It is generally agreed that the charter market in 2014 has been stronger than it has been for quite a few years. But there are always challenges and ways to improve and grow. The Superyacht Owner interviews Bob Saxon, president of the International Yacht Collection (IYC), who offers a candid look at the strengths and struggles of the charter market in the US in particular.
TSO: How has the charter market in the US fared in 2014?
BS: I think the best that can be said is that the charter market is holding its own. We are battling a lot of socioeconomic and political factors that can frustrate clients from wanting to charter but we are starting to see the results of pent up demand and a lot of great charter inventory available for their vacations.
TSO: The world wealth report shows a rise in US billionaires and millionaires again, has this translated into more charter business?
BS: Undoubtedly the US is a bedrock of wealth but until very recently we have not been experiencing a spike in activity. American lux spending indices are up across the board with the exception of boating due to issues associated with conspicuous consumption. The industry in general felt a surge in buying activity during the last quarter of 2013 which translated into buoyed spirits onward into 2014. We were on alert for a brisk Fort Lauderdale International Boat Show and put a lot of emphasis on charter because chartering represents the entry portal for the majority of customer who buy or build a yacht.
BS: The charter inventory has been expanding exponentially but I don’t believe the market has been maintaining pace. I believe that the number of charters is holding steady but that the volume of activity on a yacht by yacht basis has fallen off. The proven charter yachts with a history of performance continue to draw the most attention.
TSO: What has been the most popular charter destination?
BS: The Mediterranean remains the most popular charter destination and represents some 60 per cent of the charter vacation market. It remains that way because any and all of the delights that a charter customer might want to experience can be found in the Med. Based on that demand, one finds the vast legion of the world’s finest charter yachts positioned in those water.
TSO: What have the challenges been for charter brokers this year?
BS: The US is particularly challenging because of the aforementioned factors but in addition, the work ethic of Americans often place them in a position where they find it difficult to justify taking time off to just enjoy life. You’ll note that much of our charter advertising speaks to these prospects in terms of “You’ve been a success … you’ve worked hard for what you have achieved … reward yourself.”
TSO: How do IYC work with owners to ensure smooth running of charters, realistic expectations of revenue, an understanding of investment in marketing/upkeep etc?
BS: We provide our owners with a set of reliable expectations based on the inventory they present to us for charter consideration. Having managed some 3,000 charter yachts during my career, I can tell you that here is a formula for success in the charter business. If an owner can follow the time-proven recipe for success, they will reach their charter volume expectations. If the formula omits any key ingredients, instead of reaching their desired goals in terms of charter activity, they will fall into the mass of less than successful charter yachts.
TSO: What lessons can the industry learn from this year going into 2015?
BS: It’s very simple. Those brokers who cling to the old manners and methodologies of selling will not succeed. The very things we said to our clients and the objections we were faced with in closing a deal as recent as six short years ago have changed dramatically. In addition we are now selling to the descendants and heirs of the wealth that have represented our client base in the past. Those new and younger clients will not respond in the same way to our marketing and sales pitches as did their forefathers and we need to rethink our jargon and marketing themes. Who said: “If you want to see what the world will be like in the future, study the young”?
A full review of the charter market in 2014 will appear in The Annual Report, out January 2015.