Report: Ship nowready to turn profit
With extensive repairs complete, vessel has been earning $30K a month, according to city officials
The Queen Mary is rebounding after years of financial issues, infrastructure concerns and a pandemic-induced closure, according to a recent report from Long Beach city officials.
And it is poised to turn a profit this fiscal year.
“The iconic Queen Mary continues to capture the hearts of so many people from around the world,” Mayor Rex Richardson said in a news release this week. “We're thrilled to share the remarkable achievements made since its reopening.”
The historic World War II-era ship initially closed to the public because of the coronavirus pandemic in 2020.
But it also was badly in need of some major fixes.
The operator at the time, Urban Commons, was supposed to oversee those repairs; it received city money to do so.
A 2021 city audit, though, found that Urban Commons had not completed the $23 million dollars in repairs the city funded.
A later report revealed that Urban Commons actually did use about 80% of that funding — though not for the infrastructure projects the money was intended to cover, which prompted the ship's continued closure.
Urban Commons forfeited its 66-year lease on the ship that same year — and also filed for Chapter 11 bankruptcy to restructure the company — bringing the Queen Mary back under city control for the first time in nearly 40 years.
Before Long Beach regained control of the ship in 2021, private operators reported losses totaling more than $31 million from 2007 to 2019, according to the Wednesday city news release.
But with the city's newly seized control of the Queen Mary, the ship's future is finally starting to look brighter, the release said, with an anticipated profit of $3.6 million for the 2024 fiscal year.
It's been a long road to this point, though.
Once Long Beach regained control of the ship and hired a new management company, Evolution Hospitality, to oversee the ship's operation, both parties took on the herculean task of completing myriad critical infrastructure and safety projects.
The first critical milestone on the Queen Mary's journey to recovery came in April 2021 when Long Beach removed 20 deteriorated lifeboats from the ship. Those had been worsening the vessel's structural integrity by overloading it with nearly 100 tons of excess weight.
About 25 other projects and improvements have been completed since then, the city's report said, such as making aesthetic upgrades throughout the ship, conducting HVAC repairs, installing new bilge pumps and controls and patching the roof.
In December 2022, the Queen Mary welcomed a small group of passengers aboard for the first time since its 2020 closure; a broader public reopening took place in early 2023.
City officials and the ship's operators have taken a slow, phased approach to the Queen Mary's reopening.
Overnight stays at the Queen Mary Hotel were brought back online about a month after the ship welcomed passengers back onboard. That was followed by the ship's beloved Observation Bar reopening, several tours starting up again and a Sunday brunch returning.
The ship and its surrounding property, including the Harry Bridges Memorial Park, also have begun hosting special events again, including New Year's Eve and Independence Day celebrations last year.
Since October, the city's news release said, the Queen Mary has welcomed more than 118,000 guests, and the adjacent park hosted three weeklong music festivals last year that drew from 20,000 to 30,000 visitors.
And there could be more to come.
“We envision an even brighter future for the Queen Mary and adjacent land,” Richardson said in his statement, “with plans for future development that will further elevate its status as a premier tourist destination.”
It cost Long Beach about $45 million to get the ship in proper order to reopen, the city's news release said. That money was spent on ensuring the Queen Mary's structural integrity, preservation and restoration projects, guest amenities and attractions and other upgrades.
“Most of the $45 million was supported by revenue generated from the Queen Mary or its related subleases,” the news release said, “which are also now under direct city control or from the creation of new revenue opportunities.”
Another critical portion of that funding, the city said, came from a land-exchange partnership with the Port of Long Beach, which the City Council OK'd last year.
Under that deal, the city freed up 13.9 acres of land within the port's jurisdiction and leased it to POLB for a $12 million advance and half of any revenue created from future land leases. That helped fund a good chunk of the ship's reopening, the city said.
The Queen Mary's financial recovery, though, also has been slow, largely because of the high upfront costs of reopening the ship.
“The Queen Mary ended the year at a loss of just over $7M,” a more in-depth report about the ship's operation, released in January, said. “This loss, and the associated reopening expenses, were primarily offset by the city/port partnership revenue advance.”
But revenue continued increasing, the news release said, and toward the end of the 2023 fiscal year, the Queen Mary was reporting net-positive numbers — about $300,000 in revenue on a monthly basis.
“From an operating perspective, the Queen Mary can now support operating expenses with regular operating revenue,” the news release said. “All generated revenue is being invested back into the ship and vicinity.”
With a baseline of stability restored aboard the Queen Mary, Long Beach is now looking toward taking advantage of the ship's future potential.
There are several preservation, refurbishment and expansion projects on the docket for 2024. Those include hotel room renovations, elevator upgrades and repairing the Queen Mary's third smokestack, the release said.
The city and the ship's operators also are planning to extensively remodel and repair a large portion of the ship's Sun Deck this year. The Sun Deck is a popular spot for special events and weddings.
“(That project) is expected to increase revenue generation immediately upon completion,” the news release said.
Additional renovations are planned to facilitate the return of the Queen Mary's “Ghosts and Legends” tour, the city said, and Long Beach staffers are working to identify and fund other art and historic restorations on board.
But the city also wants to leverage the 43-acre property surrounding the Queen Mary, the news release said, in hopes of developing it into a “world class entertainment and mixed-use development space.”
The city is planning to demolish the vacant English village adjacent to the ship this year, the news release, alongside other unused structures on the site.
“City staff are in the process of developing plans for a temporary amphitheater with the goal of providing a temporary, unique waterfront concert venue to meet the current demand of concert promoters in the region,” the news release said, which will “stimulate the tourist economy and provide additional revenue generation.”
A city team is planning to undertake a formal study to determine development opportunities on the property, which could include a permanent amphitheater, a marina and an improved cruise terminal, though those upgrades are likely years down the line.