Digital charter and a transparent market
Digital platforms offer more than a convenient user interface, they may create a more transparent market…
For the most part, discussions concerning the rise of digital charter platforms like Yotha and Ahoy Club have focussed on whether or not such platforms will improve the charter experience for guests, while simultaneously reducing commission rates.
While this is undoubtedly an important consideration, given that guests will only continue to charter vessels if their experiences are of a sufficiently high quality, I personally feel there are more important factors to be considered.
“Why are they lying to us and saying that they want to work with us, when stealing our business is what they really want?”, commented one broker to me.
Quite frankly, I have no interest in who is trying to steal whose clients.
If the traditional charter model works, and charterers feel that they are getting good value for money, in terms of the overall experience, regardless of the rate of commission, then the brokerage houses have absolutely nothing to worry about. However, if guests don’t feel like they are getting good value for the service provided by the traditional model, then they may well be tempted to try the new digital alternatives. It is as simple as that.
As an objective market commentator, so long as there is an active and healthy charter market, I am happy. Charterers are not all cut from the same cloth and, as a result, it seems to me it is extremely unlikely that a single model will be able to satisfy the demands of the entire customer base. As far as I am concerned, the more models the merrier.
That being said, during a weekend cruising the French Riviera and experiencing the Yotha digital charter offering on board 43.3m ISA-built Philmx, there were two factors, beyond the quality of the charter experience, that appealed to me; these, I believe, would appeal to superyacht owners and charter guests.
According to the Yotha team, current systems used by brokerage houses for holding charter fees in escrow are unauthorised as financial intermediaries by any recognised body and, as such, operate illegally.
“At present, charterers are sending money to the central agents who keep the money, for instance, in an escrow account and then later transfer the funds to the owner in accordance with the contractual steps,” explains Carlo Benveduti, COO at Yotha. “This kind of activity is something that has been going on forever in the yachting industry, but, legally speaking, it is not allowed.
“In accordance with the most recent financial regulations worldwide, to keep money on behalf of someone else you must be a certified financial intermediary. Brokerage houses are not entitled to keep money on behalf of others. In order to do so, you must carry out a full compliance check like you would expect from a bank. If you receive and keep money, you must check where the money comes from. Yotha has gone through the full process to be recognised as an official financial intermediary. Our escrow company in Switzerland has a certificate from the Swiss financial authorities that confirms that we are entitled to hold charter funds. We conduct all the necessary compliance checks and when the money gets to the owner we know that the funds are clean.”
In today’s climate, which has rightly seen financial authorities worldwide crack down on dirty money, the ability to use a certified financial intermediary for charter operations is surely attractive to owners. If for instance, an owner’s vessel was chartered unknowingly to an unscrupulous individual, who used the proceeds of illegal activity to pay for the charter, they may risk legal action, as well as the reputational damage that goes hand in hand with dealing with these individuals.
This brings me neatly on to the second element of Yotha’s business model that I found appealing. Using a ‘know your client’ (KYC) platform called Kroll, Yotha vets every potential charter client to ensure that the owner of the vessel, and indeed Yotha itself, does not risk association with individuals that could be damaging for them legally and reputationally, or that pose a risk to the vessel or others. The system allows Yotha to manage third party risks by complying with anti-money laundering, anti-bribery and corruption regulations.
“The system allows us to decide whether or not a particular individual is appropriate as a charter guest,” continues Benveduti. “Fortunately, the only alert that we have received so far was for a potential charter guest that had an outstanding administrative fine in Japan, certainly nothing that would warrant Yotha refusing a charter.”
For a number of years, the superyacht market, as well as those with the financial resources to either own of charter superyachts, have been concerned about the market’s reputation for being the choice pastime for unscrupulous individuals. In a global climate that is increasingly averse to ill-gotten riches and within a superyacht industry that has been (supposedly) clambering for transparency, the addition of systems to ensure financial validity and safety can only be a good thing. As digital charter platforms like Yotha and Ahoy Club become legitimate alternatives to the traditional charter model, we may find that the transparency afforded by digitisation is more alluring than simplifying and improving the charter process.
Photo credits: Yotha
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