Yachting Market Outlook

 

Published by Superyacht Times (extracted from “THE STATE OF YACHTING 2019”)

 

Before looking forward, we have to take stock of where the superyacht industry currently stands. It has taken a long time to reorganise superyacht construction following the difficulties experienced ten years ago and, even now, some unfinished projects from that period can be found around the world. In addition, during this period many yards disappeared from the industry or were taken over, resulting in fewer yards in operation and a concentration of business around a number of large yards. Between 2004 and 2008, 226 yards delivered 1,049 new builds. Ten years later, between 2014 and 2018, this number had dropped to 170 yards delivering 752 new builds. The decline in the number of active yards continues today in the construction book of 483 yachts, which is now divided between 147 yards. Of these 147 yards, the top 25 account for 58% of the construction book in the number of yachts. So, the industry appears to have become more concentrated around a smaller number of larger builders and has recently enjoyed a number of years with good sales, particularly in 2017 and 2018. However, does this mean that the industry can look to the future with confidence?

The construction book is at its highest level since 2011, when many “boom time” projects were still under construction. We see shipyards accustomed to starting construction of yachts on speculation selling quite a few of their projects to customers before construction is started. Could this be a sign of a tightening market? Yacht brokers certainly seem to echo that sentiment, as they scour the market for the few good new builds and used yachts still available, or try to persuade owners of good yachts to sell their boats. A number of builders have also taken note of the changing market and are moving up in size, producing their first models over 40 metres. Several recent first-time buyers are known to have bought large (50-metre plus) to very large (80-metre plus) yachts right away, also supporting the trend towards larger yachts.
The move by several builders towards larger-sized yachts could be explained by the fact that many well-reputed large yacht builders now have full order books. Customers who want to move up in size but do not want to wait for many years for a fully bespoke yacht will gradually get more newbuilds to choose from. It is somewhat telling that a builder like Amels, which offers a number of yachts over 50 metres built on speculation, has been selling very well lately. In addition, the yard has recently updated and stretched almost all of its yacht models by several metres.

The move towards more explorer-like yachts seems set to continue, as especially at the smaller end of the market we see many builders building yachts with explorer-like characteristics. We use the word “explorer-like” as many of these yachts do not tick all of the boxes traditionally associated with explorer yachts. In addition, the discussion about what constitutes a true explorer yacht is still ongoing and will probably not die down anytime soon. Yacht owners are becoming more and more curious about cruising in new areas off the beaten track and need a different type of yacht in order to do that.

At 194 yachts, sales of new superyachts in 2018 were at their highest level since the extreme peak of 241 yachts in 2008. However, several challenges lie on the horizon in terms of regulations, sustainability and economic circumstances.

SAILING YACHTS

Looking at sailing yachts, the market is becoming more diverse in terms of new builds. Builders formerly dependent on the 30 to 60-metre segment have all had to take a close look at their strategy going forward, as sales in that segment have been low for several years now (around 10% of new yacht sales, whereas sailing yachts are currently 16% of the operating fleet). Some yards are diversifying their product mix by getting into motor yachts, while others are gearing up for bigger projects over 60 metres. In that segment, however, the traditional sailing yacht builders will also meet large motor yacht builders getting into sailing yachts and coming in with a fresh approach to the market. Nobiskrug and Oceanco are best known for this, but there are also other well-reputed large yacht builders who are known to have been working on designs for very large sailing yachts.

ECONOMY

Economic factors still remain the major concern. The spectre of trade wars is looming above the US and Chinese economies, while many European economies are expected to experience a slowdown in economic growth in 2019. The economic growth of superyacht powerhouse Italy almost came to a standstill in the early months of 2019 and this could potentially negatively impact the financial stability of superyacht builders in that country, as many mid-sized Italian banks are already in dire straits and will have to cut back lending. This comes at a point in time where quite a few Italian shipyards are still recovering after years of hardship.

