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Profile
Continued from page 16
in the Royal Victoria Dock - with proximity to Canary Wharf, London ExCel conference & exhibition centre, and the O2 Arena. That London ship was moved from the group’s Naantali spa hotel and given a near €50m refit, and is the group’s second in the capital - the original was sold after a decade to Nigeria for around £30m in 2008.
Today’s Sunborn London with 80% occupancy already, aims to achieve 85% within the year. “However, of all the hotels in the east London area, Sunborn has the highest average day rate,” Niemi says. London is in line for one of the new vessels and the existing London ship would then go to another destination.
Recirculating existing vessels to other ‘home’ ports such as Gibraltar is a key part of the Sunborn strategy. Venice, Istanbul and Abu Dhabi are amongst the earliest other locations being considered, with Barcelona subsequently.
Simply moving ports
“What this super yacht hotel product enables us to do is to change [the local offering] over time”, Niemi declares, adding: “If in ten years’ time the market diminishes, we need a finer, luxury version of my hotel, or only a 4-star product, we can change it.
“We cannot predict what is going to happen ten or 16 years’ away, and if the market is still there – it may have got bigger or smaller - we are happy to stay in a location, but maybe with a different vessel; the lifespan of these ships is more than enough, maybe 100 years. In any business, the market will certainly change over that time.”
Gibraltar’s ship, after a slow start this year, currently is achieving 70% occupancy and will probably end 2015 at 65% overall. Sunborn is “very happy” for the year 2 operation. “I am not expecting it to be higher than that, because Gibraltar has its own seasonality very different from the rest of the Costa del Sol. We struggle with the lack of business clientele in summer and have to work much harder than in the business months”, Niemi notes.
Most clients for the hotel are from outside of Gibraltar, but a lot of the events – banquets and food and beverage business – are Rock based customers. A tie up with Marbella’s La Sala Group from June to run around 5% of the yacht’s public space as an entertainment and separate restaurant venture is attracting “a different, younger fun group” of local people and from over the border.
Meanwhile the new 24 x 7 Casino is an
investment in Sunborn by Paf, a Finish not- for-profit company with exclusive gambling rights on Aland Island, where it generates funds for local humanitarian and social causes. Already “it is a significant part of our business in Gibraltar” and Niemi quips: “Now I have two governments behind me – Gibraltar and Aland!”
He picks partners able to share in Sunborn’s aspiration: when settling on other jurisdictions he already has a willing casino operator, and La Sala, a company that “has a big expansion plan, including wanting to do an IPO in London”.
Sunborn Group turnover this year “of around €150m is again growing quite rapidly” after a period of consolidation, and is refocusing on the objective of gaining a London Stock Market listing in 2020 for the super yacht strand of this private family business – assuming sufficient investment partners are found to finance the expansion to at least six ships.
Relocating to The Rock
An early move has been to broaden the Sunborn board with people who can add experience, contacts “and most of all enthusiasm and passion for our business; it’s not just a matter of money - money is everywhere”, says Niemi who, despite his youthful appearance and laid back approach, is responsible for just about everything in the Group, other than shipyards.
And then comes the denouement. With an increasingly large part of Sunborn Group activity now outside Finland, Niemi is “very seriously considering relocating our whole holding company structure to Gibraltar, because of the tax benefits, and looking at Gibraltar as our doorstep into the rest of Europe and the Middle East. It is much simpler than doing it from Finland.”
Sunborn says it’s important to open up the London and Gibraltar flagship operations – “because they are the showcases, the big revenue generating pieces of business”.
Niemi claims there are several potential Gibraltar investors in Sunborn. “It is more a case of coming up with a suitable vehicle for these people to invest and that is one of the reasons why we are talking to the local funds, companies, banks, lenders and so forth; we are trying to create a structure in Gibraltar for the future growth of this company.”
And Niemi observes wryly: “Gibraltar is one of those locations that draws in entrepreneurs; sometimes you need not look further than your front door”.
A night club and casino give added 5 star appeal
from an existing yard and use existing suppliers and networks: rather than waste a lot of resources in building or buying a shipyard, or renting one permanently, we go wherever in the world there is capacity, wherever we get the best deals”.
Sunborn developed a ‘Virtual Shipyard’ system designing ships, with various companies participating worldwide – “it really has become like a cloud - so that, for example, the steel can be assembled in one place, fitting out in another location, and so on; it’s non-geographically-specific”, Niemi enthuses. “It is a global business, we can build ships anywhere in the world: with our last ship [Sunborn Gibraltar], the work was done in six countries.”
Six ships by 2020
The significance of this detail soon becomes clear: Sunborn has four more ships in the planning stage, with an implied cost of some
€500m “to be completed in 36 months and then there’s another two or three destinations [for ships] in mind thereafter”, Niemi confesses. Commercial negotiations are due to be complete by end-2015, with shipbuilding starting within three months thereafter.
Part of the investment logic is to achieve synergy, scale and saving on design costs by building four ships in a short period of time, having the existing ships as prototypes with proven new technology.
The new yachts will complement Sunborn Gibraltar and the 4-star Sunborn London, that also opened in March last year,
18 Gibraltar International
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