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Olav Norum invests €1.2bn in US ‘floating conference ships’
Entrepeneur confident of investment, writes Jerry Frank
January 10 2005NORWEGIAN entrepreneur Olav Norum is to spend around € 1.2bn ($1.56bn) on three newbuild cruise ships and a luxury yacht as he looks to target the burgeoning demand from corporate America for conventions and conferences at sea.
The Trondheim-based shipping investor has set up new venture Vision Quest Lines to operate the new luxury cruise fleet, which he plans to operate out of US cruise capital Miami and Port Everglades.
The three 70,000 gt floating conference centres will cost around € 390m each, with an additional luxury corporate yacht costing around € 20m.
Norwegian shipbuilder Aker Yards looks set to bag all three cruiseship newbuilds for its Finnish operation Aker Finnyards, which has been closely involved in drawing up the designs for the luxury specialist vessels.
Germany’s Lloyd Werft and Chantiers d’Atlantique in France were also in the running for the deal, with Mr Norum hoping to sign a series of letters of intent with Finnyards by mid-March.
“We have decided to go for Finnyards, because they have offered a delivery schedule 10 months faster than their competitors”, said Mr Norum.
Leading a consortium of over 30 investors eager to break into the growing corporate cruise sector, Mr Norum said that he has been looking at setting up in the niche area since the mid-1990s.
“The 9/11 terror attacks put back our plans to move into this market by about 18 months”, Mr Norum added. “Conditions have picked up and there is a lot of interest now in the US for conference and conventions at sea.
Industry figures for 2002 valued the conference cruise business in the wake of 9/11 at around $300m a year, with recent Vision Quest analysis estimating that the sector’s value has now doubled to $600m.
“The big cruise operations are experiencing growing demand from corporate clients with highly specific needs”, explained Mr Norum. “The holiday and business cruise markets don’t always blend well together.
“Holidaymakers don’t necessarily want to see large numbers of businessmen striding around in suits and vice versa.
“These vessels will specifically offer the level of facilities that corporate clients want when they book a conference or convention.”
As well as offering 35,000 sq ft of onboard floor space, the vessels will have a capacity for 1,200 passengers, going up to 1,400 with double occupancy of rooms.
Mr Norum, who over the last 12-years has built a business empire chartering and marketing cruise ships, expects to take delivery of the first vessel in mid-2007 with the next two due for delivery in 2008.
Financing of the deal is still under negotiation, with the consortium awaiting investment-grade coverage to secure backing from a number of undisclosed investors.
Vision Quest will aim to generate an annual revenue of around $100m from each vessel, which will initially be owned and operated by the company.
There are no plans to charter vessels to established operators, but Mr Norum did not rule the possibility out in the future.
With the first vessel due to operate from Miami for cruises in around the Gulf of Mexico and the Caribbean, Vision Quest will expand its cruise destinations with delivery of the second and third specialist cruise ship.
“We intend to offer New England and Canadian destinations, and, with panamax beams, the vessels will be able to operate via the Canal along the west coast and around Alaska.”
The cruise line also plans to offer cruise tours between North America and Europe.
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