Delaware North Companies (DNC) has emerged with the surprise winning bid of $80.4 million for bankrupt Delta Queen Steamboat CO. 's 176-passenger Delta Queen, 402-passenger Mississippi Queen, and 420-passenger American Queen. Included in the price is acquisition of the brand name and all assets (equipment, office systems, etc.), while $47 million of that total represents DNC's assumption of the remaining debt on the American Queen to the U.S. Maritime Administration (MARAD).

DNC continues to negotiate with MARAD for the purchase of the fourth and final steamboat in the fleet, the 174-passenger Columbia Queen, which is also reportedly being eyed by American West Steamboat CO.

Although new to cruising, DNC has extensive leisure and concessionaire holdings worldwide, explained Dennis Szefel, president of the Delaware North Hospitality and Entertainment Group. In total, DNC does $1.3 billion in revenues annually and has 25,000 employees in the United States, Canada and the Pacific Rim. DNC manages hotels and visitor services in the Yosemite and Sequoia National Park, and owns a hotel and conference center in California. Other leisure activities include management of the Kennedy Space Center, and operation of all retail at Yellowstone National Park beginning in 2003. DNC's non-leisure units operate pari-mutuel racetracks, airport food service and retail concessions; and retail and dining service at professional sporting venues, including Boston's Fleetcenter (DNC Chairman Jeremy Jacobs owns the Boston Bruins hockey team).

"We have a diversified hospitality background," Szefel continued, "and we are open to new opportumhes like Delta Queen." Under DNC ownership, the steamboat operation will benefit "from economies of scale in marketing and advertising, and certainly in purchasing, as well as in all other corporate services," he said. Additional synergies involve the promotion of the steamboats at the national parks and other attractions in DNC's portfolio. "We have a whole range of guests staying with us at Yosemite and Sequoia who may not know about the steamboats, and we're going to educate them."

In particular, noted Szefel, this promotional avenue will be used to tap a relatively new market for Delta Queen: European passengers. "That's the key area for growth," he said, estimating that as much as 30 percent of the guests at Kennedy Space Center are foreign tourists.

Asked how the new owners will make changes on the operational front, Szefel commented, "We're obviously just starting the process of reviewing that now - we don't actually close on the sale until the end of the month. But one of the things that really drew us to this company and really impressed us was Delta Queen's management, so we will be leaving the day-to­-day operations to the management" in New Orleans, he said, where the company's operations will continue to be based.

Added Szefel: "We never looked at this as a turnaround operation. The financial problems at AMCV were not the result of the steamboats. They were elsewhere."

That said, given the very public failure of AMCV, Szefel acknowledged, "It will probably take a year or so for there to be an awareness among both the guests and travel agents that everything is back to normal and all their concerns have been put to rest."

Since the AMCV bankruptcy filing last year, cruises aboard both the Delta Queen and Mississippi Queen have been sold to consumers, with the intention of bringing the vessels back online this year. The Mississippi Queen began sailing as planned on May 7; the Delta Queen will start up Aug. 26. According to Szefel, the American Queen is expected to return to service on Jan. 18, 2003. "I don't see how we can get that ship back into service this year," he said.

"In the immediate future," he said, the three steamboats "will feature the same rates and same itineraries" as before the bankruptcy. "They were very successful and had a very loyal following, and that's in addition to the new ridership we'll create." If DNC is successful in its acquisition talks with MARAD for the Columbia Queen, the vessel will likewise remain in its former cruising grounds in the Pacific Northwest.

Asked whether the Delta Queen fleet possesses its own protected niche in the cruise market, Szefel answered, "It's always a mistake to think your market is unassailable. The Delta Queen product is unique, but we understand that we compete in the broader leisure market - with other cruise lines and other hospitality products."

When asked for his opinion of conditions this year in that broader leisure market, Szefel said, "I wish my crystal ball was a little less foggy, but it looks in general like the domestic U.S. market will probably do pretty well, and Delta Queen offers a unique way to take another look at the United States."

The DNC growth strategy, he said, is to target acquisitions "where we basically believe we have the underlying capability." Once that capability is proven, DNC is then in the position to grow the business further.