While Burgess and Winch Design are both market leaders in their respective sectors, both are also unique in terms of their scale and structure. SuperyachtNews speaks with the principles of both enterprises to understand how each evolved throughout the pandemic and to consider their predictions for the superyacht market’s performance in the future.

“It was shock and horror for a lot of people initially, for ourselves and our clients,” starts Jonathan Beckett, CEO of Burgess. “We have all experienced financial crises and recessions before, but this is the first global pandemic that we have had to contend with. In essence, the market ground to a halt incredibly quickly and many clients that were committed to engaging with the industry, especially on the charter side, wanted to get out.”

The rapid collapse that the market experienced is by now well recorded. Firstly, the charter market all but bottomed out with many guests requesting to cancel charters or otherwise indefinitely postpone, the sales market quickly followed. The Mediterranean closed its doors to the international community and many feared the worst.

Jonathan Beckett, CEO of Burgess

“As a business, we drilled down into all of our costs, fixed costs, variable costs, staff costs and so on. We determined what we needed to do and the team did a fantastic job extremely quickly in reducing costs and getting cash flow under control,” continues Beckett. “We operate with something called ‘safe cash in bank’ that ensures financial reserves for challenging periods of business. Initially, we watched the reserves going down, but by June we had been able to stabilise our costs and benefit from the various government schemes.”

For the brokerage community, the risks of the pandemic and the ensuing financial crash are clear. Without geographical access to cruising grounds or confidence in a financial recovery, neither the brokerage nor charter markets can survive without active clientele. While many of the same challenges exist for the design community, in so far as it is incredibly difficult to maintain typical levels of project momentum without regular face-to-face contact with clients, this unprecedented period also provided Winch Design with the opportunity to diversify.

“At the beginning of the Pandemic we considered the worst-case scenario and determined that in that eventuality our business could be 50 per cent of what we were expecting in 2020, as such we would need to reduce staff numbers,” explains Andrew Winch, founder and creative director of Winch Design. “However, we opted against that negative option and chose to be positive. Of 110 staff, only four staff were furloughed, the rest were put on new project development and they were asked to explore new ideas, dreams and research how to conduct business within this unique bubble. Rather than close the window, we opened it. We looked at ecological materials and started a new challenge called ‘Life Worth Living’, which is a five-year target for our company to embrace internal ESG goals and improve not only the environment but also the lives of our employees and the local community through a series of initiatives. We also started a new business venture called ‘Studio Winch’ that focuses on the redecoration and refit markets, for which we have signed two projects already. As we did when we started working on private aircraft and real estate, we challenged ourselves to find new income streams, we don’t say no to challenges.”

Andrew Winch, founder and creative director of Winch Design

As fortune would have it, the initial crash of the global financial markets did not last as long as many had initially feared. Indeed, Becket concedes that at one point there was a concern as to whether or not Burgess would sell another superyacht in 2020, such was the uncertainty surrounding the length of global lockdowns and speed at which the financial markets would recover. And yet, recover they did.

“We had planned for the worst and hoped for the best and we were extremely pleased when the market started to pick up again. Our year kick-started again with the sale of a project that is nearly 100m, and then we closed around eight deals in eight weeks. After these deals and 330 charters, our safe cash in bank reserve was back to pre-COVID levels, which we were extremely pleased about. Throughout this process we have learned to be leaner, keener and fitter,” says Beckett. “A lot of buyers have been expecting prices to drop substantially and we still have buyers calling us expecting significant reductions, but prices have remained very firm and yachts are selling at normal market prices. However, I do think we will see some prices drop over winter, especially where owners have bought over-large yachts and relied on charter revenue to cover the running costs.”

The beginning of the market’s recovery has seemingly been characterised by two interrelated wants on the part of superyacht owners. On the one hand, the period of isolation and geographical restriction has led to some UHNWIs realigning their priorities and simply going after either assets or experiences that they have always wanted, leading some to engage with the superyacht market in a sales capacity when they may otherwise not have done. On the other hand, it has been highlighted in several wealth reports recently that the pandemic and general fears over its longevity and future health risks has led to UHNWIs increasingly seeking out luxury real estate in secluded areas. Both these phenomena, however, have created a general trend towards internalising the luxury experience, which bodes well for the superyacht market.

“Lockdown has led more people than ever to question how they want to live their lives in the event of another pandemic, or even more generally, and that is the same for superyacht owners. They are asking, how do I live my life? What do I need on board? What sort of gym do I need? What sort of office facilities do I need?” comments Winch. “In the conversation that I had with an owner this morning, he was looking at the superyacht as a semi-permanent home and considering the space required to have his PA on board, what her requirements would be, as well considering the space required for a staff room for around five other employees.”

80m M/Y Excellence, designed by Winch Design and for charter with Burgess

Another by-product of the pandemic and global travel restrictions has been a growing appreciation for domestic travel. For several years the yachting community has in some ways been complacent in its approach to cruising. While more recently there has reportedly been a boom in activity that has seen more and more owners getting off the milk run and exploring new locations, this phenomenon is often exaggerated. However, the pandemic has, in some cases, forced UHNWIs to explore their domestic cruising grounds.

“One vessel in particular springs to mind,” continues Winch. “Excellence, an 80m Abeking & Rasmussen that Burgess operates for charter, has been on the east coast of the United States with its owner on board and I think there has been an awakening for US clients that they can stay in the US and travel to such beautiful places, from Puerto Rico to Newfoundland, from San Diego to Alaska on to Hawaii and everything in between. The US has such an enormous and varied coast and the restrictions have forced some owners to experience it, some for the first time.”

“The same is true of Scotland,” adds Beckett. “We have had My Fair Lady chartering in Scotland this summer and she has done extremely well. Scotland is perfect for the UHNW community."

37m MY Fair Lady in Scotland, for charter with Burgess

It bodes extremely well for the superyacht industry that businesses have been able to adapt and that there are positives to be drawn out of this pandemic. However, there should be no doubt that this will be a damaging year for the entire superyacht community. Those businesses that have been able to weather the storm may come out of the pandemic leaner, keener and fitter, but there will be those businesses for which the pandemic proves to be the final nail in the coffin. That UHNWIs have been willing to engage with the market throughout such a turbulent period is incredibly positive, and perhaps finally more people are looking at superyachts as more than just extravagant toys, rather as private, transient and safe real estate. The future is uncertain, but it is not without hope.

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