Software entrepreneur plans cruise line launch from home port in Ottawa

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When his plan to launch an airline stalled, local entrepreneur Michel Castonguay started looking elsewhere for his ship to come in.

Michel Castonguay is the founder of Float Cruises.

By David Sali

Strangely, he thinks he’s found it with a venture you wouldn’t expect to be hatched in a place hundreds of kilometres from the ocean: a cruise line.

That’s right. A cruise line, the first outfit of its kind based in the second-coldest capital in the world.

“I looked at the (cruise) business, and it seemed really ripe with opportunity,” Mr. Castonguay says in a boardroom at Invest Ottawa’s offices off Preston Street, where his company, Float Cruises, is headquartered. “I think Ottawa is as good a place as any.”

The idea came to him a couple of months ago. He was exploring ways of breaking into the travel business after deciding his dream of getting a new airline off the ground didn’t make economic sense.

If Mr. Castonguay has any doubts his plan holds water, he’s not telling. In fact, he says, being based in the nation’s capital could be an advantage.

“This is an inherently international business,” he says. “In (the Caribbean), we have 30-something countries we need to deal with. I almost couldn’t think of a better place (to set up shop) than Ottawa because of our access to all of the embassies, consulates and so forth.”

Being a Canadian firm could give the business another edge over U.S. and European-based competitors such as Carnival and Royal Caribbean, he adds.

“I think it’s an opportunity to sell Canada on a global stage,” says Mr. Castonguay, who is also the founder of local software developer Leapshot Labs. “And I think that people will buy it because I think Canada is a great brand. We’re really well-respected internationally, we’re well-liked.”

While most cruise line operators have traditionally targeted honeymooners and snowbirds – “the newlyweds and the nearly-deads,” as the saying goes – Float Cruises hopes to entice passengers in the 21-to-45 age demographic by offering entertainment from the hottest DJs and trend-setting acts such as Cirque du Soleil.

“The point that we’re trying to get across is that this is not your grandparents’ cruise,” says Mr. Castonguay, 35, who got his start in the business world as a DJ in high school. “This is not your parents’ cruise. We may have shuffleboard, but we’ll make it glow in the dark or something. I enjoy entertaining people. I enjoy watching people have a good time. I want to create that experience (on the ship).”

Under his business model, that experience won’t cost passengers a dime more than the price quoted in the brochure. Float Cruises’ excursions will be truly all-inclusive, he says, meaning guests won’t be charged extra for anything on the ship, including all food and alcohol.

“The bill that you signed up for is not the bill you leave with,” he says of most cruise vacations. “Basically, I want you to put your wallet away for the rest of the trip. I think that’s appealing to people. We’re not going to be the cheapest (cruise line). I think we’re going to be the best value.”

Noting that Las Vegas attracts at least five times as many tourists each year as all the world’s cruise ships combined, Mr. Castonguay thinks he’s hit on a winning formula.

“It’s a bit of the Holy Grail is to get that younger demographic,” he says, adding his vessels would offer “modern, kind of no-frills luxury” in the style of the W Hotels chain. “I think if we get to them, we’ll be a great target potentially for acquisition and so forth.”

Michael Mulvey, a marketing expert at the University of Ottawa’s Telfer School of Management, says Mr. Castonguay might be on to something.

“He’s trying to sell sort of a lifestyle appeal,” Mr. Mulvey says. “Birds of a feather flock together. (Many younger travellers) don’t want to be on a cruise ship talking to a 75-year-old lady in a bikini. As nice as she may be, it’s just not (their) idea of an ideal vacation. It’s like a club almost. There is a big market for that, so if he can get it co-ordinated, he should have a model that is worth a serious look.”

Still, he cautions it won’t all be smooth sailing for Float Cruises. For one thing, the industry is extremely capital intensive. Recruiting staff with experience in areas such as ship scheduling and logistics also won’t be easy in Ottawa, he suggests.

“It costs a lot of money to get a boat, service a boat, insure a boat and staff a boat,” he says. “There’s just so many layers to managing something of that scale. There are some major, established players that have been doing it a long time and even they have a hard time keeping it above water, if you will, because of the challenges.”

Undaunted, Mr. Castonguay says he knows there will likely be a few stormy days ahead. But he looks at an industry in which 26 companies generate $30 billion in annual revenues and sees plenty of room for a 27th. He’s seeking series-A financing in the “high seven digits, low eight digits,” and anticipates revenues of $150 million in the company’s first full year of cruising.

“You don’t need a lot of vision to see the potential there,” he says.

Besides scrounging up investors, Mr. Castonguay’s other immediate priority is convincing would-be clients his venture is for real.

The firm hopes to generate buzz with a 90-second hip-hop advertising video it recently posted on its website and YouTube channel. Visitors to the website will soon get a chance to vote on which destinations they’d like on the itinerary when the first cruise sets sail – something Mr. Castonguay expects to happen some time next year.

“I’m not even worried about buying a cruise ship right now,” he says, adding the company’s fleet will initially consist of a single, 1,500-passenger vessel it will likely buy or lease from a competitor. “If I have two years worth of bookings of 1,500 passengers a week, someone will bring me their ship. We need to create a company. We need to create a demand. We’re getting people interested, and that’s really our first mission.”

Organizations: Carnival and Royal, Leapshot Labs., Cirque du Soleil W Hotels University of Ottawa Telfer School of Management

Geographic location: Ottawa, Caribbean, Canada Preston Street U.S. Las Vegas

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  • Omar
    February 20, 2014 - 09:55

    I don't mind big hairy audacious goals from the likes of Mr. Castonguay but the revenue projections for his first-year of operations seems to have no basis in reality. Perhaps the cruise industry is ripe for disruption but this article doesn't leave an impression that Float Cruises has a business model that will do the disrupting.

    • Michel Castonguay
      March 25, 2014 - 15:59

      Omar, in terms of the (rough) revenue projections given to the author I would offer the following: Our ticket revenue per passenger target is ~ $200 per person per day. This number is higher than some of the lowest priced competitors, but is on par with the cruise lines we are competing with. Assuming we sold 100% of our capacity (note successful ships routinely sail at 104% capacity) that alone would bring in nearly $110 million in revenue per year. (1500 X $200 X 365) The additional 40 million projected would come from shore excursions, casino and on-board purchases. These projections are based on industry sales norms for these revenue generating items. We stand by the revenue projection of approximately $150 million in the first year of full time operation . Lastly, the point of providing these numbers was to provide the reader with a rough quantum as to the size of this opportunity. This is not a 2 , 10 or even 50 million dollar opportunity, it's $100 million + opportunity, in our opinion. Thanks for your comment. Check out our site at FloatCruises.com and learn more about how we are planning to disrupt the industry.

  • Larry
    February 10, 2014 - 16:01

    Seriously? Does he have any experience running a cruise line? What is in this plan that a competitor like "Celebrity" or "Carnival" can't replicate?