Having previously chartered through the traditional route of brokerage, Beechey approached his own broker with the question of how would someone looking to charter frequently do so in a more ‘efficient’ manner. “Her answer was there really wasn’t a good business model today for that purpose without getting into some form of ownership,” explained Beechey. “And that is why OceanScape Yachts was created.”
Members pay $9,500 one-time membership fee of which $5,000 is then credited against the first charter. There is then an annual fee of $5,000 which is then credited against the next booking, however if for one year a member chooses not to charter this will accumulate to the following year giving $10,000 against the price of the next booking. Beechey adds that with the commitment of the membership fee members will be more likely to vacation more frequently, providing a little more security to owners in terms of income. “By having this commitment of the members we’ll be able to go to the owners and say, we’re going to put 20 weeks of time on their yacht in a year, or 15 weeks, and negotiate better rates than on a one off transactions,” said Beechey. “We believe we’re offering a no risk model to the owners in that they can do whatever they want with their yacht on their own, including keeping it in a traditional charter market and all we ask is that they provide us with an updated and open calendar.
“What we want to do is create what I call it the proper member to yacht ratio, where I’d guarantee to owners that this ratio won’t go over a certain amount. If we have 400 members we’d only have 20 yachts in our network and then it is somewhat based on supply and demand to ensure that yachts get booked: we don’t have 400 members and then offer them 400 different yachts around the world. We’re only offering those 400 members a choice of 20 and trying to make it high quality yachts in high quality destinations.”
For members, there is a level of familiarity with the service, much like a hotel chain reward scheme, where vacationers come to expect a certain level of service associated with that particular chain.
Basing their financial model on charter rates, Beechey has developed this membership plan to factor in those costs. “I have looked at all the pricing in the industry ranging from 18m-21m long up to 40-50m yachts and ranging in price to $15,000 up to over $150,000 a week and I’ve built a pricing model where I know the factors that influence the price of the yacht in the charter market today,” explained Beechey. On the OceanScape website an example is presented to potential charterers of a yacht in the Caribbean that is 30m, less than five years old and carries four crew and eight passengers, pricing it at a total weekly cost (inclusive of APA and gratuities) of $75,800 per week, compared to OceanScape’s model, where the same trip could be enjoyed at a rate which ranges from $57,600 to $71,650 per week, depending on the time of year.
“We’re also trying to bring in seasonality in to our pricing model, so there will be 4 weeks of peak time a year, 12 weeks of high season, 20 weeks of base rate season and the weeks that aren’t very popular, for any of a number of factors, those weeks will be the value season. By lowering the price point in those seasons we can hopefully attract a little more attention and get those yachts utilised rather than just sitting in a marina somewhere.”
In terms of profitability, Beechey will, instead of using the traditional route of taking a percentage of a charter fee, be using a flat rate in order to make it a financially viable business. “What I’m trying to do is build profitability based off of volume rather than one or two transactions a year”, said Beechey. “It’s based off of a fee based approach where we understand what the cost to serve that customer is and we charge that fee regardless of what the charter rate is, if it’s $40,000 or $80,000.”
Marketing the experience of yachting, and also presenting yacht charter as a more affordable option if divided up between the party on board, Beechey believes that this will help to promote yacht vacations to a wider range of clients, including those who enjoy an affluent lifestyle but may not currently have the income to be able to afford to buy and run a yacht. There is a significant number of people on the world’s wealth pyramid where while they’re still in the top income levels, they are not really being targeted as an owner because they can’t afford to buy and operate a superyacht… Even if you use someone who earns $1 million a year as an example, they’re not in the target market for ownership because they can’t afford the running cost. But someone in that income range or lower might spend $40-50,000 a week on a vacation once a year. That’s the market that we’re trying to target.”
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