Small Ship U.S. Operators Upgrading Tonnage

The small-ship, U.S.-flag operators are upgrading their products and expanding into international waters.

“We have upgraded customer amenities across the fleet to get a consistent level of quality,” said David Giersdorf, president and COO at Majestic America Line. In addition to its eight river vessels, earlier this year, the parent company, Ambassadors International, also acquired Windstar Cruises. “Long-term, our goal is to be the global leader in small-ship cruising,” Giersdorf added.

At Cruise West , President and CEO Jeff Krida said that the company is in the planning stages of a major investment program to upgrade and renovate its vessels. “We are establishing a new design and decor standard across the fleet,” he said. “We are looking at cabins, public rooms, all soft goods and lighting and will retrofit the galleys as well. In addition, four balcony cabins will be installed on the 138-passenger Spirit of Yorktown. Today’s passengers want wildlife during the day, but luxuries at night,” Krida added.

Cruise West also expanded the sailings of the 114-passenger Oceanus from l00 days in Alaska to an additional 244 days in the Pacific in 2006 and 2007, and operates the 100-passenger Pacific Explorer yearround in Costa Rica.

American Cruise Lines (ACL) introduced a new vessel this year, bringing its fleet to four, with an average age of four years, making it the newest fleet in the market.

Meanwhile, construction has started on another new 100-passenger vessel, slated for introduction in August 2009.

In addition, ACL is launching a new brand, Pearl Seas Cruises. A new yet-unnamed ship is under construction for delivery next summer. The ship will start service in the Canadian Maritimes and St. Lawrence before going to the Caribbean for the winter of 2008/09, according to Charles Robertson, CEO. A second vessel is in the planning stages and will be deployed in Northern Europe, starting in the summer 2009.

The pioneer of small-ship cruising, American Canadian Caribbean Line, shrunk from three to two vessels last year, as its then-owner and founder, Captain Luther Blount, donated one of its vessels to three universities.

“We are a niche product,” said Maria Prezioso, director of marketing. “We offer minimalistic amenities and modest cabins, which put us at the entry level pricing for small ships. Our strong points are itineraries and that we are non-commercial and down to earth.

Market Leader

The largest small-ship operator in North America is Majestic America Line with an estimated annual passenger capacity of approximately 50,000, plus some 30,000 aboard Windstar.

Ambassador acquired Delta Queen Steamboat Company and its three vessels in 2006, plus assorted other small companies and riverboats, that have all been combined under one umbrella, American Majestic. And 2007 is the first full year of operations for the new brand.

Its present domestic fleet includes eight vessels of which seven are in service. “We are holding the Mississippi Queen back until 2008,” Giersdorf said,
attributing that to the vessel’s need of refurbishment, for which the Thomas Tillberg firm has been hired.

At press time, the Empress of the North was also in drydock following her grounding in Alaska in May. She is scheduled to enter service July 7.

“The crew and the passengers like the direction we are going,” noted Giersdorf. “The crew aboard the Queen of West, for instance, is completely energized.

“We are now working to have travel agents understand the brand – that we have standardized and upgraded the product across the fleet. Our itineraries have all been standardized around seven-day cruises, but some can be combined for the full river experience down the Mississippi,” he added.

“As for Windstar, we are going slow, looking for opportunities. We want to close the gap in yield between other small-ship brands that charge much more and ourselves. Windstar is an incredible value today.

“We are also talking to the officers and crew onboard – where to go and what to do next. V. SHIPS is also very helpful – a very astute group.” (V. Ships provides ship management and crewing services for the Windstar fleet.)

Giersdorf said the Windstar acquisition has gone very smoothly and with much of the former management joining the new owners.

“We have a great market proposition,” Giersdorf said. “The market is growing; there are more experienced cruisers looking for new experiences.

“The real issue to success is whether you are committed and have the strategy to execute.”

According to Giersdorf, Majestic has some 1,600 berths in the domestic market, sailing nine to 10 months out of the year, and Windstar, 608 in the international market, sailing year-round.

Published rates for domestic cruises are in the range of $300 to $400 a day.

Ambassadors (AMIE) is publicly held.


This year (2007) is better than last year for a couple of reasons, according to Krida at Cruise West. “In 2006, we doubled our capacity. We absorbed the two Clipper ships we acquired, and we expanded the deployment of the Oceanus from 100 to 344 days. We also added to senior management.

“We went from being a $53 million a year company to a $96 million a year company, with 800 employees.” The annual passenger capacity is 24,800.

Cruise West is operating seven ships in Alaska this summer, as well as the Spirit of Nantucket on the East Coast in addition to the Pacific Explorer in Costa Rica.

