(Bloomberg) -- If your tourist attraction isn't bringing in enough attendees - move it.
That's not an option for most attractions, but it is for the state of Texas, the Battleship Texas Foundation and their 573-foot-long ship, originally commissioned in 1914 and a veteran of both World Wars. The state owns the vessel while the foundation operates and maintains it.
The battleship was berthed in the Houston Ship Channel at the San Jacinto battlefield park, about 25 miles east of downtown Houston, where it received between 80,000 and 90,000 visitors a year, according to Tony Gregory, president and chief executive officer of the Battleship Texas Foundation. That's less than a third of what it needs to be self-sustaining.
"It's an industrial area," Gregory said in an interview. "Where we're going now is the location that will give us the greatest chance of success."
The new venue is going to be Pier 21 in Galveston, a tourist destination on the Gulf of Mexico. Gregory estimates the attraction needs to sell 283,000 tickets a year to support itself, according to a feasibility study of historic ship attendance by Deloitte. Ticket prices would range between $17 and $20, he said.
The Port of Galveston will lease space for the ship at the pier for 10 years at a monthly rental rate of $20,000, with options for additional 10-year leases. The lease is still being negotiated, according to Kathy Thomas, a spokeswoman for the port. The foundation is also in talks with Landry's Inc., a hospitality group which controls the land around the pier.
What makes the Texas's move to Galveston unusual is that it won't be accompanied by a trip to the municipal bond market, Gregory said. The foundation is currently in the midst of a capital campaign to raise $15 million to pay for a visitor center and ticket office and further renovation of the ship. The state of Texas has put up $60 million to pay for restoration of the hull as well as the vessel's deck. The ship is currently in drydock undergoing repairs. The foundation regularly updates the progress of the work on its website.
The new Pier 21 attraction is scheduled to open sometime in 2025, according to Gregory.
Tourist attractions that have borrowed in the municipal market haven't all had an easy time. The USS Intrepid, Elvis Presley's Graceland and the Great Platte River Road Memorial Archway in Kearney, Nebraska, all defaulted on the municipal bonds sold for construction and renovation.
The ship's move to Galveston "is not expected to have a material impact to the city's credit profile," said Grayson Nichols, vice president at Moody's Investors Service, which rates the city's general obligation debt Aa3. "Tourism is already a large portion of the city's economy and will continue to be over the long term," he said in an email.
Eric Kazatsky of Bloomberg Intelligence said in an email that tourism seems to have rebounded since the Covid-19 pandemic.
"For example New York City tourist figures could hit 63.3 million in 2023 and surpass 2019 levels by 2024," he said. "However, does that robust global visitor growth translate into traffic expected for a semi-niche local attraction? Maybe not so much."