Torstein Hagen is the Norwegian billionaire founder and chairman of Viking Cruises, the biggest river cruise company in the world that he founded in 1997 at 54 years old.
Viking operates 78 river ships and 6 ocean ships.
Torstein owns 75% of Viking and his net worth amounts to $1.5 billion as these lines are written.
This is his story.
Beginnings
Torstein was born in Norway in 1943.
He studied physics at the Norwegian Institute of Technology, wrote a master thesis on artificial intelligence and machine learning, then went on to get an MBA at Harvard in 1968.
He subsequently went back to Europe and worked for McKinsey.
In the early 70s, his employer sent him to work for the cruise company Holland America Line which was near bankruptcy. He saved it by telling HAL to sell the cargo business which was profitable, and use the money to build the cruise business which was not.
He was right. Holland America Line went on to sell for $625 million to Carnival in 1989.
As for Hagen, his experience with HAL made him confident enough to offer his help to the then-struggling Bergen Steamship Company in 1976.
Bergen was a Norwegian steamships business ferrying both passengers and merchandise between Norway and the UK. They liked Hagen and hired him as CEO.
Hagen fired almost everyone, sold almost all boats, and achieved his objective to be profitable in record time.
After 4 years at Bergen, Torstein became CEO of Royal Viking Line in 1980.
When he joined, Royal Viking had only three ships.
Torstein found them too small so he extended each of them by 30 meters.
It increased the total number of passengers per vessel by 200 and made the boats both more comfortable for guests and more profitable for the company (it decreased the break-even occupancy rate from 93% down to 63%.)
After a couple of years at the Helm of the Royal Viking, Torstein learned the owners wanted to sell it.
It was a great opportunity. Hagen raised money from a group of investors and employees and made an offer.
He was about to win it when he learned on television that Viking had been sold to Norwegian Cruise Line instead, a Norwegian company that had come out of nowhere to buy it.
Faced with embarrassment, Torstein had no choice but to resign. It was one of the worst moments of his life.
One year later, he went back to Holland America Line, then joined the board of Kloster, the group that had bought Royal Viking.
Torstein fought to gain back control of Royal the following decade but failed.
In 1991, he tried to take control of Nedlloyd, a Rotterdam-based shipping company.
That didn’t work and he ended up selling his shares for a loss.
In 1994, Royal Viking, which was about to go bankrupt, was for sale again.
Hagen offered $300 million to Kolster. But a mix of bad luck and prostate cancer prevented him from having it back.
Kolster sold all of the ships and Royal Viking Line ceased to exist.
For Torstein, It was time for another plan.
As he was cruising on the Volga, Hagen wondered if this type of cruise could not be developed at a bigger scale.
Relentless, he decided to try.
Viking Cruises
In 1997, at 54 years old (the age of his father when he died), Torstein stroke on his own. He bought four river ships with the few millions he had left and launched Viking River Cruises in Russia.
While most cruise companies built shopping malls, bowling alleys, theaters, and charge premiums for sparkling water, Hagen wanted to make his ships “nicer”.
His target was wealthy, educated, and old retirees that sought knowledge and exchange more than they did alcohol and party – people exactly like him.
So he built the cruise ships of his dreams.
Instead of charging a low-price and additional fees for onboard services, Hagen built an all-in “luxury cruise”.
Everything is senior-friendly.
Customers have one free excursion per day and the boat stops in a new port every day. There is free wine and beer during meals, free laundry, opera, and reading and cooking lectures onboard.
There is no charge for specialty restaurants, no casinos, no fancy drinks, no formal nights, and no butlers. Children are forbidden and as a result, the swimming pool is waterslide-free.
Hagen designed everything himself, from the shampoo bottles easy to open, to the nine-button TV remote control.
Viking’s beginning was slow but steady.
In 2000, Viking bought KD cruise to have more ships and take advantage of premium docking locations in important EU cities.
That same year, they targeted US customers and opened offices in the country with Los Angeles as their first location.
Then problems came.
First, 9/11 killed leisure tourism for a while. Hagen was so close to bankruptcy that he asked Carnival’s CEO for a loan.
Somehow, he didn’t get it.
Then the crisis of 2008 forced him to sell a part of his company to a Dutch fund.
Negotiations were so long that by the time he was about to sign, business had finally picked up again.
To gain customers, Hagen assembled a database of 37 million customers and flooded people’s mailboxes with flyers.
Since its inception, Viking has spent $1.5 billion in marketing alone.
It worked.
It worked o well in fact that in 2013, Hagen added ocean cruises.
Everyone was against it, including his family. They didn’t think he was financially capable of such an undertaking with giants like Carnival and Royal Caribbean as competitors. But Torstein knew he could do it.
He rebranded the company as Viking Cruises and ordered his ships.
Viking’s first ocean cruise happened in 2015 with the Viking Star, a 930-passenger ship.
Their second ship was delivered in 2016, then two more ships in 2017, and one each in 2018 and 2019.
Viking Cruises won the best world award every year since 2016.
Their trips are booked up to one year in advance, and Hagen cannot seem to build ships fast enough despite leveraging debt like no one has ($2.5 billion).
To fuel growth, Torstein sold 23% to investors for $672 million.
That enabled him to buy more ships and increase the number of cruises.
Future
The company is only starting. They announced they were launching exploration trips to Antarctica in August 2022 with ships specially designed to navigate the ice-cold waters.
The expedition will also welcome a group of scientists from the University of Cambridge.
Additionally, they will launch a cruise on the Mekong in Vietnam, on the Nile in Egypt, and on the Mississippi in the US.
Today, Viking sails to 403 ports, 95 countries, 5 oceans, and 20 rivers with more to come.
They plan on having 101 vessels in total in 2025, and 16 ocean ships by 2027.
They’re also expanding their customer base.
According to Hagen, the only difference between US and Chinese tourists is the language.
As a result, he hired Chinese-speaking staff and gained a strong foothold in China.
COVID
It’s an understatement to say that the cruise industry was decimated by Covid-19.
In order to go back to business as soon as possible, Viking adopted a few practices.
First, they hired a chief medical officer.
Then they made vaccination mandatory for everyone, staff, and customers.
Since all of their cabins are equipped with ventilation and air-con, they added ultraviolet-C (UVC) lights and electrostatic air filters to filter the air, which enables them to kill 99.9% of pathogens.
They installed PCR testing labs and partnered with other labs close to the ports they are operating in.
Conclusion
While I was a little jealous of many of the billionaires I wrote about, I am actually happy for Torstein Hagen.
I am happy because the man never wanted money. He never sought it. If he had been, he would have started his own cruise line much earlier, or would have retired with the dozen of millions he owned.
But no. Torstein Hagen wanted to run a cruise company. So, that’s what he did.
I have a lot of admiration for him because he fought his entire life.
In 2015, at the ripe age of 72, his ex-wife asked for a divorce and sued him, seeking to acquire half of the fortune he had built up to then (€1 billion).
The dispute was settled two years later for an undisclosed amount.
Once single again, Torstein went back to his ships and started to prepare his succession.
His daughter is vice-president of Viking and will take the CEO role when her time will come.
But by looking at the fun Torstein Hagen has to run his company, it may be much later than expected.
Sources:
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