Gold Star Cruises is launching one-day service out of Galveston with the Star of Texas, formerly the Mardis Gras, which the company has chartered from Seaways, a Greek company, presumably owned by Carnival Cruise Lines. Carnival had previously announced that the Mardis Gras would be joining Epirotiki Line's fleet in Europe. Sources said that Carnival has not yet decided whether to deploy another Carnival vessel in the Epirotiki fleet in the Western Mediterranean or substitute the Mardis Gras with another Epirotiki vessel or charter a vessel from another cruise line.

Gold Star will operate the ship on a 12-month time charter with open-ended options and with an option to purchase, according to Paul Wells, President of Gold Star Cruises.

The 27,250-ton, 1,260-passenger Star of Texas starts service November 4, 1993 and will be sailing year-round from Galveston, offering 10 "cruises-to­ nowhere" each week; four six-hour day cruises and six "night club" cruises. Once a month, the ship will also sail a two-day cruise to Matamoros, Mexico.

"We are marketing the Star of Texas as a cruise product," said Wells, "we have passenger cabins for overnight accommodations and offer all the services and amenities of multi-day cruise ships."

Already announced are weekly Monday "Sports Night" and Wednesday "Ladies' Night" cruises. Rates range from $49 to $69 for adults and a flat $19 for children. Buffet lunch and dinner is included. A Ia carte dining is available at an extra charge as well as cabins. Port taxes are an additional $16.

Gold Star Cruises of Galveston, which is headquartered at the Texas Cruise Ship Terminal, is owned by Gold Star International which also owns Gold Star Casinos, which runs the on board casino. Catering will be provided by World-Wide Catering.

Wells said the company chose the Mardis Gras for her seakeeping ability, passenger capacity and other favorable operational characteristics. "She is the right ship for the operational area," he said.

The Star of Texas is hardly new to the cruise market. The ship first entered service as the Empress of Canada in 1960. For almost 11 years. she made North Atlantic crossings each summer and cruised in the Caribbean in the winter.

The ship was sold to Carnival and began service as the Mardis Gras in 1972. She was most recently sailing three- and four-day cruises from Port Canaveral where she was taken out of service this past September. According to Carnival's announced plans she was to be redeployed in Europe sailing for Epirotiki Line in which Carnival holds minority interest.

Gold Star International was founded in December of 1992 by Peter J. Catalano, its Chairman, and was co-founded by Clive P. Tilley, Michael Kornblum and Patrick O'Malley. The company's stated mission is to build a portfolio of land- and water-based hotel casinos and passenger ship/casinos worldwide.

Gold Star refers to the Star of Texas as its first ship suggesting expansion plans into the cruise business.

For now, however, Gold Star has leased the ship on a one-year trial basis. Sources also said that Carnival has no ownership interest in Gold Star and has no interest in the one-day market. Meanwhile, Carnival found the offer from Gold Star very attractive. Neither company would divulge the cost of the charter.

Largest One-day Ship

The Star of Texas has a capacity for 1,260 passengers which makes her the largest ship in the one­ day market. As the Mardis Gras, the ship carried 906-passengers, and was last refurbished in 1991. The ship's registry was transferred from Bahamian to Greek flag this past September.

"We have an entertainment platform," said Wells. Gold Star promises star-studded entertainment aboard the Star of Texas including Folies Bergere-style shows, big bands, magicians, and comedians. There will also be a disco and a 200-seat movie theater.

The 13,500-square-foot casino will feature blackjack, roulette, baccarat, tai gow, dice, poker, mini-baccarat and slot machines.

Economic Impact

According to Gold Star officials, the Star of Texas will have an economic impact on Galveston of approximately $20 million in its first year of operation.

This estimate is based on projections that 240,000 passengers per year will be attracted. Based on this estimate, the Star of Texas would average a 50 percent load factor. Sailing at capacity she would be able to carry some 450,000 passengers a year.

