Baton Rouge is the perfect example of a yacht that's remained with the same full-service brokerage and charter house since her inception. We speak to the team at Burgess to learn how the process of full-service brokerage, management and charter can benefit owners.
Yachting as a pastime is defined by notions of easy relaxation and escape: It should come as no surprise then that the service industry that promotes the yachting lifestyle has cultivated a similar credo. The big, full-service houses that broker, charter and manage yachts deliver to their busy clients a portfolio of services that are tailored and sold as a package.
Yachting at the largest end of the spectrum is a broad, full-service enterprise which comprises multi-million euro design and manufacturing contracts, followed quickly by shore-side management and support contracts, crew services, refit plans, charter schedules and marketing campaigns. The biggest firms in the market have sought to offer services, guidance and support, “in-house.”
Burgess, one of the largest houses in the superyacht market, offers the full gamut of services, including management, charter, crewing and financial services. Rupert Nelson, the firm’s sales director in Monaco and one of it’s lead brokers, knows the market and sees the offer of consolidated services as simply good business.
“Owners see the opportunity to get a good deal when they work with a full-service provider,” Nelson says. “They may reason that the brokerage house stands to earn fees from operational and charter management, as well as a sales commission when they decide to sell. On the basis that there is an incentive for the house to retain these fees, clients might negotiate more inclusive and attractive terms.”
Consolidated contracts have their fans and their detractors. Arguments against using one company to handle all aspects of a yacht’s life and operations rest on concerns that management contracts, for instance, could be offered for little or no fee to sweeten a charter central agency. The refrain from boutique superyacht management specialists will always be that owners get what they pay for, and that cut-rate deals undervalue the work of running something as complex as a large yacht.
Baton Rouge, the gorgeous Icon-built 62m motor yacht with Tim Heywood lines and a Redman Whiteley Dixon interior is a case in point. Started with Burgess, she’s been with the same house from her initial signing though project management, operational management, charter and is now for sale, again through Burgess.
“A lot of busy owners just want to find someone who they can trust and who can offer a turn-key solution to running their boat,” Captain of Baton Rouge, Joss de Rohan Willner says.
“The relationship between the owner of Baton Rouge and Burgess pre-dates the build, so it was always going to encompass everything that we are able to provide, including the build supervision, the operational management and then the charter management (central agency),” Nelson says. “The more in-depth discussions regarding management usually commence about one year before delivery, with a reduced contract going active at approximately 6 months from delivery,” he says.
The idea is that combined services of charter and management simplifies communications. “Each department within Burgess can easily follow what the other is doing, which relieves the captain from having to liaise with multiple parties,” Captain Willner says.
Selling the company’s management services is a key part of the broker’s remit when engaging both new and returning clients. “Burgess sells itself as a fully comprehensive superyacht services group first and foremost with all divisions working closely and cohesively together,” Nelson says. “Promoting our full range of services is paramount to extending the relationship with the client further and to demonstrating we are a full service provider.”
“Some might say that there are risks in placing all eggs in one basket, but I disagree,” Nelson says. “The services on offer (management, charter, etc.) are standard industry skills if experienced professionals are in charge. When pooled together under one roof, the benefits easily outweigh any possible disadvantages: one point of contact, shared information, transparency internally, no hidden agenda, managed overheads, and so forth.”
It’s clear that the practice makes business sense, but what may be less clear at the outset is where exactly the value-added benefits lie for the owner. Nelson highlights the simplicity of communication between departments and services under one roof. “There is a single point of contact or one office aspect as well as the possible commercial advantages, not only on fees and costs, but on whatever relationships the house might have with other independent suppliers and providers or agents (bunkering, ship agencies, insurance, crew recruitment, etc.)” Nelson says.
Once the owner agrees to the full-service contract, the management team is engaged and a manager assigned—in the case of Baton Rouge, that was Kevin Renshaw at Burgess’ offices in Monaco, in the same building as Nelson. Renshaw, who manages a fleet of yachts for Burgess, was engaged in a light involvement about a year before the yacht was launched. “On the Baton Rouge build, we started to work with the owner’s build team to begin planning the implementation of the ISM/ISPS systems,” Renshaw says. “Later, I liaised between the yacht and the classification and flag authorities. And it’s key that we know the captain and crew at a personal level as well as the technical layout of the yacht, so some pre-launch visits are extremely beneficial in this regard.”
Renshaw highlights the ease with which the handover from new build to operational management takes place. “There’s not really a formal process: The broker and manager discuss the project and the personalities involved in great detail to ensure continuity of the customized service Burgess makes a point of providing,” he says.
The yacht’s manager and its broker work together to care for the yacht in all aspects over the course of the management of the vessel. “The broker remains closely involved with the yacht throughout the ongoing operations,” Renshaw says. “As a manager it is extremely useful to have the broker’s feedback and guidance, as typically they know and understand the personality and motivation of the client and his representatives very well. Brokers tend to have a very different perspective of the yachting industry in general and, as a manager, this is very useful to consider when decision making.”
“The fundamental purpose of management is to ensure safe and legal operation of the yacht,” Renshaw says. “However, when considering the business model of yacht management from a commercial point-of-view our motivation and strategy is simply to keep the client happy so that in the long-term he is more likely to buy, sell or charter a yacht with our brokers again. The only sure way to keep clients happy is by offering a consistently high quality, low cost service while negotiating attractive discounts for them on a variety of supplies. Therefore if a client chooses to keep his yacht management and brokerage with the same house he is effectively guaranteed better value management.”
“A company which only offers management without brokerage does not have the same motivation and has to create other methods to generate revenue from its clients, which general means higher management fees and less value for the client,” Renshaw says.
“I can see that two departments within the same house might occasionally have some kind of conflict of interest, but over the past few years everything has gone smoothly for us with Burgess,” Captain Willner says.
This article appears in Issue eight of The Superyacht Owner magazine.