For the first time in 40 years, Long Beach will have a new operating model for the Queen Mary in which the city is responsible for the capital improvements but will also receive a percentage of the ship’s income.
The Long Beach City Council on Tuesday unanimously approved a five-year contract with Evolution Hospitality to manage the Queen Mary’s hotel and operations. Evolution, a San Clemente-based hospitality company, has managed the ship’s daily operations for the past decade.
The aging vessel has been closed since 2020 as the city works on critical repairs, but the city is hopeful that the ship will reopen to the public this fall.
Under the agreement, the city will provide $2.87 million for re-opening the ship. The funding will come from Tidelands Operating Funds, which are city funds that can only be used in coastal areas. The plan includes $1.6 million in pre-opening costs for staffing and other approved costs and $1 million for improvement projects.
Evolution will plan for the reopening and manage ship’s hotel, attractions, parking, retail and food and beverage services.
Long Beach has owned the Queen Mary since 1967 and for decades it leased the ship to a string of failed operators who neglected critical maintenance. Long Beach took over control of the ship last year when the last operator, Eagle Hospital Trust, collapsed into bankruptcy.
Under past agreements, the operators would profit from the ship’s revenue but also would be responsible for capital improvements.
Since the past financial models have proved unsuccessful, Long Beach is now moving forward with a new model in which the city is essentially the operator, said Long Beach City Manager Tom Modica.
“It’s cutting out the middle partner,” he said.
As part of the contract, Evolution will be paid $25,000 per month beginning in July to get the ship ready for a planned Oct. 1 reopening date. The company would also be paid 2.5% of the ship’s total operating revenue for the first year, and then 2% for the following years.
The city said Evolution anticipates the ship’s operations can offset expenses for fiscal year 2023, with an expected net revenue of $1 million for Long Beach.
Evolution anticipates that the ship beginning in fiscal year 2024 could generate revenue in excess of $7 million, not including revenue generated from concerts and special events on the surrounding land.
Officials said the ship needs about $1 million in improvements to reopen. Meanwhile, the city continues to work on $5 million in larger, critical safety repairs for the ship. Earlier this year, the city removed 20 of the ship’s 22 badly corroded lifeboats, which were deemed a safety hazard.