Ann! As the late Capt. C.W. Stoll used to preach, "You either ARE or you AREN'T sentimentally and emotionally involved with steamboats. And if you AREN'T, you just don't get it!"



                      I really appreciate your posts on this thread. My intention was to hopefully keep people thinking, possibly outside the box. I think it's obvious that we all are sentimentally tied to this boat and hope she continues to exist preserved or operational for future generations. I meant no disrespect by asking you to remove your emotions, but simply trying to look at the situation objectively. Passion for something sometimes can skew what is realistic and what is not. I also wonder why the City of Chattanooga has not been more involved in efforts to keep the boat there. Interesting comments as always from Captain Judd but I wonder for what use these companies seek her hull. I share George's hope that GASC takes note of the DQ situation and I know there are employees there who will keep the fire on the boilers on the DQ's situation. Thanks again to all who responded. If we can't help financially, at least we can keep talking about her and keep her in the spotlight.



                        The hull is not that new any more and is probably fully depreciated. Old historic stuff is popular and people will stay in anacronistic hotels just for the ambience, even if the rooms and amenities are not up to modern standards, most of which I would not use anyway. Clean and well managed means a lot more. Has anyone priced one of these old hotels lately? Maintenace and upkeep on them? Getting everything up to code? Answer: $$$$$$$$$$$$ Check around and the DQ looks like a real bargain at $1.5 mil (or less?)


                          First of all the DQ is not a hotel, it's a BOAT, and you know what BOAT stands for...Bust Out Another Thousand. Only with it's size and age with the DQ that means Bust Out Another hundred Thousand. The DQ was never designed to be a hotel, it was designed to be an overnight BOAT where 1920's flappers spent ONE night only. From the time Tom Greene bought the boat, the rooms have been under constant change, it was he who put the parlor rooms in where the dinning room used to be, the old cabin rooms have all been removed and converted to larger bedrooms and with it the capacity has been constantly deminished. But, even with those changes the DQ is still not a hotel, its a BOAT with all the headaches and expenses of a boat....Bust Out Another Thousand. As a hotel the DQ is worth very little because it's NOT A HOTEL.


                            Bill Judd


                            Please check your PMs here on .org




                              Steamboat Financing 101.....there are suggestions that perhaps the GASC buy the DELTA QUEEN, like that company has money to do it, and get the DQ back in operation. I was at a meeting the other night where John Waggoner was honored and he was talking about the trials of bringing the AQ out. The Maritime Administration rules require that all booking deposits and payments be put in a escrow account until the beginning to the voyage that payments is for. Therefore, even though the GASC had millions of dollars in deposits and payments, they couldn't use a single penny of that money. They had to borrow the $6 million it took to refurbish the boat and get it back into operation. Only once a voyage is begun can the money for that voayage be available for the company to spend to pay expenses.
                              This same will hold true to the DQ. Let's say someone buys the DQ and advertises the hell out of it and books every room for every trip the first year, none of that money can be used. Whoever buys the boat, even if they have $100 million in advanced payments, will still have to finance all the costs for bringing the boat out. Then the money is dribbled out as each voyage is completed.