In the spring and the fall, Cruise West operates some of the ships on the Columbia and Snake rivers, and the Spirit of Yorktown will go the Sea of Cortez, replacing the smaller Spirit of Endeavor.

When Cruise West acquired the two Clipper ships, the company said it would continue the original cruise programs, “which we did in 2006,” Krida said. “For 2007, we have improved the itineraries, made them more attractive and more efficient,” he said.

While the Yorktown had been on the West Coast, the Nantucket will also be on the West Coast in 2008, with Cruise West essentially ceding the East Coast to the competition.

The reason is simple. “We make more money sailing 100 days in Alaska and with spring and fall shoulder seasons on the West Coast than we could on the East Coast and in the South,” said Krida. “We have good efficiencies is Alaska, and we get higher per diems. Even when we ran the Oceanus for only 100 days a year (in Alaska), the ship was profitable.

“Across the board, our per diems average about $450.”

Krida noted that after the cancellation of several cruises by the Empress of the North, few passengers transferred from the Majestic Cruises’ vessel, due to Cruise West’s higher rates.

“Our typical passengers have changed a lot over the past few years,” Krida said. “We have an age range from 40 to 80. The common denominator is the high curiosity level. Our passengers want a small group experience that is destination-oriented. They are well-educated and well-traveled. That they are like-minded is more important than demographics.”

Krida said the product ranges from tbree-and-a-half to four stars.

When Cruise West acquired the Oceanus in 2001, the plan was to deploy the ship in the Pacific, but Americans were not traveling to the Pacific in 2002 (after 9/11), according to Giersdorf. As the market recovered, Cruise West planned to enter the market in 2004, but then SARS and bird flu struck, which delayed the Oceanus another two years.

Cruise West’s annual passenger capacity is about 26,000. “We think we can both grow the market and our share,” Krida said. “The baby boomers will help us grow. They have more time and money; they are better read, better educated and healthier than previous generations. We see a natural demand – that people want an ‘inside’ experience, to be participating – not just an audience.” Cruise West is privately-owned.

Luxury Adventure

“2007 is a very good year. We are not discounting and our per diems are very high,” said Robertson, owner of ACL and Pearl. “Brochure prices are around $500 per day and that is in the range of what we are getting.

“Our prices are close to Seabourn, but our yield is higher,” he added.

“Advance sales for 2008 are ahead of where sales for this year were a year ago,” Robertson said.

When the next new ship for ACL enters service in 2009, Robertson will consider retiring the smallest and oldest vessel in the fleet, the 2000-built, 49-passenger American Eagle, but he said he will not sell it to a potential competitor.

One advantage Robertson has is that he also owns the yard that builds the vessels for ACL, the Chesapeake Shipard in Maryland, which allows better control over costs and delivery, he said. But the Pearl ships are being built at Irving Shipbuilding in Halifax.

“The market is growing for us,” Robertson continued. ”But I think there is some reluctance among passengers to go on older vessels ( of the other smallship lines).

”The market is clear on what it wants today – big staterooms, sun decks and elevators,” Robertson said.

The newest ship, the 100-passenger American Star, has a crew of 26.

ACL runs its cruises through New Year’s with only a few cruises in January and February, before starting up again in March, with around 150 sailings a year. The estimated annual passenger capacity is about 11,000.

The first ship of Pearl Seas was originally 165 passengers, but bas grown to 214 just before construction started, Robertson explained.

“We are confident we can get the per diems we want for 200 to 300 passengers,” he said, “but don’t know yet if we can go larger.”

Robertson described Pearl as luxury adventure cruising. “We will be different from the luxury brands, but will by far be the most luxurious in the adventure market.”

Be Responsive to the Market

“This is definitely a good for year for us,” said ACCL’s Prezioso. “We downsized and reduced supply so demand went up. We maintained our price level this year, but will raise prices in ’08 – mainly due to higher fuel and operating costs.”

Accl is part of privately-owned Blount Industries, which includes the yard that has built the line’s vessels. “We always have the opportunity to build another vessel,” Prezioso said, “but the yard is going strong right now with many contracts, so a newbuilding is not in the immediate future.”

This year, ACCL will offer a total of 35 cruises for a passenger capacity of 3,500. Forty-two cruises will be offered next year. The 100-passenger vessels have a crew of 17 each.

Rates start $1,135 for five days to the New England islands to $4,205 for the most expensive cabin for 15 days from Chicago to Rhode Island.

One vessel goes to the Caribbean during the winter. 2008 itineraries will range from Quebec City to St. Thomas.

Having been family run for more than 40 years, Prezioso cited the founder, Luther Blount’s key to success: “calibrating” – be responsive to the market.

“We offer lots of new itineraries every year to satisfy repeat passengers,” Prezioso added.

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