The luxury industry, while not ‘essential’, contributes hugely to the global economy and appeals to consumers worldwide. Taking the charter market into consideration further to a global pandemic, ongoing travel restrictions and a weakening economy, SuperyachtNews asked key stakeholders how it is faring compared to the financial crises of 2001 and 2008.
Varying levels of ‘experiential luxury’, ranging from seven-star hotels, restaurants and cruises, up to superyacht chartering, had become increasingly popular prior to COVID-19, as Millennials and even Baby Boomers sought out ‘Instagrammable’ entertainment. However, “While we expect the positive momentum of experiential luxury to persist, it will slow down in the short term,” stated a report by McKinsey & Company entitled, ‘A perspective for the luxury-goods industry during—and after—coronavirus’.
Just how ‘short-term’ this slowing down of luxury experiences will be is still up for debate. But perhaps the aftermath of previous historical crises can offer some insight.
“September 11th happened in America, whereas, COVID-19 is a worldwide event. After September 11th, planes started to fly as normal [with increased safety measures], however, the main problem now is that we don’t know when planes will fly properly again,” began Thierry Voisin, President at the European Committee for Professional Yachting (ECPY), drawing a comparison with one of the most tragic events of the 21st century.
“Terminal 1 in Nice airport will be closed until March 2021, so we don’t know when our clients who are not European will be able to travel. A lot of the clients are not European, coming in from America and Dubai, for example, and for the time being it is not looking likely that borders will be open,” continued Voisin. The question, therefore, seems to be, ‘Can you guarantee that the client will be able to come?’, and the answer for now is, we don’t know!
“In 2001, there was a minor impact on the yachting industry as everybody waited to see what happened around the world, but life started to go back to normal very quickly. Now, however, we know that life will not be like before, due to COVID-19, the restriction of travelling, and the economy stopping for two to three months..." - Thierry Voisin, President at ECPY
“Everybody was, of course, shocked after September 11th, but this was after the season,” said Voisin, commenting on the traditional summer season for the industry which is only just beginning in earnest. “In 2001, there was a minor impact on the yachting industry as everybody waited to see what happened around the world, but life started to go back to normal very quickly. Now, however, we know that life will not be like before, due to COVID-19, the restriction of travelling, and the economy stopping for two to three months,” explained Voisin.
On this basis, Voisin believes that the consequences of COVID-19 from an economic perspective could be disastrous, as we don’t know if people will be keen to get travelling and back on boats again due to a different kind of safety concern than that of 2001.
“What I can say is that there are a lot of procedures that have been put in place to make the boat safer,” he emphasised. “Crew will be incredibly careful, and there are many anti-COVID procedures. But this is not enough; some people will believe it and some people will not."
Understandably, the pandemic has affected this season, but there is growing confidence for the next few months. “We may hope to have a season in July/August, and I did put some boats in charter last week with safety measures on board, but will the clients that are not European be able to fly? We don’t know if people will want to fly if they know that there is going to be a 14-day quarantine when they come back. We are dependent on the general attitude of each country towards the protection of its health,” concluded Voisin.
While the economic impact of the tragic events in 2001 was negligible compared to the human and geopolitical cost, the impact from COVID-19 on the industry could, last much longer, and be more akin to 2008.
Reassuringly, Richard Lambert, Head of Sales at Burgess, says that there is already a growing appetite for chartering yachts, and this is increasing hand in hand with easing travel restrictions.
“It is a very different set of circumstances that we encounter today in comparison to the Global Financial Crisis of 2008. Travel restrictions have had a significant impact on the charter market, however, we do see that there is the appetite for charter and clients are postponing to a period when travel is expected to open up. As restrictions start to ease, we are seeing the enquiry level increase,” said Lambert.
"In 2008, insufficiently capitalised banks were part of the problem and we witnessed a far higher level of yachts that were financed in comparison to the current day. Whilst the current supply in the market may be temporarily substantially higher, we expect that demand will also significantly increase once restrictions begin to lift..." - Richard Lambert, Head of Sales, Burgess
“An entirely different set of circumstances have brought us to this point today, [compared to 2008]. In 2008, insufficiently capitalised banks were part of the problem and we witnessed a far higher level of yachts that were financed in comparison to the current day. Whilst the current supply in the market may be temporarily substantially higher, we expect that demand will also significantly increase once restrictions begin to lift – we are already seeing a number of charters postponed to 2021 which will, in turn, decrease the supply available for next year,” explained Lambert.
When asked if Burgess anticipates the charter industry will become more desirable further to the COVID-19 crisis, as it is a safe and secure way for a family to holiday away from crowds, Lambert said it would likely be the case. “We do feel that there will be an increase in the desirability of a safe and private yacht charter; being able to spend time with your family in a safe environment will have a significant appeal.
“I think it is important to first note that chartering a superyacht is one of the safest types of holidays available. Even before the pandemic, our fleet practised very high standards of hygiene, ensuring a safe and clean environment for guests. We have, however, implemented a specific on-board plan for crew [and guests] across our fleet, designed to limit any risk of COVID-19 on board, and there will certainly be elements of this which will become the ‘new normal’ even after COVID-19 is less of a threat. So, hygiene standards and on-board plans are likely to be more thorough as a result of this, making yacht charter even safer than it was previously,” concluded Lambert.
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