Tourism on Svalbard has grown rapidly in recent years, while coal mining has declined. One of the winners of this situation was Hurtigruten Svalbard, one of the largest tourism companies on the archipelago. In contrast, Store Norske, the former mine operating company had to look for new opportunities. Now the two have found each other and it all culminates in a sale of Hurtigruten Svalbard’s properties to Store Norske.
The search for a buyer for the properties on Svalbard, announced last October, has ended. In a press release from Hurtigruten Svalbard, the company announced that it is selling its three hotels with a total of 290 rooms, office space, 40 apartments and two large retail stores to Store Norske. The total area of the properties that have been sold is around 40,000 square metres. The company has been looking for a reliable investment partner for years and has now found one in Store Norske, according to the press release. At the same time, however, the company will remain the operator of the properties, as it had concluded a 30-year leasing agreement with Store Norske. Therefore, nothing will change for the employees in the hotels and the other properties at the moment, Hurtigruten announces in its statement.
“We have wanted to buy the Hurtigruten Group’s portfolio of buildings in Svalbard for a long time.”
Jan Morten Ertsaas, CEO Store Norske
For both companies, despite or even because of the current situation, a sale of the properties and further cooperation has been enormously important. “Over time, there has been great interest in our Spitsbergen properties from several key players. Svalbard is an important destination for us and we have a eternity perspective for our investment. Therefore, it was important for us to find a perfect partner who can contribute to the long-term development of tourism and the Svalbard community. That’s what we found in Store Norske,” explains Hurtigruten Group CEO Daniel Skjeldam. Jan Moorten Ertsaas, CEO of the state-owned Store Norske, is also enthusiastic about the collaboration. “Commercial real estate is a key focus for us and we have long wanted to buy the Hurtigruten Group’s portfolio of buildings in Svalbard. (…) This is an exciting and commercial investment that fits well with our existing business and we look forward to developing Svalbard as a tourism destination together with Hurtigruten in the coming years.”
Still everything the same
With the sale, Hurtigruten Svalbard now wants to devote more time to its core business again: “By leaving the building stock to a professional real estate provider, we can now focus on what we do best: creating unique experiences, not to mention year-round activities and several year-round jobs on Spitsbergen,” says Per Brochmann, the head of Hurtigruten Svalbard.
The deal, worth almost €69 million, has also already received the blessing of Store Norske’s actual owner, the Norwegian Ministry of Trade and Industry. The Ministry has announced that it will contribute almost €27.6 million directly and €41.2 million in the form of a loan. These amounts have been agreed with Parliament and have yet to be officially approved as part of an amendment to the state budget. The sale or purchase also comes at the right time and is a logical consequence of the two largest companies on Svalbard. Due to the pandemic and the declining tourism on Svalbard, concerns had arisen that foreign companies could take over real estate or even parts of Hurtigruten. There has also been talk of a loss of Norwegian sovereignty as a result. In addition, after the closure of the Svea coal mine, Store Norske, which had been a model company for many years, had to look for new opportunities to continue commercial activities on Svalbard. And now the path is going “back to the roots” to real estate, together with the Norwegian state. Thus, the two largest and longest-operating Norwegian companies on Svalbard have found each other for cooperation and want to develop tourism together, the press release says.
Dr Michael Wenger, PolarJournal
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