BREXIT

We cannot write this outlook without mentioning the word Brexit. The United Kingdom, a major hub for the superyacht industry, is facing uncertain times due to Brexit. The country hosts a number of successful yacht builders like Princess and Sunseeker, renowned refit yards and a large quantity of equipment, brokerage, insurance and design companies among others, but most importantly, a high number of very wealthy people from all over the globe call London their home. What will all these companies and people do if the UK does indeed plunge into a no-deal Brexit? The uncertainty around Brexit has already made many major companies across multiple industries set up shop elsewhere in the remaining EU countries.

ASIA

These days, Asian countries are a key source for the growth in the worldwide number of ultra high net worth individuals, but superyacht ownership is not yet as widespread among them as it is among the wealthiest in the USA or European countries. At the same time, Asian yacht buyers are becoming a more prominent group every year. They now account for over 7% of the known owners of 40-metre plus yachts in the construction book and, as also indicated in our analysis of market trends earlier on, we believe the share of Asian ownership in the world superyacht fleet will continue to grow. 

RUSSIA & NORTH AMERICA

Russian customers have been key to the huge growth of the superyacht industry since 2000, and they are still valued customers, particularly in the higher end of the market. 11% of the sold superyachts in build over 40 metres are destined for Russian owners. However, North American customers have been the driving force in the market in recent years and their role remains key, with a share of 17% of sold superyachts in build. A lot will hinge on the continued appetite of North Americans for superyachts going forward.

FORECAST

Superyacht builders also notice that their customers are getting younger and some of these young customers are buying very large superyachts. Meanwhile, the global superyacht fleet has been growing by 150 to 180 yachts per year in recent years. At 483 yachts, the current construction book guarantees close to another three years of deliveries and more speculation projects, in particular, will be started up in the intervening time. The market for refitting and maintaining yachts is also buoyant, with yards in that industry gearing up to receive the rising number of very large superyachts.

We predict around 160 to 180 deliveries per year during 2019 and 2020. For the picture after 2020, a lot will depend on the level of new yacht sales during 2019. If the market can sustain the level of demand experienced over the last two years for another year, then deliveries in 2021 and 2022 can also be expected to remain at a high level. However, the growing economic uncertainty after a number of very good years presents a significant downside risk. An economic downturn seems likely, as we are approaching the end of an economic cycle. Superyacht builders are currently very busy and working hard to satisfy their hungry customers. However, going forward they will need to be even more flexible and show that they can go along with new demands from their changing clientele in order to remain successful.

Photo: © Superyacht Times - www.superyachttimes.com

Trends in superyachting

With the 29th Monaco Yacht Show this September, we highlight the latest trends in the superyacht market in collaboration with The Superyacht Life Foundation.

The foundation works to share the positive aspects of the superyacht community to a wider audience, championing the positive people, places and projects surrounding the superyachting good life.

From 25 to 28 September at the Monaco Yacht Show, you’ll meet the trend setters of a market represented by the 125 jaw-dropping superyachts on display.


SUPERYACHTS ARE GETTING GREENER

THE TREND FOR SUSTAINABILITY

Sustainability has become a hot topic in the yachting world, with many superyachts developing innovative solutions to help reduce their environmental footprint. Savannah, an 84m Feadship, was billed as the first hybrid superyacht with a single engine, three generators and a combined total of approximately one megawatt-worth of batteries. Black Pearl, the 107m sailing yacht from Oceanco, meanwhile, uses special shaft generators which create free electricity by allowing the propellers to turn when the yacht is under sail. Fuel cells are also gaining momentum, with Italian shipyard VSY developing a concept powered by hydrogen fuel technology, together with renowned designer Espen Oeino, Siemens and Lloyds Register.

The industry-at-large is following suit. Many superyacht builders provide financial support to Blue Marine Foundation, an NGO on a mission to put 30% of the world’s oceans under protection by 2030. Their famous London to Monaco cycle ride, a 1100km trans-European marathon effort, has raised over one million pounds since 2016, with industry professionals coming together to raise money for ocean conservation.

