Aqua Blue Transforms Luxury Expedition Yachts in Indonesia
Aqua Expeditions
If you want to be inspired by Francesco Galli Zugallo, CEO and Founder of Aqua Expeditions, don’t tell him he’s amazing, even if he is. Tell him he’s crazy. Tell him his ambitions are impossible. And then just sit back and watch the magic happen. Galli Zugallo is someone who thrives on turning challenges into opportunities. The Italian-American has built a business running luxury river cruises and yacht charters aboard custom-built yachts in some of the world’s most complex destinations, including the Peruvian Amazon, Vietnam’s Mekong, and Indonesia’s remotest islands.
Since founding Aqua Expeditions in 2007, Garri Zugallo has designed some of the most groundbreaking itineraries for “affluent explorers” and has been hailed for launching Peru’s first luxury Amazon River cruises, revolutionizing luxury expedition yacht travel in Indonesia with Aqua Blu, and taking the first commercial superyacht (Aqua Mare) to the Galapagos Islands. With a fleet of six vessels now under his belt, and a growing list of ventures, the list is long.
As Aqua Expeditions prepares to announce its next project, we take a deep dive into Gari Zugalo’s greatest passion, chart his path to success and reveal the next steps in his master plan that may soon be open for strategic investment.
Francesco Galli Zugallo, CEO of Aqua Expeditions
Aqua Expeditions
Where did your passion for travel come from?
Francesco Galli Zugallo: Growing up in 16 countries made me love to travel. My father was the Managing Director for Latin America at Alitalia. Travel was in my father’s blood, and I inherited it. After my parents divorced, I moved to live with my mother and stepfather. He was the bureau chief for many countries at TIME magazine, so we moved around a lot: Germany, Lebanon, Israel, Cyprus, Italy. Then, after graduating from Boston, I started working for a private equity group investing in telecommunications and tourism in South America. I ran a telecommunications startup for five years, then moved to investing in small ship expeditions in the Galapagos Islands. That’s how I got my experience in the travel industry.
What prompted you to leave a private equity group and start Aqua Expeditions?
Leaving Ecuador and the investments I had withdrawn from there, I started looking around South America. I originally wanted to go to Argentina. There was an American gentleman named Douglas Tompkins who owned The North Face and was investing in buying ranches, so I thought, “Let’s go there.” On the way, I stopped in Iquitos and the Peruvian Amazon, but realized that no one was really working on the Amazon at a high-end level.
I was touring Iquitos with a Peruvian Navy admiral and heard that there was a 50-meter steel hull for sale in a tributary. So I went on a small Navy tug and banged on the hold and the guy sold it to me. I towed it away that same day. Then I obviously had a shipyard build it and I brought in Jordi Puig, who was a very famous architect in Peru at the time. It took eight months from the time I bought it to the time I put the hull and bed in and launched it. I wouldn’t say I was the first, but I was the first to build a top-level ship for what we would call today “rich explorers.”
Aboard Aqua Blue in Indonesia
Aqua Expeditions
Why did you choose South America to launch your business?
I chose South America because I knew what I was going to do. At the time, the hottest package in South America was Machu Picchu and the Galapagos. Compared to Ecuador at the time, Peru’s growth potential was phenomenal. Orient Express had come in, owned five properties and three trains, and was pumping money into promoting this destination. So I figured I just had to pitch a great product to the Peruvian Amazon and it would automatically be packaged in the Peruvian circuit at the time. It was very easy to position a premium product at the top of the line quickly. So I sold my house in Ecuador, moved my whole family to Peru, and put everything into it. It was a risk, but I have a healthy cautious attitude towards risk.
Why did you decide to build a business focused on boats rather than entering the hotel market?
When I was working in the Galapagos Islands, I thought it was amazing to be able to control the guest experience. If you’re just staying in a hotel, it’s very hard to really curate the guest experience and you can’t influence it. With the yachting experience combined with the cruising experience, you can curate something and create a really amazing environment for the guest.
From a business perspective, these businesses are cash rich because the cash flow is high because people book in advance and there are very few cancellations because it’s a long-distance, aspirational trip, so this has always been an attractive experience and business opportunity.
Service and hospitality are key on every Aqua Expeditions ship
Aqua Expeditions
Why did you decide to build a 12-cabin boat and do you have plans to build a larger vessel?
