Instead of a deteriorating ocean liner surrounded by a sea of asphalt and nestled in a maze of port operations with semi trucks whizzing by, what if the Queen Mary were a polished historical gem providing the backdrop to a vibrant waterfront promenade, where residents could grab a coffee or sit down to a meal, hear an outdoor concert or enjoy a unique view of the city skyline?
With a recent infusion of cash to fund continued repairs on the neglected ship and renewed plans to explore shore-side development, Long Beach city leaders are hoping they’ll finally turn the tide to create a bustling moneymaker that draws locals as well as tourists.
The latest efforts follow a string of failures by companies hired to both operate the 1930s ship and develop around it, and the obstacles to success are considerable: a dilapidated vessel that needs at least tens of millions of dollars in maintenance and has so far rarely turned a profit, and adjacent land with limited access and restrictions on how it can be used.
Johnny Vallejo, the city’s deputy economic development director, pointed to the difficulties of accomplishing both tasks simultaneously.
“Nobody was able to successfully maintain and manage the ship as they tried to work through the development process,” he said.
So the city has taken on maintenance and operation of the vessel, with the help of contractor Evolution Hospitality, and officials are hoping development proposals will follow.
“We want the ship to be the crown for not just this site, but for the city,” Vallejo said.
“We want someone to come to the site and think, ‘Wow, that view, that ship—we want to build something out here.’”
A history of failure
Whatever development gets pitched, it won’t be the first try.
In the past few decades, ideas that failed include Disney’s plan in 1990 for a development that would have included an amusement park with replicas of historical ships, a “Mysterious Island”-themed area, a massive aquarium and a working research lab.
The $2 billion park and accompanying resort—including five hotels and hundreds of boat slips—would have covered 350 acres, much of which is underwater and would have been filled in.
Faced with a tangle of regulatory issues and lukewarm reception from residents, Disney deep-sixed the idea and instead built a second attraction next to its flagship Anaheim park.
More than two decades later, Urban Commons—which held the ship’s lease from 2016 to 2021—revealed a $250 million plan for Queen Mary Island, a 65-acre entertainment district with a 2,400-foot boardwalk, a 200-room hotel, shops and restaurants, and “adventure” entertainment such as an ice climbing wall, zipline and skydiving simulator.
But by 2019, the ship’s longtime inspector was reporting critical repairs had been neglected and the vessel could soon become unsalvageable; the city later fired him. In 2021, Urban Commons was in bankruptcy court and the city was scrambling to complete urgent maintenance on the Queen.
Some of the earlier proposals were so grandiose, it seemed unlikely they’d come to fruition, said Kam Babaoff, whose Ensemble Investments LLC operates two hotels about a half mile from the Queen Mary.
“It needs to be more realistic,” Babaoff said. “It’s challenging developing down there, but it can be done.”
For previous operators, the work of keeping the ship from falling apart likely took their focus away from the land side, said Geraldine Knatz, who held high-ranking jobs at the ports of Long Beach and Los Angeles for more than 25 years before her 2014 retirement.
“I suspect that the ship was always the challenge for them in terms of how that property was going to be developed,” she said. “It’s not like a clean slate.”
That’s why the city’s current plan is to handle Queen Mary operations itself and keep that separate from land-side development, Vallejo said (though he left the door open for a great proposal or alternate direction from the City Council).
“Our emphasis since the city took control is to stabilize, maintain and improve the ship,” he said.
“My belief is that by stabilizing the asset, and showing potential investors that the Queen Mary is not an albatross but should be an incentive to shoreside development, that that’s where we’re going to end up.”
Operating and maintaining the hulking steel octogenarian remains a challenging and expensive task, and turning a profit from it has been mostly an aspirational goal.
City staff believe the ship is capable of generating upward of $57 million in gross earnings annually. Financial records do show two years when the most recent operator, Urban Commons, reported grossing more than $57 million, but the firm also booked millions in net losses both years.
From 2007 to 2019, under two different operators, only three years ended in net profit; over that time, their combined losses totaled $31.4 million.
A big obstacle to coming out ahead is the ship’s costly and unending maintenance needs—and after previous operators fell behind on (or neglected) upkeep, it’s not clear how much the city must invest to keep the vessel afloat.
The ship was already suffering from deferred maintenance when, in 2016, the city issued $23 million on bonds so Urban Commons could pay for critical repairs. But the money was gone before the work was finished; the city auditor later found that fewer than a third of the proposed projects got done, and the costs for some of those ballooned beyond original estimates.
