Hotel Closed, 900 Workers Lost Jobs as Council Argued Over Queen Mary : Tourism: Long Beach also lost two conventions and related revenues during months-long debate over whether to take over the money-losing attraction.

After months of indecision and haggling, the Long Beach City Council finally decided to take over the Queen Mary and keep the landmark in town--but not before the ship’s hotel closed and about 900 people lost their jobs.

The months-long debate over the fate of the ship also cost the city two conventions, which would have brought thousands of people into the city’s hotels and restaurants and produced an estimated $4 million in revenue.

Some city officials complain that the transaction took far too long and was bungled, especially because a hotel on the ship was allowed to close.

“It was a collective failure on our part not to keep the hotel open and not to keep people working,” Councilman Ray Grabinski said this week. “What was allowed to happen was the ship imploded.”

The city could hardly afford the losses given its recent setbacks. In March, the Walt Disney Co. scrapped its proposal to build a major theme park in the city and the Navy has decided to move its base out of town.

Hotels are struggling with a 60% occupancy rate and Long Beach’s aircraft industry has taken a beating, leaving thousands unemployed. Last spring’s riots charred parts of the city.

Councilman Warren Harwood blames Mayor Ernie Kell and harbor officials, saying they prevented a quick resolution by waging an all-out campaign to sell the ship.

“Kell was the orchestra leader,” Harwood said. “He was determined to get rid of it. He did nothing from Day 1 except focusing on selling it, bad-mouthing it, getting rid of it.”

Kell, who once compared the ocean liner to a tomb that no one wanted to visit, says he does not regret trying to rid the city of the money-losing tourist attraction.

The mayor and the majority of the city’s Board of Harbor Commissioners, which has jurisdiction over the ship, wanted to sell the Queen Mary to a Hong Kong firm for $20 million. They proposed using the proceeds to help build a tourist harbor that someday could bring thousands of jobs to Long Beach.

Kell said he fears the city could end up losing millions on the Queen Mary.

“I never in my wildest dreams thought the city would take the ship back,” the mayor said. “I think it’s going to go down as one of the worst decisions we made.”

Besides, Kell said, no one was stopping the City Council from acting sooner to take over the ship from the Harbor Department and keep the hotel open and the employees working.

The council voted Tuesday to take control of the ship at the end of the year and lease it to a new operator, Queen Mary Partners Ltd., a group headed by Joseph F. Prevratil. Prevratil oversaw the operation of the Queen Mary in the mid-1980s.

Disney, the current operator, decided not to renew its lease to operate the ship after reportedly losing as much as $10.8 million a year.

City officials asked the harbor commissioners in mid-September to pay Disney to keep the hotel open. The harbor officials agreed but it was too late.

“With no business booked . . . it would be virtually impossible with less than two weeks notice,” Disney said in a release.

Disney closed the hotel as scheduled and laid off about 400 employees. Without the hotel, business dropped dramatically at the ship’s restaurants, bars and shops. Only about 300 of the ship’s 1,200 employees remain.

Confusion surrounded the closure of the hotel.

“I thought Disney would have (kept the hotel open),” Councilman Alan S. Lowenthal said this week. “I assumed the Harbor Commission was keeping open all the options.”

Queen Mary workers and their union representatives had appeared at meeting after meeting, warning that the closure would be catastrophic.

“When they closed the hotel down that hurt everything,” union spokesman Bud Rymer said.

The controversy began last March, when Disney announced it was leaving town, abandoning its plans for a theme park and the Queen Mary.

Harbor officials shuddered. After all, they were in the business of running the highly successful Port of Long Beach, which earned a $68-million profit last year. The last thing they wanted was to lose money on a floating hotel and tourist attraction.

The Harbor Department commissioned a study on the Queen Mary and found out it would need $27 million in repairs over the next five years to be made safe. Thereafter, the ship would need about $5 million in annual maintenance.

So Harbor officials solicited 18 bids from prospective buyers and operators of the ship.

A $20-million bid was submitted by the Hong Kong group, along with several other lucrative offers. Harbor officials were ecstatic.

The port’s executive director, Steven R. Dillenbeck, and a deputy city attorney jetted to Hong Kong and London to ensure that the offers were valid and to persuade the prospective buyers to keep the ship in town two more years.

That would give the city time to at least get a start on the new harbor attraction to recapture the tourism that would be lost with the departure of the Queen Mary.

About the same time, in early September, Disney was moving to shut down the Queen Mary Hotel.

Disney had wanted to abandon ship Sept. 30. But at the urging of the City Council, the harbor commissioners last summer arranged to have Disney stay on until the end of the year. The Harbor Department would pick up the losses, which are expected to total $3.7 million.

But the harbor commissioners would not foot the bill--estimated at more than $1 million a month--to keep Disney from closing the hotel at the end of September.

By late that month, Lowenthal was one of several council members who was convinced the Harbor Department was railroading the sale. The Harbor Department had narrowed its list of proposals for the Queen Mary to six--five to purchase the ship and one to operate it.

At a Sept. 22 meeting, Lowenthal lambasted the harbor commissioners for not informing the City Council of their intentions. Harbor officials flew to Hong Kong and London to negotiate with prospective buyers, but they had not talked with Prevratil, who at the time was the lone prospective operator.

“I had always assumed that they were going to look at operators as well as the sale of the ship,” Lowenthal said. “Their top priority was to sell the ship. There was a complete breakdown in communication at that point.”

Another councilman, noting that residents had been urging him to save the Queen Mary, proposed that the city take jurisdiction of the ship.

The Harbor Commission offered the Queen Mary to the City Council the next week, and the two arms of city government entered into negotiations.

David L. Hauser, president of the Board of Harbor Commissioners, said at one point that he had received signals that a majority of the City Council would support selling the ship for $20 million.

“The whole thing had gotten so confusing to me,” Hauser said. “If the city would have demanded that we turn the boat over to them immediately, we certainly would have done that.”

The city’s tourist-driven businesses had been silent on the issue.

The Board of Directors of the Long Beach Area Convention and Visitors Bureau finally voted Oct. 28 to urge the city to keep the landmark. The organization has 400 members, including the city’s major hotels.

“They couldn’t believe that the city fathers and mothers would let this go,” said Chris Davis, the organization’s chief executive officer. “If we don’t have the Queen, at that point we’re no longer different from any other city.”

Davis said two groups canceled conventions, citing the uncertainty surrounding the Queen Mary. He estimated that the two conventions would have brought about $4 million in spending to the city.

The City Council ended the debate Tuesday. The new agreement calls for the Harbor Department to give the city $6.5 million to repair the Queen Mary.

City officials are pinning their hopes on their new operator to change the fortunes of the tourist attraction and the city.

Prevratil, who intends to reopen the Queen Mary Hotel in about three months, said his plan will create at least as many jobs as were lost in the last few months.

“The Queen Mary can be that public beacon that says Long Beach is back,” Councilman Grabinski said. “The new year could be a turning point for the city.”