David Kelly’s Epic Sails

In just 10 months, David Kelly took a defunct casino vessel and converted it into a luxury cruise ship ready to embark on the American river system

For years, she sat in Beaumont, Texas, neglected. Born in 1995 and forced to retire in 2008, the world’s largest river steamboat, the American Queen, was left for dead after her original operating company sank into bankruptcy.

In 2012, marine management and operations company HMS Global Maritime began the process to revitalize the abandoned watercraft by launching the American Queen Steamboat Company (AQSC), its newest division after HMS Ferries, Seaward Services, and HMS Consulting & Technical.

“Bringing her back to life was no easy task,” says David Kelly, vice president of new construction, who was brought to HMS in order to lead the American Queen renovation.

Kelly was prepared for the task, having earned his start in the industry at Renaissance Cruises’ hotel department. He later joined upscale cruise line Oceania Cruises in 2003, eventually becoming its quality assurance director and gaining oversight to major renovations in European shipyards. Royal Caribbean approached Kelly in 2007 to assist with the launch of the Azamara Club Cruises. Kelly followed up with positions at Aurora Hotels & Resorts and Prestige Cruise Holdings.

“My passion for the design and construction of the vessels came from a very strong operational position,” Kelly says. “I would seek alternatives to the design elements I was given to work with. I pushed myself in this direction to help with the development of the vessels I was involved in to make them exciting and fresh for the guests, yet innovative and efficient for the staff operating them.”

Steamboat Kelly

At AQSC, Kelly’s role is to develop its assets, which include the American Queen, American Empress, and the American Duchess. Based on each ship’s operational challenges and guest feedback, Kelly works with each crew to gain insight into their needs beyond regular maintenance. He combines this information with his own ideas for the vessels, planning the following year of work for each one.

For example, AQSC recently completed a five-year dry docking on the American Queen to convert eight cabins into four luxury suites and to build a new bar atop ships on the stern.

According to Kelly, the company’s major advantage over most cruise operators is that it is privately owned. This gives the vice president of new construction the autonomy necessary to make design choices confidently.

“We have an owner who sees the long-term benefits to what we do and is happy to invest back into the assets,” he says. “Our vessels are not standard vessels. They are unique, boutique hotels that run up and down America’s waterways.” As such, AQSC invests roughly $3.5 million into each of its vessels annually.

Shipshape Up and Ship Out

“In five years, we have grown from that one vessel at a fairly undercapitalized company to having vessels that are sold out for the year,” Kelly explains. To get to that point, he and his team built on the successful launch of the American Queen in 2013 by taking on its second project when it purchased the Empress of the North. It’s the ship that, after a four-month renovation, would become the American Empress.

For AQSC, these rehab projects make the most economic sense. According to Kelly, buying a superstructure from an operator who has owned the hull for years, but is now disposing of it due to regulations, helps AQSC because the former operator has already paid the vessel. Frequently, these vessels are former casinos and have already multiplied their initial investment, making them willing to sell it for a fraction of the cost in order to avoid burdensome carrying costs.

Kelly and his team end up with a hull, superstructure, engines, propulsion, and a vessel that’s already certified by the US Coast Guard (USCG). Additionally, by using these old vessels, certain systems are grandfathered in, leading to more savings. For the American Duchess, Kelly’s most recent project, the AQSC team added nearly $3 million worth of steel, building from the ground up with a new hull and propulsion that would double the acquisition cost.

“Still, it’s complex to do a conversion because you are restricted with some of the structure that is already there, which you can’t remove because it questions the integrity of the hull and the vessel’s stability,” Kelly says.

“In five years, we have grown from that one vessel at a fairly undercapitalized company to having vessels that are sold out for the year.”

The Third Lady of Liberty

As a cruise line operating solely in the United States, AQSC’s vessel must be built inside the country. This poses a challenge in finding suitable ship stock because, according to Kelly, most cruise lines have international itineraries and use foreign flagged vessels. For construction, Kelly relies on local vendors because not only are they willing to go above and beyond, but also because there are no large national groups that build cruise ships in the southern region of the United States.