A 2021 city-commissioned report estimated that after an initial investment of $25 million to $50 million, the ship would require $5 million annually for upkeep. The two operators that held the lease between 2007 and 2019 spent, on average, less than $3.4 million a year on repairs, according to financial audits obtained by the Post through a public records request.
(Older Queen Mary financial records were not provided prior to publication.)
Since taking control of the ship after Urban Commons’ bankruptcy, the city has spent at least several million on what it has described as critical repairs, but officials had not provided a total amount or inventory of the work at press time.
The ship will get a fresh infusion of $12 million from a land swap deal between the city and the port, but city leaders have not laid out in detail how it will be spent.
Vallejo said he hopes to get the Queen out of the red by the end of 2025 and reinvest any profits into the ship, and the city does get revenue from Pier H (where the ship sits) beyond the money people spend on admission, food and drinks on the ship.
Hotel taxes on the ocean liner’s more than 300 staterooms bring in millions each year, passengers who go through the adjacent Carnival Cruise Lines terminal pay a surcharge on their tickets that goes to the city, and all revenue from concerts and other events at the nearby Harry Bridges Memorial Park will now be collected by Long Beach rather than a ship leaseholder.
‘Hollywood Bowl by the sea’
Despite its administrative and maintenance headaches, some people truly love the Queen and want to see it prosper.
Among them is Danny Rangel, 36, a Long Beach resident who was devastated to be laid off in early 2020 after nearly eight years as a tour guide on the ship. He was one of at least 125 former employees, some with decades under their belt, who were thrilled to return to their jobs as the management company ramped up hiring to reopen the ship earlier this year.
As an actor, Rangel enjoys the performance aspect of giving tours, he said, but also “it’s the history of the ship, what she means to not only Long Beach history but world history, getting to run into all walks of life, people who had traveled on board, former employees, people related to families who worked on (building) the ship.”
His favorite fact about the Queen Mary is that during World War II, a voyage with 16,683 troops and crew members set a record for the most passengers carried on one vessel; the record still stands.
With the storied ship as an anchor for shore-side development, some observers said they’re optimistic the area could be transformed into a success. (Land-side, up to 43 acres could be available if the cruise ship terminal is included; without the terminal, it would be closer to 25 acres.)
In 2013, an economic firm studied the site and proposed a multi-phase project including a marina for large yachts, a boutique hotel, apartments, retail shops and public open space.
A task force the city convened in 2015 to gather input and make recommendations suggested mixed-use development with a public promenade and an amphitheater with about 5,000 seats, said Michael Bohn, an architect with Studio One Eleven who chaired the group.
“At the time we were looking for a pretty rich mixed-use environment that would take advantage of the views of Downtown” but keep the Queen as the central focus, Bohn said.
“What better place than to sit near the Queen Mary and look back at our city and see a performance—it could be the Hollywood Bowl by the sea.”
Bohn said the city’s plans should be bold, but he and Babaoff agreed that finding the right developer will be crucial and that the city should limit its involvement with the project.
Any project would need to consider a convenient way to get to and from the site, which has limited access (via the 710 Freeway and Queensway Bridge), Knatz said. She suggested water taxis, something Vallejo said city staff have begun to discuss.
A new study of development possibilities for the Queen Mary and its environs could come in 2024. Vallejo said the task force’s recommendations will be considered, but he also wants to know how the market has changed since they were made.
For now, the focus is on fixing up the ship—Vallejo and Managing Director Steve Caloca said the state rooms are being spruced up, carpet is being smoothed out or replaced, and the sun deck is set to be restored.
Caloca said weekend brunch service will be back this summer, and 2024 will see the return of Sir Winston’s restaurant and the popular Halloween-time Dark Harbor event. He also said he and his staff are carefully analyzing the ship to determine how it could be more profitable—such as adding new tours or staging for different types of events.
The ultimate goal is to make the Queen Mary self-sustaining, though Vallejo said he couldn’t put a dollar figure to that yet. But whatever decisions are made going forward, the ship’s finances will be more transparent than under previous operators and their sometimes “creative” corporate accounting, he said.
“I think we really are in a proof of concept here. In some ways, I’m taking part of my career on it, just because, you know, this is different,” he said, adding that since the 1970s the ship was operated under a master lease, with the city in a more passive role.
Rangel, the tour guide, just wants more people to have the chance to hear the stories the Queen Mary has to tell.
“I really want future generations to experience what I’ve gotten to experience over the years,” he said.
“The ship will always own a piece of my heart.”