28 Jun 2012
Charter brokers confident market will show true colours
By Lulu Trask
“Price reduction” has been a turn of phrase used almost excessively for the past 12 months in the brokerage market, though the familiar tag-line is now moving its way into its sister market. The charter industry, feeling the effects of a battered Western economy, has recently become inundated with advertisements for reduced-rate charters and special offers. SuperyachtNews.com has spoken to some of the industry’s leading charter brokers to gain a succinct understanding of the faring of today’s charter market as we enter the 2012 summer season.
In June alone SuperyachtNews.com has seen advertising comprised of reduced rates, '20 per cent off bookings', '10 days for the price of eight', and 'all charter taxes paid', as well as seeing cheaper offers for the last summer slots. Announcements of this type are coming in thick and fast, with even single-day charters finding advertising space; Fraser Yachts is offering Arno’s 27m motoryacht Coca VI at a daily rate of €5,000.
Just as sales-based price reductions are indicative of an overabundance of yachts on the market, these reductions in all their forms reflect the same problem. Bertrand Mattei, assistant manager of Fraser Yachts Monaco’s charter management division, informed SuperyachtNews.com: “The problem of our industry is that there are too many yachts on the market,” an opinion shared by director of marketing and communications at Burgess, Alev Karagulle, who targeted the problem of excess inventory as the cause of the high number of reductions: “Lead-times are shorter and due to the excess inventory, older yachts are proving to be more flexible with their rates to compete with the trend which favours newer yachts.”
It is not just the smaller yachts seeing this type of activity, however. May’s average size of superyachts offering reduced rates for the summer was 42m, this figure rising to 51m for June. In May, Ocean Independence announced a 36 per cent rate drop for Benetti’s 70m Reverie. The 2000 motoryacht, previously offered at a weekly rate of €550,000, was being offered at €350,000 for charters in May and the first half of June. The same brokerage house also announced that Ortona Navi’s 50m motoryacht Mar, normally offered at a weekly rate of €150,000 in the high season, would be offered at €125,000 for 10 days in June – a rate drop of 17 per cent.
For the charter brokers, however, it’s not all bad news, for despite figures that tell a story of a troubled charter market, those announcing reductions are more positive. “I just think that the market is more competitive, but it’s not that bad. Of course we are always open to negotiate a little, but we really don’t close our deals with a high level of reduction; we don’t sell price cuts,” said Mattei, who highlighted the market’s overcrowding as a useful marketing tool for the brokerage house’s Diamond Collection, which he said “gives yachts a competitive edge in a crowded market.”
“The charter market is certainly not in the doldrums,” Karagulle told SuperyachtNews.com. “Some very big charter deals are being signed and the appetite for superyacht holidays, particularly during the high season, remains strong.”
Despite a relatively positive response from the charter brokers, in the light of somewhat worrying statistics, we can be under no illusions that the charter market is in rude health. At the time of writing three announcements came through: a €6,000 rate reduction; an announcement declaring a summer season rate of €88,000-€98,000 would remain at €88,000 for the summer; and a €55,000 rate drop.
And for the future? Karagulle concluded: “It is important for both owners and charterers to remain realistic about pricing, and to take advice from professionals who are fully in tune with the state of the market.”
Fraser Yachts Profile | Fraser Yachts Website
Burgess Profile | Burgess Website
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