I wanted a small boat. The original concept was to copy the idea of a houseboat in Kerala and put it on the Amazon. I said, “Let’s make four boats with two small cabins each,” but when I did the math, I realized that it’s not scalable. As you get bigger, your fixed costs go up. Whereas a 12-cabin boat can carry 24 guests, but as soon as you break even, the economies of scale become very attractive because your variable costs are so low. The only variable costs are extra meals and extra guides, and fuel and operating costs are still fixed.
Second, the guest experience must be determined by the small group. This is a high-involvement trip where connecting with the guide is key. We never have more than four couples per guide. This allows the guest a chance to really get involved and allows the guide to tailor the tour to the group. You can’t get anything this unique on a ship with 100 guests.
Francesco Galli Zugallo in front of the luxury riverboat Aqua Mekong
Quan Light Lighter Photo
How many of your ships are available for private charter and how many are booked by tour operators?
About a quarter of our business is private charter. Currently, all our ships are in service for 48 weeks. Charter is 30%, about 15 charters a year, most of which are private, but we also have a lot of buyouts by tour operators, which means a client comes in, buys the ship for a week, and then resells it under their own brand, as a one-week package in Siem Reap or Ho Chi Minh.
In private charters, there are often two main paying clients and it was difficult to determine who would use the top owner suite, so on our river ships we offer three very similar and very large suites. We have implemented this on all our ships and have found it very appealing to private charter clients.
Why did you choose to focus your business on one complex area over others?
I love challenges. I love the sense of accomplishment I get when I show that I can do it, even when people keep telling me, “You can’t do it, no, you’re crazy.” All you need is a vision and the drive to execute. What started as a vision is now realized by 300 talented people working alongside me, from the crew to the management team. I love challenges. I don’t like to take the easy way out. What gives me the most joy is seeing our customers appreciate what we’ve accomplished.
Raja Ampat
Aqua Expeditions
Aqua Blu is redefining luxury expedition cruises in Indonesia. What inspired you to set up shop here?
I like Indonesia because it makes you feel like you’re exploring. The Galapagos, by comparison, is very organized. The guest experience is great, but very controlled. In Indonesia, you can see volcanoes, find dragons and birds of paradise, sail to Raja Ampat and the Spice Islands, and go on an expedition to see what nature has to offer you. It’s very hard to get permits, but that excites me. It takes two years to get a permit in Indonesia, but I want my guests to see these parts of the world, where the logistics are complicated, at a very high level.
What are your guests looking for, and how do you match your destination to meet their expectations?
When you talk to guests, they’ve done it all. They want cool, unusual and relaxing. They want world-class service, but they’re not pretentious and they’re willing to walk barefoot and take it easy. And the destination has to deliver in terms of nature and wildlife.
I chose the Mekong River in Vietnam because it is the iconic river that connects two World Heritage sites, Siem Reap and Angkor Wat, and I decided to work in three bucket-list marine biosphere reserves: Galapagos, Raja Ampat and Komodo. My next destination will be a combination of both: either an iconic river of the world or an iconic coastal cruise that offers wildlife, natural elements and sometimes cultural elements too.
Enjoy the sunset on a private beach in Komodo National Park
Aqua Expeditions
What are the company’s long-term plans?
We have a very clear map of where we will be docking the ships. We have delivered one ship every three years. Next year will be our 18th year and we will be delivering our sixth ship. We will announce the details of how, how and where in August. We scouted the destinations and put together the routes. This is what I do in my off-time. I spend weeks and months scouting different ocean areas around the world. This is my passion. It’s finding logistically complex destinations and if we can get there, raising the money for the ships (because ships are getting more and more expensive), and putting together unique routes.
What opportunities exist for interested investors?
This is a very profitable business thanks to our fixed costs. As long as we break even, our margins are roughly in the 50% range. We are on track to beat our forecasts this year, and bookings beyond 2025 are already very strong.
From an investor perspective, I obviously maintain control of the business and will continue to do so. But that doesn’t mean that it will continue in the future. I’m open to whether we can add value strategically from a strategic partner. We have access to capital, but that strategic capital is what I’m looking for in the future, to allow us the opportunity to strategically develop the business faster and bring passenger flow to our company faster, as opposed to growing organically.
There aren’t many companies like Aqua. We are the only company with this scale, this niche and this scope. I think that the day Aqua goes to market to find a strategic partner, we will attract a lot of attention wanting to enter the space.