Gold Star will employ 453 people, 400 aboard the ship, and 53 in its Galveston office and travel agency.

It is also estimated that the Star of Texas will generate $1 million per year for the City of Galveston in new revenue from permit fees and sales taxes, in addition to helping to establish Galveston as the "playground of the South", according to City Manager Douglas W. Matthews.

According to the General Manager for the Port of Galveston, Doug Marchand, the port will receive $2 per passenger in the form of head tax, plus $0.06 per ton each day the vessel is in port, or $1,096 per day. In addition, the port will receive approximately $3 per car from parking. Gold Star executives estimated that the ship will generate approximately $2.1 million in income for the port each year.

The Star of Texas has also been welcomed by the Galveston Hotel-Motel Association which expects passengers to produce as many as 15,000 to 20,000 new room nights of business each year.

Also supportive of the ship are the Galveston Chamber of Commerce and the Galveston Economic Development Corporation.

The City of Galveston spent S2.2 miliion to build the 26,000-square-foot Texas Cruise Ship Terminal on the roof of a historic 1927 building in 1988. The terminal opened in 1990 and has attracted seven cruise ships since that time, including Sun Lines' Stella Solaris and Royal Viking Line's Royal Viking Sun and Royal Viking Queen.

Other one-day operators, including Pride Cruise Line's Pride of Texas and Europa Cruises' Europa Jet, did not fare so well in Galveston, however. Europa's vessel was said to be small for prevailing sea conditions and also reportedly suffered from start-up and mechanical problems. Pride, meanwhile, was forced out of business by a U.S. General Attorney in Texas who applied a rarely used ruling that cruise ships with gambling facilities must call at a foreign port or stay in international waters 24 hours.

Background

Catalano, Chairman and Chief Operating Officer of Gold Star International, is also President and principal owner of Catalano Kornblum Management Corporation. as well as Chairman of Realty Asset Advisors, an investment and consulting firm, and has a portfolio of $900 million in commercial and residential projects.

Tilley, President and Chief Executive Officer of Gold Star International, most recently had his own firm, Ocean Gaming Consultants, and has experience in cruise ship, resort and private club gaming in North and South America, Africa, Europe and Asia. He formerly worked for Tiber Entertainments Group and Atlantic Associates.

Kornblum, Executive Vice President and Secretary of Gold Star International, is also CEO and principal owner of Catalano Kornblum Management Corporation. He has been responsible for the acquisition and management of commercial projects in New York City.

Wells is President and CEO of Gold Star Cruises of Galveston. He has previously been Vice President of Corporate Development for Fraser Maritime Services, responsible for developing new business opporrunities in the maritime industry, including day­ cruise operations from Galveston.

Wells was also founder of National Maritime where he directed the design and operations for a new U.S.-flag passenger ship that was to have operated in Hawaii. Wells was also a founder and Vice President of Operations, and a Director of Regency Cruises. He was also founder and President of Adventure Cruise Lines USA.

In addition, Wells has served as an independent shipping consultant; as Vice President of Operations for Constanna Shipping Agency; and as an Assistant Vice President of Operations for Carnival Cruise Lines, where he was responsible for two ships, including the Mardis Gras.

World-Wide Catering has a long track-record in the industry going back to 1968. The company presently provides catering services to Premier Cruise Line, Starlite Cruises, Seawind Cruise Line, Regency Cruise Line and American Family Cruises.

Plans

"We have pretty aggressive plans for expansion into the day-market in deep water cruises and river boats," Wells said.

In the meantime, Gold Star is targeting Houston with its three million inhabitants only an hour away and plans to launch air/sea programs in Dallas, Fort Worth, and Austin whereby passengers would cruise one day and spend one day in a hotel in Galveston. Plans also call for marketing in Louisiana.

"We are different in the one-day market," Wells underscored, "we offer a full-fledged cruise experience, which has not been done before."