Tom Stieghorst
Staying out of the shadow of the big boys is one way for small cruise lines to prosper, and John Waggoner of American Queen Steamboat Co. is a firm believer.
Waggoner, whose company acquired Victory Cruise Line in January, is following some of the playbook written by the previous owners of the line, but he has torn out at least one page: sailing to Cuba.
The line's two ships, the Victory I and II, are sailing the Great Lakes this summer, a market that Waggoner said he's had his eye on for decades. The narrow Welland Canal that bypasses Niagara Falls limits the competition on the Great Lakes to smaller vessels and smaller companies.
Not so Cuba, where all the big players have flocked since Carnival Corp. first resumed U.S.-Cuba itineraries in 2016. Waggoner said Norwegian Cruise Line Holdings CEO Frank Del Rio, himself Cuban, is more suited to taking advantage of the opening than he is.
After completing their Great Lakes season, the Victory ships will be laid up for the winter because American Queen didn't have enough time to get new ports and marketing in place. But for 2020-21, one ship will sail to Mexico's Yucatan peninsula and another will sail the Eastern seaboard.
Neither route is attracting much competition from larger cruise lines.
Waggoner took the much the same approach with the American Empress river-cruise ship when putting it on the Columbia and Snake rivers in the Pacific Northwest, rather than returning it to Alaska, where it had sailed for a previous owner.
"When everybody said, aren't you going to take the boat to Alaska, I said not only no, but hell no," Waggoner said. "Last year we had 32 back-to-back, sold-out cruises on the American Empress. So if we leave for Alaska, chasing higher per diems, I'm going to leave that market for someone else, a market we created.
"Secondly, we run the same itinerary [on the Columbia and Snake rivers] week in and week out," he said. "It's up and back, up and back. Same ports, same stops. We thought it would be one and done, people would do it once they'd never have to do it again and that's not true. They go in different seasons and it's so different there, whether it's the spring, the summer or the fall.
"We're in our sixth year of operation; that boat has been wildly successful," he concluded.
Besides dodging the obvious competition, Waggoner said the other half of his formula is to get assets at a good price and manage them well.
He said his elevator pitch for American Queen Steamboat Company runs something like: "We buy distressed assets at a reasonable price; we use our intellectual knowledge to improve those assets, to remodel them; and we deploy those assets in underutilized markets, thereby reaping extraordinary profits."
The company acquired the American Empress in 2013 after it had sustained $8 million of damages from an accident under previous ownership. After the owner returned the ship to the U.S. Maritime Administration in lieu of repaying its loans, the ship laid idle on the agency's books for five years.
The Maritime Administration "gave us an unbelievable deal," Waggoner said, which made it that much easier for the ship to turn a profit while staying out of the way of excess competition.
However, don't count American Queen Steamboat Company out of busy markets altogether: The line plans to add a third ship to the Victory fleet that will cruise in Alaska in 2021.