The fact that AQSC operates on the river system adds another layer of complexity, as ocean-going vessels cannot handle the levels, bridges, and docks that dictate how river boating functions. But river cruising gives AQSC an advantage, as the form of travel fell out of favor in the early 2000s, leaving a wide-open marketplace.

“Finding a vessel that is built for the river and is already a cruise ship is not easy,” Kelly says, adding that the vessels that were abandoned in the early 2000s are mostly gone. What remains are casino boats, many of which are unsuitable for cruising as the vessels were always intended to be attached to a dock. Many don’t even have the engine capacity, potable water, or fuel-tank capacity.

Fortunately, HMS has several leaders, including its chairman, who were involved in the casino business, bringing an understanding of which boats are suitable for the requirements of cruising.

By the summer of 2016, AQSC had sold more than
70 percent of its available rooms on the American Queen and American Empress for 2017. “We were turning groups and large business away,” Kelly says. “They were crying for inventory, and we simply didn’t have it to sell. We had to move on the purchase and build quickly.”

That July, AQSC found the American Duchess as it was being decommissioned by the Isle Casino in Iowa. After surveying the ship that August, Kelly and his team found a vessel that not only had more power than they needed, but also had vast, unrestricted spaces that made the
conversion easy.

“The bidding process is easier than most would think,” Kelly says. “Our strategy for the American Duchess was simple: Our chairman John Waggoner approached the owner and said, ‘Let’s make a deal.’”

Twelve hours later, the deal was done, and he had closing documents in 14 days. With a 10-month deadline, this expedited timeline was absolutely necessary.

Whatever Floats Your Cake

“When you’re building a ship, you are basically putting steel down on the bottom deck and then moving up to the next deck,” Kelly says. “As the steel is finished on the next deck, the pipe fitting, the HVAC, and the electrical teams roll in behind each other, making this wedding cake as you go up to the top. By the time everyone is finished, everything is being supported from below.

If it was possible, Kelly says that the process of finding a vessel, designing it, pricing it, contracting the work, and building it would happen in that order. “We were so desperate for inventory that we did it the other way around,” Kelly says. “We bought the vessel at the same time as we started the process.”

To ensure the process runs as smoothly as possible, Kelly came prepared with several designs for this type of project. The process is further streamlined by playing to its strengths while at the same time leveraging the strengths of its partners.

While AQSC managed the project itself, it enlisted the same naval architect firm that designed the American Queen. “They took my vision, my crazy ideas, and made it fit inside an existing superstructure,” he says. That meant having the port engineer review and ensure that the American Duchess had enough power, water, and fuel to run the routes it needed to. “It’s a very layered process. When you do it in this timeline—everything is stacked,” Kelly explains.

Kelly would oversee the demolition of the old structures and mechanical systems while concurrently planning the new systems, layouts, and designs. “It’s not ideal to do it this way. However, one must get it done in the timeline we provided,” he says. “Whatever it takes, we will make the process fit the project.”

No Parking

While most land-based construction must deal with state regulations, AQSC must satisfy federal regulations while it builds a hotel and ship. Usually, it will have to build to Safety of Life at Sea and American Bureau of Shipping standards, which ensures it meets or exceeds USCG regulations. “We don’t have the parking lot to evacuate into,” Kelly says.

Beyond fire and smoke detection, suppression, and an escape route from a unit, each ship must have an additional level of evacuation.

According to Kelly, public space design must include separate egress points and the ability to isolate sections of the boat in order to keep passengers safely away from certain zones. Every shipbuilder knows this and it’s commonplace, Kelly says.

One of the project’s largest challenges was getting approval from the USCG Marine Safety Center. The center must review all drawings, which, for the American Duchess, exceeded 400 individual system drawings. If AQSC had waited until it received approval for all of its drawings, it would never complete the project in its designated 10-month timeline.

“We must be confident in our own work from design to execution and that provided to us by the Naval Architects,” Kelly says. In this case, the strategy paid off as the center approved with merely minor modifications. “We took the risk of building before approval,” he says.