With airfares rocketing, Norwegian Cruise Lines shrinking its Hawaii presence and island hotels suffering substantial drops in occupancy and slashing room rates (and even offering vouchers for groceries and gasoline for minimum stays), most businesspeople might think it's a bad time to invest millions to start a high-end, interisland Hawaiian cruise venture.
But that's exactly what Seattle-based American Safari Cruises is doing.
In December, the yacht cruise purveyor will begin eight-day excursions aboard its $7 million, 145-foot Safari Explorer. All-inclusive prices for stays aboard the 18-cabin yacht will range from $3,995 to $8,295.
"We did about 1,000 surveys to former clients about our Hawaii plans, and the positive feedback was so strong that we believed this wasn't a high risk if we got the word out to the right people," said Dan Blanchard, ASC's president and CEO. "Our client base may not be completely insulated from the whims of the economy, but they're the top half of 1% in annual U.S. incomes, [earning] $500,000 and up."
ASC operates similar luxury cruises using four boats for Alaska's Inside Passage, Mexico's Sea of Cortes and other areas. Despite this year's nationwide economic downturn, ASC is meeting or exceeding occupancy goals, with its Alaska cruises running 94% full, said Blanchard.
"We offer a unique product using smaller yachts, which means fewer passengers for one-of-a-kind adventures, service and attention to details," he said.
ABCs of ASC
American Safari Cruises pioneered yacht cruising in Alaska in 1997.
The Safari Explorer, the largest and most expensive yacht in ASC's fleet, was put into service in June on Alaska routes but will be repositioned to Hawaii in September to be readied for the inaugural Dec. 19 interisland voyage.
Knowing and meeting its target clients' expectations has been ASC's key to attracting travelers willing to pay a premium for unique experiences, said Blanchard, who joined the company nine years ago.
"We provide a high-end product, which in the small, luxury cruise ship business is hard to find," he said.
Among ASC's recent customers on the Alaska route were Microsoft's Bill Gates and financier Warren Buffett. The two friends each chartered ASC vessels for family and friends, cruising side by side. The deal cost the billionaires several hundred thousand dollars each.
"This is a tough clientele to find, but we've figured out a way to do it," Blanchard said.
The Hawaii venture is less risky for ASC because "those who've already been to Hawaii know that if they cruise with us, it will be an entirely different experience for them," said Tim Jacox, vice president of sales and marketing.
What makes ASC unique in commercial cruising, said Jacox, is that not only are its vessels bona fide yachts, but the company sells a charter service as well as individual cabins.
Company executives believe there's a market for a top-tier adventure cruise in Hawaii. The fact that Hawaii has lost most of its large-scale cruise ship business doesn't faze ASC, "because that's not our market," said Blanchard.
"Our niche is intimate service for the experiential client," he said. "They still go to high-end hotels but want to do things where they get a lot of experience on land and with local people. They're not satisfied with just a nice beach."
A few years ago the majority of ASC's clients were in their late 60s and early 70s. Now it's upper 50s to low 60s.
Couples continue to account for the majority of bookings. Virtually all passenger bookings for the Hawaii cruises so far have not been Hawaii residents.
Major market areas for the Hawaii cruise are the West Coast, Chicago, New York and Florida.
ASC's charter service makes up about 40% of its business. Jacox doesn't think Hawaii charters will be that high, in part, because the Safari Explorer is so much larger than the company's other boats. The vessel can hold about 36 passengers.
(The company has one Hawaii charter scheduled. Charter rates for 2009 are $177,000 to $208,000.)
Sailing interisland seas
The Safari Explorer will cruise the calmer, leeward sides of Maui, Lanai, Molokai and the Big Island through early May. Four of the seven days will be sailed within the placid triangle of Maui, Lanai and Molokai islands. Departure ports will alternate from Kahului or Maalaea on Maui and Kawaihae on the Big Island. If trade winds shift, the Safari Explorer -- which underwent $4 million in renovations, including installation of two state-of-the-art stability systems -- might cruise the normally rougher but always spectacular north shores of the islands, Blanchard said.
"We can change our routes at a moment's notice," he added. "A traditional cruise ship can't do that."
Blanchard said that the Maui County area was chosen for most of ASC's excursions and activities because it offers so many spectacular sights, sea cliffs and isolated beaches.
On Lanai, the Safari Explorer will visit isolated Polihua Beach -- famous for its miles of white sand, green sea turtle nesting beach and whale-watching -- and Kaiolohia, also known as Shipwreck Beach, with eight miles of shoreline that includes two shipwrecks and is home to many Hawaiian petroglyphs, including the Bird Man of Lanai.
The Safari Explorer will travel only during the day, cruising at a maximum 10 knots so guests don't miss anything. At night the vessel will set anchor in coves or small harbors. The short cruise through the Alenuihaha Channel between Maui and the Big Island will be at night.
Crew members include a naturalist/expedition leader, who organizes shore activities and provides presentations on the day's sights and activities; a gourmet chef; and a masseuse/wellness leader. Crew-to-passenger ratio is 2 to 1.
Daily activities focus on close-up viewing of wildlife, fine dining, kayaking, beachcombing, hiking, snorkeling, scuba diving, sailing and stand-up paddleboarding.
On a more exotic note, there are also excursions by motorized Zodiac inflatables to isolated coves and sacred Hawaiian places; helicopter rides over the Big Island's Kilauea volcano, with a stop where lava flows into the ocean; day trips at Hilo on the Big Island and Lahaina on Maui; a visit to an upcountry Maui taro farm; and a luau with a Molokai family.
Accommodations range from the top-of-the-line Commodore Suite -- with separate sitting area, king or twin beds, private bath with whirlpool tub, TV/DVD player and a sliding glass door overlooking a small balcony -- to the least expensive single stateroom, which features a single bed, window, windowed door, TV/DVD player and private bath with shower.
When possible, meals will consist of local fare such as ahi, mahi-mahi, lobster, fruits and vegetables.
All premium wines, liquors and microbrewed beers and on-yacht meals are included in the price.
ASC's first-year business plan is to get the word out about "our unique service and adventures," Jacox said.
"Exploring interisland in Hawaii on a luxury yacht has not been in the offerings before," he said. "So people need to fully understand what we do."
The company is marketing the cruise through travel agent partners, especially on the West Coast, using Hawaii destination specialists, the ASC website and travel writers.
"We think we can hit 70% occupancy [in Hawaii], which would be a very successful first year," Jacox said.
Advanced bookings so far are strong over the holidays through January and February, with some tapering off in March. In 2009, the company will move its opening Hawaii cruise date to November, making for a 24-departure season, three more than this year.
Even with all the surveys and market testing, Blanchard conceded that there are no guarantees for success.
"You do the math when you bring on a big capital investment like this boat and hire employees and deal with all the other expenses, but you just never know what will happen," he said. "So far we've been right on target."