Viking River Cruises: Norse invasion5 March 2012
Viking River Cruises CEO Torstein Hagen outlines his battle plan for the largest fleet expansion in riverboat history.
When the Vikings struck, their raids were defined by numbers, speed and the element of surprise. It is a tactic that Torstein Hagen has clearly studied closely. His announcement last year of the 2012 launch of four new Longships caught the industry unawares and saw the chairman and CEO of Viking River Cruises generate such excitement that he was soon declaring the order of two more.
The debut of six new vessels in a single season is unprecedented and breaks Viking's previous 2001 record of four. It is just one element of a $250m fleet development programme, which covers the complete refurbishment of a number of ships - including its entire Russian fleet - and the introduction of ten Longships, an entirely new class, by 2014.
These must be exciting times at Viking River Cruises, but, speaking just three weeks before the simultaneous launch of the first four, Hagen conceals his enthusiasm well.
"It's not that much of a big deal," he says. "In the bigger picture, you're not even talking about a quarter of an Oasis of the Seas. We're the little guys and it's the big boys out at sea who make the headlines."
This is somewhat disingenuous. Hagen acknowledges Viking's dominant role in the riverboat sector - "We have virtually created the industry you see today" - and $250m is a lot of money, even to the Royal Caribbeans and Carnivals of this world.
"The industry is doing quite well at the moment, especially the US market," he explains. "We've been around a long time and it seems as though the value of river cruising is finally getting through to people. It's a very different business model to ocean cruising and a very different experience. They enjoy big margins and big profits; we don't have those benefits."
A bigger splash
It is hard to envisage his competitors emoting much sympathy for Hagen's little guy act, but they are certainly all ears when it comes to the subject of Viking's new Longships. Currently under construction at the Neptun Werft shipyard, the chairman and CEO is somewhat less bashful once discussion turns to the impact they are set to make.
"These ships represent a quantum leap forward in hardware," he says. "The real game changer is that we've managed to fit proper cabins with balconies. In the past, corridors on river ships have traditionally been centred. Here, they are asymmetric, which means the creation of additional space; balconies on one side of the ship and suites on the other."
Yran & Storbraaten, famed for its work on some of ocean cruising's leading luxury ships, was employed as naval architect, but the real innovation came from Viking headquarters, and Hagen has patented the design of the 443ft vessels as he seeks to put further daylight between his company and the competition.
"It's entirely our intellectual property," he explains. "We told the architects what it was we wanted and, while it's always hard to tell whether your vision has been realised three weeks prior to launch, when everything looks a complete mess, I think we've got there."
The build process has been relatively smooth, but not without some teething problems. Two ships from the first wave will be launched a couple of weeks later than first envisaged, with Hagen acknowledging that the scale of what the company has been trying to achieve has left little margin for error.
"It's a bit of a surprise, but not a major disaster," he says. "We wanted to have them ready early in the season and that's seen us pushing very hard. There are a number of reasons behind the delay. It's mainly a capacity and experience thing, but for the two ships following later in the year these issues will be fixed."
Other lessons learned are already being employed within the refurbishment programme. In Russia, where Viking launched 14 years ago, the balconies have even been incorporated onto an old member of the fleet.
"I had a colleague who used to say, 'Tor, for money you can get anything'," says Hagen. "I've applied that philosophy to the balconies. The truth is that I'm a simple-minded man and when I start in one direction I carry on."
Another recent announcement sees Hagen charting a quite different course. In December 2011, STX France received orders for a pair of 40,000t cruise ships from a new operator: Viking Ocean Cruises. Construction starts later this year and the new liners, which will carry 888 passengers and 444 crew members, will be delivered in 2014 and 2015, with the option for a third vessel remaining open. Welcome to Project Odin, Viking's first foray into the high seas.
"I look at the ocean cruising market and it seems as though the ships themselves have become the destination," says Hagen, who formerly served on the board of Holland America Line. "We now have a large customer base in place, many of whom would like to go to other interesting locations, but perhaps not aboard a megaship. These vessels are remarkable feats of engineering and serve their purpose in an excellent way, but there are a lot of people out there who feel more comfortable with something rather smaller. I think we can provide that experience."
There is still some work to complete on the financing side, but Hagen insists that this is a little more than a formality. What he's really excited about is the design process.
"We have a great newbuild team in place, boasting a huge amount of experience, and are very clear as to what we want," he explains. "The main thrust will come from us, but we've also got a great relationship with a number of naval architects and will be consulting with several firms. An ocean-going project is a much bigger deal and we're looking to invite input from more areas in order to make sure we get it just right."
Don't bet against him. Hagen's track record so far points to another successful Viking invasion.