Thanks very much Danhiel for taking the time to respond. I did also reach out to the team @ Gotthard Express. FYI their response as follows:
Thank you for your interest in the Gotthard Panorama Express. We are very pleased about this. The Gotthard Panorama Express is a unique journey with the SBB 1st class panoramic train and the boat trip across Lake Lucerne between Lucerne and Lugano. For the route between Flüelen and Lugano, you will need a 1st class ticket.
Please proceed as follows:
Please reserve your train seats at www.gotthard-panorama-express.ch. Select "Reservation only" as your discount. You will then receive a seat allocation and a supplement of CHF 24. Seat reservations are not possible on the ship. If you wish, you can reserve seats for lunch online in the ship's restaurant.
Unfortunately, the Interrail/Eurail pass is not valid on the boat route; you will still need a ticket for this. However, with the Interrail/Eurail pass, you will receive a 50% discount. You can purchase your boat ticket from the boat crew during your trip or online at www.lakelucerne.ch. Choose the Half-Fare discount. The ticket for the boat journey costs CHF 26.50 in 2nd class or CHF 41.00 in 1st class.
With a 2nd class Interrail/Eurail Pass, you will need an upgrade to 1st class for the train journey. This is best paid for by paying to our train crew during your trip. The class upgrade for the Flüelen and Lugano route costs CHF 34.00. If you only use the train between Arth-Goldau and Lugano, the upgrade costs CHF 40.00.
We offer a free luggage transfer between Lugano and Lucerne. You can drop off your luggage at the platform in Lugano at 9:00 a.m. and pick it up at the luggage counter in Lucerne station until 7:00 p.m. Or, in the other direction, drop off your luggage at the Gotthard Panorama Express Welcome Desk at Pier 1 by 11:00 AM and collect it on the platform in Lugano, right next to the train.