The headlines all seem to be in agreement; the US economy is at an all-time high. The GDP is rising at the fastest pace since 2014, our unemployment rate is at an all-time low of 3.9 per cent and wages are on the increase. For many living and working here in the United States these are exceptional times.
While a significant number of the large and very large new-yacht builds are sold to American buyers, the fact remains that there are fewer new builds being sold. Unfortunately for the American yacht-building industry, most of these sales are going to the European shipyards in a far greater proportion than to US shipyards. This is a confusing period right now; for many companies doing business in the large-yacht industry it feels more like a recession than an economic boon. So why is the large-yacht market in the US so soft?
I live and work in Fort Lauderdale, the yachting capital of the world, where I am privileged to be able to experience our multi-faceted industry from the inside. There seems to be a consensus among the industry professionals here today that these are challenging times requiring thoughtful analysis of our present business models and a reinvention of our industry. A good friend who is closely associated with a well-known European shipyard recently gave me a tee shirt with the words ‘Yachting is Fun’. It should be! This statement certainly compels us to consider why an individual should spend the millions of dollars required to participate in this activity if they are not enjoying the experience. Yet I believe this may very well be the challenge we all face in improving the economics of our industry: finding ways to enhance our clients’ yachting experiences and encourage them to stay in the lifestyle.
I fear too many large-yacht owners have discovered that the cost of ownership is not worth the experience. We need to start asking ourselves why owners are selling their yacht only a couple years after the initial acquisition. Are they being sold the right product for their needs? Does the prospective owner understand the implications of a bright-blue bespoke hull finish during the build process and the fact there will be almost a half-year of yard time in the future to re-fair and paint the boat? Are we as an industry willing to sit with a prospective owner and explain the long-term implications (cost and down-time/loss of use of their boat) associated with the amazing upgrades and features we want to build into their boat? Are we as an industry contributing to the problem by saying ‘yes’ without being willing to explain the consequences of the feature, finish or upgrade?
This is a confusing period right now; for many companies doing business in the large-yacht industry it feels more like a recession than an economic boon. So why is the large-yacht market in the US so soft?
In a recent conversation with the owner of a successful yacht-management company, I was informed that 100 per cent of its fleet sized over 50 metres was actively for sale. These are clients who simply want to downsize or get out of yachting altogether. When was the last time you heard a yacht owner say they were excited to be building a larger boat? I remember when that was a common desire among yacht owners, yet today it seems to be the exception. For many owners, their yacht is too expensive and likely to be too complicated for the experience.
I enjoy innovation and new technologies. I have found in my own business over the years that the larger yacht builds have driven us to innovate and become more creative. This can be a very good thing, but are we building these new boats in a practical specification? How many days of the year can they be kept in service? How much down-time/yard time is anticipated in the annual operation of the vessel? Is the cost of long-term service and maintenance known to the prospective owner going into the build or will this be an unpleasant surprise a year or two after delivery?
The solution to the current economic challenges facing our industry is to build the product the yachtsman wants in a way that makes sense. Our clients have not become wealthy by making silly decisions with their money. We as an industry need to build a product with known and consistent quality to an established standard that speaks directly to the needs of the client. We need to find a way to enhance our clients’ experiences as they use their yacht, designing and building specifically to their expectations. We should build a better boat with long-term resale value, perhaps with less glitz, glam and bling and a bit more practicality.
If the American yachting industry can build this boat we stand a chance of attracting buyers back to the US shipyards.
This article appeared in The Americas Superyacht Report. Click here to subscribe.
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