Let’s say you’re a billionaire tired of commuting among multiple residences worldwide.
David Robb, chairman of Beverly Hills-based Utopia Residences Co., has a simple solution: buy a home aboard his company’s $1.1 billion luxury ship Utopia – soon to be under construction in South Korea – and the globe will be yours. More specifically, you will spend much of your life visiting special events throughout the world including the Cannes Film Festival in France and the annual running of the bulls in Spain.
Prices start at $3.7 million for a 1,400-square-foot unit with kitchen and bath, ranging upwards to $24 million for 6,600 square feet of personal space. Oh yes, there will be monthly fees of $10,000 to $30,000 for water, sewage disposal, electricity and the like.
“It will be a very unique and close-knit community,” Robb, 41, said of the buyers he expects to occupy 200 apartments aboard the 971-foot ship. “They will be the captains of industry, the founders of successful companies and the leaders of entertainment.”
Among other things, the 105,000-ton, 16-deck ocean-hopping vessel – expected to be completed in 2013 – will include an outdoor movie theater, putting green, rock-climbing wall, casino, deli, several restaurants and lounges, nightclub, cabana deck and meandering “lazy river” on which to float.
For less permanent guests, the ship will feature a 204-room luxury hotel with stays priced from $500 to $1,500 per night.
“What we’re creating,” Robb said, “is our own minicity that floats.”
The idea, he said, grew out of conversations with Capt. Ola Harsheim, now the company’s senior vice president of operations and shipbuilding, who spent most of his adult life skippering cruise ships.
“What I began noticing,” said Harsheim, 64, “was that 70, 80 percent of our passengers were repeat customers, some of whom, more or less, lived on the ship. They always wanted the same cabins, and even began customizing them by leaving their belongings on board.”
Three years ago, Robb took the idea to the Frontier Group, a St. Louis-based private-equity firm he had founded with Sanford McDonnell, former chief executive of the McDonnell Douglas Corp., and Frank C. Carlucci, the former U.S. defense secretary, with whom he had previously worked.
The group specializes in buyouts, growth financings, turnarounds and such. And earlier this month, it placed an order for the ship with Samsung Heavy Industries Co., one of the world’s largest shipbuilders, based in Seoul, South Korea.
This won’t be the first time a luxury liner has sold on-board homes. The World, a ship based in Miramar, Fla., set sale in 2002. Within four years, according to its Web site, the homes were sold out. Some other companies have tested the concept with varying degrees of success.
What makes Utopia unusual, Robb said, is its focus on special events.
“This will not be a seafarers’ ship,” he said, “but a landlubbers’ event-oriented place to be. Most of the time we will be in port.”
Not everyone is convinced of the venture’s viability.
Wido Schaefer, the chief executive of TravelStores Inc., a travel management company based in Los Angeles, said it may be the wrong time to start a business dependant on luxury spending.
“I think it’s a great idea and I wish them luck,” he said, “but sales will be slow.”
Schaefer pointed out that much less than 1 percent of the world’s population can afford to live on the Utopia.
“Frankly,” he said, “this kind of spending is now frowned upon. People who drove Bentleys are now driving Priuses. If I were an investor, I would ask for guarantees that the ship will still be operating in 12 months.”
Robin Diedrich, an analyst covering the cruise industry for Edward Jones & Co. in St. Louis, shares those concerns.
“This is ultrahigh end,” she said of the project. “The competition will be consumers who typically choose to build and cruise their own yachts.”
Robb, however, said he’s confident that the worst of the recession has passed.
“The equity markets tend to have an impact on our buyers and, luckily, they have recovered remarkably since March of 2009,” he said. “Our buyers feel bullish about the market and they look on this as a lifestyle investment.”
Though the shipboard units have not yet formally gone on sale, he said, the company – which has offices and showrooms in Beverly Hills and New York – already has commitments to fill about one-sixth of the homes.
“That’s just from word of mouth,” said Robb, adding that the potential buyers come from a variety of countries including China, France and India.
Ultimately, he said, Utopia expects to generate as much as $100 million in revenues per year.
“We think,” he said, “that we can make money on this.”
