The S/S Monterey - a 30-year-old American passenger liner that has been docked in San Francisco for the past eight years - will be refurbished for operation in the Hawaiian Islands.

SS Monterey Ltd. Partnership - a group of private investors - is behind the venture. It purchased the ship from the International Association of Masters, Mates and Pilots, which will retain 10 percent ownership and exclusive supervisory jurisdiction over the crew. Aloha Pacific Cruises Inc. - a Virginia corporation headquartered in Washington, D.C. - is the general partner, and Aloha Pacific Cruises - a Virginia based management group - will market and operate the ship.

According to John Broughan, director of marketing for Aloha Pacific Cruises - the 14,799-ton Monterey will undergo a $30 million modernization and renovation. Her hull will be overhauled at the Dillingham shipyard in Portland; her superstructure expanded in Tacoma shipyard; and her interior completely refurbished and upgraded at Wartsila.

Unlike many of the other pending U.S. ventures that are awaiting funding from the Federal Maritime Administration, the Monterey's refurbishment is being completely financed by individual investors. Securing funding in this manner has been much easier for SS Monterey Partnership because the costs involved are substantially less than the other ventures, Broughan said, noting that refurbishment of the SS United States will cost about $150 million.

"Although the total refurbishment costs are $30 million, we only have to raise $16.8 million because Wartsila is guaranteeing us an 85 percent loan to be paid back over eight-and-one-half years," he said. The costs are not yet completely covered, but the general partner is certain that they will be presently, and has ordered the ship to be moved to Portland. Work is scheduled to begin imminently.

Noting that this is the first time that a union has had a vested interest in a cruise operation, Broughan said that operating costs will remain competitive to those of foreign flag vessels, he said. "We have worked out a contract that guarantees wages will remain comparable, and we have signed a five-year no-strike, no-slowdown agreement." Aloha Pacific will be responsible for recruiting and training personnel, and the union will be responsible for supervising them.

The Monterey will accommodate 639 passengers upon completion - 228 more than she can accommodate now - and carry a crew of 240. She will be outfitted with new cabins, a swimming pool, a show lounge, dining rooms and discos.

The line intends to recreate the "grand cruises of yesterday," Broughan said. Emphasis will be placed on quality service and cuisine. The line already has recruited Stanley Pepperell-Hill, head chef of Buckingham Palace, and plans a monthly rotation of cuisines from around the United States, featuring the culinary skills of a variety of famed young American chefs. High quality entertainment and sports facilities on the islands also will be emphasized.

Cruise rates will be comparable to American Hawaii - about $1,300 to $2,600 for seven days.

According to Broughan, a great deal of business is expected to come from the meeting and incentive markets. The line believes that the Asian and South Pacific markets also are profitable targets, and plans to develop air/sea packages in conjunction with United Airlines' new service from the Far East to Honolulu.

In the United States, the cruises will be promoted primarily through wholesalers specializing in the Hawaiian market, Broughan said. "We intend for them to be an important marketing arm." Broughan projects that the West Coast will be a primary source of business, out said the line plans to lure midwesterners and easterners with attractive air/sea packages.

The line's offices will be based in San Francisco, Honolulu and Alexandria.

United States Cruises Seeking Alternative Source of Funds

Meanwhile, United States Cruises - the line that was supposed to initiate the revitalization of the U.S. fleet - has given up on the Maritime Administration, and is seeking alternative sources of financing. According to George Sotir, president of the line, "The Maritime Administration has run out of money. The combination of $1.2 billion in defaults and Gramm-Rudman have killed it."

Jarrett Kroll, whose Floating Through America venture is also awaiting funding from the Maritime Administration disagrees. "We only need $27 million, and the Maritime Administration should have enough to cover it. They have a cap of $66 million, and I'm told that much of it has not yet been allocated," she said.