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River cruising is 'thriving' amid U.S. and European droughts: Avalon Waterways President

Avalon Waterways President Pam Hoffee joins Yahoo Finance Live to discuss how river cruises are grappling with low river levels due to drought and the outlook for operations.

Video Transcript

- The global climate crisis has European rivers running dry. The low water levels are wreaking havoc on industries from farming to shipping. It's also taking a toll on a popular tourist draw, river cruises.

Now, Avalon Waterways President, Pam Hoffee joins us now. Pam, I was just in London a few weeks ago, where it went from blistering heat to torrential rain. How is all this affecting your business, starting with Europe?

PAM HOFFEE: Well, I actually just returned myself from Europe and was in Switzerland this past week, where we also experienced rain. So the reality is that rain has been happening the last few weeks. So the river levels have risen some, and we're back to operating fully across Europe. So there were some water level challenges during late August, late July, and into August, but those have subsided.

- How does this compare to what you've seen before? Have you been forced to cancel any cruises prior to what you just had to cancel this year?

PAM HOFFEE: Well, this really isn't a trend, which is something that I had been asked about. This hasn't happened since 2018 in a similar way to what we saw this year. So at this point, I'm not calling it a trend. I'm not calling it something that we can predict into the future.

This year, we did cancel three cruises to answer your question. We're very fortunate that we are really built to be able to handle these type of situations with Avalon Waterways ships. Our fleet is designed with among the lowest draft levels. So that's the vertical measurement from the water level down to the lowest point on the ship's hull in order to be able to sail through the lowest level of water that is possible.

So that's one advantage that we have. And then we also design our deployments to where we have ships on both sides of some of the more critical stretches of the river. So when we do have any disruptions like this, we can move our guests between two of our identical suite ships.

So we have 14 ships across Europe, which are all identical. And this really makes it seamless for our guests. They pack up their room in the morning. They head out sightseeing, and then their bags are moved for them to an identical ship, where they board and go into their next room, which is identical to the room that they left.

Maybe the colors are slightly different, but the ship has all the same amenities. The crew welcome them to the new ship, and it's become kind of a challenge actually on the next ship, where the crew do everything that they can to spoil them more than they were on the last ship in order to become the new favorite crew.

- That's remarkable you've only canceled three, because 65% of EU territory is currently under drought conditions, says a lot of guests about the depth of your boats. Have you noticed cancellations though based on the headlines here?

PAM HOFFEE: You know, interestingly, we haven't. River cruising really is thriving, and it is becoming the most popular and fastest growing style of travel worldwide. So one statistic that you might find interesting is that during the month of August.

So when these headlines were really happening quite a bit, we booked more travelers for the 2022 travel year than what we did in our record in 2019 for travel in that year. So that really says a lot about the resilience of the river cruise traveler and what people are hearing about how we're handling the situation and the confidence they have in Avalon Waterways.

- So, Pam, I want to ask you about your most lucrative routes. And I want to also ask you about labor shortages and how you've seen that perhaps affect your business.

PAM HOFFEE: So labor shortages certainly were an issue at the beginning of the season. A lot of that had to do with a delay in getting visas. So we have a mixture of European crew on board our ships, as well as some third countries, so Asian crew. And visas were not being approved in the same way that they had been in the past in terms of quickly.

So we did have a few less crew than what would have been ideal at the start of our season, but we are now fully crewed. That's something that we're very proud of. I think a lot of that can be attributed to the fact that we have an incredible crew program.

We were among the first companies to enter into a groundbreaking labor agreement with Nautilus, which is the river cruise crewing-- sorry, union. And it really works toward fair wages and fair working hours toward crew. That's something that we entered into just before the pandemic. And so we are an employer of choice for those wanting to work in the travel industry and work on the rivers within Europe. So we are fully crewed at this point.

- Pam, you mentioned that record year. What have been the most popular destinations?

PAM HOFFEE: So this year, as we're coming back, France certainly is winning that and has for quite a few years in terms of being the top destination, after that the Rhine. The Danube has traditionally also been very popular.

- Pam Hoffee, I appreciate you being here. Thanks so much.

PAM HOFFEE: Absolutely. Thank you for having me.