A Three Boat City Cruise rivals stage fierce battle in Inner Harbor


Leaning back in her swivel chair at the Spirit Cruises office overlooking the Potomac River in Washington, Kathleen Malloy took the surprise call last August. The brass at Spirit's headquarters delivered some disturbing news: Based on skirmishing that already had developed, Ms. Malloy was warned to expect a fierce battle with a long-established rival when she launched the company's cruise business in Baltimore.

"Harbor Cruises didn't want us coming into the harbor. They'd been here so long. It was natural they would want to protect their turf," Ms. Malloy said of the rival company, of which she was general manager from 1986 to 1988.

Millions of dollars in ticket sales were at stake. And sure enough, a battle has developed this year between Baltimore's cruise ships -- essentially restaurants on water with brassy, cabaret-style entertainment by singing waiters and waitresses.

Harbor Cruises, the 10-year-old mom and pop company that operates the Bay Lady and Lady Baltimore, made government appeals to block the entrance of its competitor. It also has stepped up advertising and adapted its cruises to meet the challenge from Norfolk, Va.-based Spirit.

"I just don't think this is a three-boat city," insisted Beverly Stappler, who co-owns Harbor Cruises with her husband, Larry. Even the Inner Harbor's burgeoning tourist base can't support three cruise ships, she says.

Still, Ms. Malloy was shocked by the intensity of the challenge from Harbor Cruises -- which went so far as to ask a Maryland congresswoman whether foreign-owned Spirit could legally operate in U.S. waters.

Spirit, owned since 1990 by the French conglomerate Sodexho, operates cruise ships in Boston, Chicago, New York, Norfolk, Philadelphia, Seattle, Washington and Weehawken, N.J. But in no other city has it encountered such opposition.

"We're not here to develop enemies. We're here to bring people down to ride boats," said Ms. Malloy. The addition of the city's second cruise line, she says, should enlarge the market by boosting advertising and public awareness of the relatively new form of tourism.

Mention the word "cruise" and most people think only of "Love Boat" type liners -- a luxury craft that travels from country to country, providing lavish food and entertainment. Although most harbor cruises last only two to three hours -- no passport required -- the young industry models itself on the same getaway concept.

For $8 to $40 per person, customers on a city cruise receive a full luncheon or dinner, musical entertainment and a guided harbor tour. "It's a complete package," said Ruth Fader, president of Baltimore Rent-A-Tour, which arranges group tours.

The Stapplers, pioneers in Baltimore's passenger cruise industry, got their start with food concession rights on the old Port Welcome, a cruise ship that was operated by Maryland's Department of Transportation. The couple had been established caterers in the Baltimore area -- having founded Overlea Catering in 1959 -- and after the Port Welcome fell into the city's possession, the Stapplers went to visit then-Mayor William Donald Schaefer and agreed to buy the boat for $150,000.

Sensing that tourism was blossoming in the Inner Harbor, the Stapplers (who later put the obsolete Port Welcome out of business) bought the 450-passenger Lady Baltimore for $1.2 million in 1985. They added the $1.7 million Bay Lady, which holds about 550 passengers, in 1988. Business steadily increased for Harbor Cruises through the 1980s, with 200,000 passengers expected to buy tickets this year.

Although Harbor Cruises' sales are up 10 percent over last year's, the company is worried about the sleek new 550-passenger, $2.8 million ship it passes several times daily in the Inner Harbor.

In attempts to block entry of the Spirit of Baltimore, the Stapplers first made inquiries with the Coast Guard and the office of U.S. Rep. Helen Delich Bentley, a maritime specialist. They wondered whether the Spirit was violating a federal law restricting foreign-owned ships from being placed in domestic service in U.S. ports. But the Spirit vessels are leased, not owned, by a U.S. subsidiary of Sodexho.

Harbor Cruises also sought to block its competitor by protesting that Spirit's Key Highway property -- next to the HarborView condominium tower and marina --lcked adequate parking to accommodate cruise passengers. But its appeal to city zoning authorities led only to the Spirit's arranging for the clearing of additional parking spaces for its passengers.

Still another dispute between the two cruise lines focused on legislation introduced by Baltimore City Council President Mary Pat Clarke last November that would require council approval for any new passenger dock. Ms. Stappler insists she hasn't pushed the pending legislation, an assertion disputed by the rival company.

Today, both companies say they will battle through advertising and marketing rather than in government chambers or courtrooms.

"We have to advertise. We're the new kids on the block and we're fighting the stigma that, 'Oh, the Spirit is just another boat.' We have to enlighten people," said Ms. Malloy, who estimates that the Spirit of Baltimore will spend at least $500,000 on its multimedia advertising campaign during its first year and that it will sell $2 million worth of tickets for its cruises.

By comparison, Ms. Stappler estimates that Harbor Cruises -- long a monopoly in its Inner Harbor niche and highly profitable -- will bring in $5 million in revenue this year.

It will spend just $150,000 on advertising, although its ad budget has grown from about $100,000 last year in response to the competitive threat.

With 25-year city dockage rights at the center of the Inner Harbor, right off the main promenade, Harbor Cruises is ideally situated for walk-up traffic -- local residents or tourists who make a spur-of-the-moment decision to take a cruise.

The 192-foot Spirit of Baltimore has less visibility, docked near the base of Federal Hill on a former Bethlehem Steel shipyard. That's a real disadvantage.

"Harbor Cruises has 10 years of repeat customers and a great location. . . . We're on the Harbor's outskirts," said Ms. Malloy.

But if Harbor Cruises has that crucial edge -- location, location, location -- the Spirit of Baltimore has its own advantages.

With cruises operating in 10 cities, offering the same sort of meals and polished Broadway musical-style shows, Spirit ships are highly visible to the national travel industry.

Several groups have recently requested bookings on the Spirit of Baltimore, based on their familiarity with the company's cruises elsewhere, said Ms. Fader of Baltimore Rent-A-Tour.

Both companies are confident they will prosper.

But success -- and survival -- will boil down to this fundamental question: Is Baltimore a three cruise-ship city?

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