A little too crowded?
Hopes were set on the 2014 summer season for an indication of an upturn in the economy and a better year for the industry, especially with regards to the charter sector. TSO catches up with one charter captain for a discussion about the issues facing the market from a captain’s perspective.…
Hopes were set on the 2014 summer season in the Mediterranean for an indication of an upturn in the economy and a better year for the industry, especially with regards to the charter sector, which in recent years has seen some owners become increasingly frustrated with a lack of bookings. With the season nearing an end, The Superyacht Owner catches up with the captain of a 33.5m charter motoryacht for a discussion about the issues facing the charter market from a captain’s perspective.
While brokers have been suggesting that strength is returning to the large yacht charter market, competition for business among the 25m to 40m yachts remains tough due to a disproportionate number of yachts available. Competition is healthy, some might say, but over-saturation at this end of the market is problematic if owners are not receiving a satisfactory return from their yachts and charter clients leave bookings until the last minute in the hope of using the struggle for business to their advantage so they can bag a bargain.
Smack bang in the middle of this category is 'Captain X' of one 33.5m motoryacht who, with the yacht being based in Antibes, has first-hand experience of the surplus of yachts at this end of the charter market. “Everyone I have spoken to says that the bookings are not really happening,” he explains. “You have repeat clients who are booking from previous years but it’s not great. We are not swimming in it and the clients are not beating down the doors to get in.”
A lifelong sailing captain, Captain X made the shift to motoryachts later on in his career because of a wish to remain in the Mediterranean and, as a result, is very much aware of the differences between running a sailing yacht and a motoryacht. One of which, we discuss, is that the two can often attract very different types of owners with very different expectations. “There are a lot of motoryacht owners who see a yacht as an opportunity – or have been sold an opportunity – for a little business,” he says, explaining that this adds to the excess of yachts available on the charter market and the pressure to fill bookings.
“They will have been able to enjoy it,” he adds, “but maybe they have paid more than they thought they would have. Maybe they are told, ‘This boat is going to be worth ten times as much next year’ or thought they were going to be able to offset all the costs, own a yacht and enjoy the yacht for a few weeks a year and it won’t cost them anything because they would be chartering. But realistically they are not going to be able to make back the money.”
Not only does this harbour the potential to damage the charter market, as more boats mean competitive prices, but Captain X believes that it could affect ownership in the long run. “I think a lot of people were sold that and that’s why we have owners now who are moving away from commercial yachts,” he considers. “The combination of the added complications with the MLC [Maritime Labour Convention, 2006] and not enough charters in the last year means that a number of owners have given up because the obstacles are too much and they are not receiving what they thought they were going to have.”
While this is not ideal, Captain X points out that there may be a silver lining to the allure of private ownership. “I like the thought of the industry going back to the more traditional owner that has a yacht and crew and uses it solely for family and friends, and doesn’t try to make a business out of it,” he contemplates. “I think that could be a good thing for the industry; to go back towards its roots. There is a need for it. We should have commercial yachts, but the number of commercial yachts at the moment is causing problems.”
And herein lies another potential benefit for owners (who can afford it) being dissuaded from making their yacht commercial and turning to private ownership: less boats available on the charter market. “Then those guys who stay on the charter market will be able to fill up their boats and have charters all season,” says Captain X. Should this prediction in fact start to materialise, it could also solve the problem of last-minute bookings and charters being sold at discounted rates – a win-win for owners and the industry.
While brokers have been suggesting that strength is returning to the large yacht charter market, competition for business among the 25m to 40m yachts remains tough due to a disproportionate number of yachts available. Competition is healthy, some might say, but over-saturation at this end of the market is problematic if owners are not receiving a satisfactory return from their yachts and charter clients leave bookings until the last minute in the hope of using the struggle for business to their advantage so they can bag a bargain.
Smack bang in the middle of this category is 'Captain X' of one 33.5m motoryacht who, with the yacht being based in Antibes, has first-hand experience of the surplus of yachts at this end of the charter market. “Everyone I have spoken to says that the bookings are not really happening,” he explains. “You have repeat clients who are booking from previous years but it’s not great. We are not swimming in it and the clients are not beating down the doors to get in.”
A lifelong sailing captain, Captain X made the shift to motoryachts later on in his career because of a wish to remain in the Mediterranean and, as a result, is very much aware of the differences between running a sailing yacht and a motoryacht. One of which, we discuss, is that the two can often attract very different types of owners with very different expectations. “There are a lot of motoryacht owners who see a yacht as an opportunity – or have been sold an opportunity – for a little business,” he says, explaining that this adds to the excess of yachts available on the charter market and the pressure to fill bookings.
“They will have been able to enjoy it,” he adds, “but maybe they have paid more than they thought they would have. Maybe they are told, ‘This boat is going to be worth ten times as much next year’ or thought they were going to be able to offset all the costs, own a yacht and enjoy the yacht for a few weeks a year and it won’t cost them anything because they would be chartering. But realistically they are not going to be able to make back the money.”
“I like the thought of the industry going back to the more traditional
owner that has a yacht and crew and uses it solely for family and
friends, and doesn’t try to make a business out of it.”
Not only does this harbour the potential to damage the charter market, as more boats mean competitive prices, but Captain X believes that it could affect ownership in the long run. “I think a lot of people were sold that and that’s why we have owners now who are moving away from commercial yachts,” he considers. “The combination of the added complications with the MLC [Maritime Labour Convention, 2006] and not enough charters in the last year means that a number of owners have given up because the obstacles are too much and they are not receiving what they thought they were going to have.”
While this is not ideal, Captain X points out that there may be a silver lining to the allure of private ownership. “I like the thought of the industry going back to the more traditional owner that has a yacht and crew and uses it solely for family and friends, and doesn’t try to make a business out of it,” he contemplates. “I think that could be a good thing for the industry; to go back towards its roots. There is a need for it. We should have commercial yachts, but the number of commercial yachts at the moment is causing problems.”
And herein lies another potential benefit for owners (who can afford it) being dissuaded from making their yacht commercial and turning to private ownership: less boats available on the charter market. “Then those guys who stay on the charter market will be able to fill up their boats and have charters all season,” says Captain X. Should this prediction in fact start to materialise, it could also solve the problem of last-minute bookings and charters being sold at discounted rates – a win-win for owners and the industry.
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