There are far more initiatives besides. Many superyacht crew have united under the Clear Ocean Pact, a shared commitment to reducing single-use plastics on board yachts. Brokerage firms, meanwhile, are partnering with conservationists in an effort to help combat ocean pollution. At marinas and yacht clubs, floating rubbish bins are being installed to help clear plastic debris.

Leaders from the industry have also banded together to establish Water Revolution Foundation, a non-profit on a mission to drive sustainability even further within the industry through collaboration and innovation. First up on this newly-founded non-profit’s agenda is to develop a database of sustainable solutions for the industry, to encourage a culture of ‘open-source sustainability’ where collaboration is prioritised over competition. They’ve also promised a revolutionary software tool that can measure the environmental impact of various yacht design concepts.

Superyachts have a very different operational profile to other marine vessels, averaging only around 300 hours per year. They rarely sail at maximum speed, cruising at only 20% of their capacity on average. Statistics show that less than 0.3% of the world’s marine vessel CO2 emissions come from the thousands of superyachts afloat today. Nevertheless, the superyacht industry continues to minimise its impact on the environment and the world’s oceans – after all, it is these very oceans that inspire people to go sailing in the first place.


SUPERYACHTS ARE GIVING BACK

THE TREND FOR PHILANTHROPY

Superyacht owners are increasingly concerned about the environmental health of the oceans. Many regularly collect data for environmental organisations. To help facilitate this, the International Seakeepers Society connects owners with scientists, allowing them to use yachts as platforms for marine research. Archimedes is one of the many participating yachts, recently being used for a shark research expedition near Antigua.
Then there’s REV. Nearing completion, the 183m yacht will be the largest in the world, with ambitions to match its colossal size. The Norwegian owner, Kjell Inge Røkke, will use REV to carry out scientific research all over the world, uncovering new truths about our oceans and helping to preserve them in the process. In research mode, REV will be able to carry 60 scientists and 30 crew members, allowing for ground-breaking research on climate change, overfishing and plastic pollution.
Alongside ocean research, owners and crew often participate in disaster relief, providing humanitarian aid to those in need. As incongruous as it might seem to see a yacht anchored up in such an environment, the size, capacity, speed and range of these vessels can make them ideal first responders. YachtAid Global, a non-profit organisation set up in 2006, works with yachts to help deliver and coordinate disaster relief and development aid to coastal communities worldwide.
The Bertarelli Foundation, meanwhile, provides significant funding for marine reserves. The foundation was set up by Ernesto and Kirsty Bertarelli, who own Vava II. To date, the foundation has supported the creation of more than 2,000,000 km2 of marine protected areas.

SUPERYACHTS ARE INNOVATING

THE TREND FOR PUSHING THE ENVELOPE

Visit a superyacht designer or builder and you’ll see evidence of the forward-thinking innovations that set the industry apart. From exhausts to engines, the design, manufacturing and engineering required on modern superyachts is uniquely complex. Many innovations come courtesy of the vision of a single owner who is prepared to pay the price of investing in the future well before the wider market.

Then there is the incredible attention to detail. Intricate and unique joinery and carpentry, metalwork, marquetry, paintwork and countless other disciplines give superyachts an unrivalled degree of sophistication. Craftsmanship is kept alive in these fields that might otherwise be relegated to history. Thousands of highly skilled men and women are employed at superyacht yards around the world, many of them from families that have worked there for generations. The same applies to the many specialised marine equipment supply companies that depend on the superyacht industry for their existence. One estimate by the International Superyacht Society put the number of people employed by a 65-metre new build at 350 – and that’s just direct employment.

A SYBAss study conducted by the renowned Delft University of Technology in 2010 developed a distinctive Compensated Gross Tonnage (CGT) factor for superyachts. This economic indicator measures the amount of work that goes into the construction of a vessel. The findings showed that a superyacht can deliver 30-40 times the monetary value of a passenger ship or freighter.


SUPERYACHTS ARE GOING FURTHER

THE TREND FOR EXPLORER YACHTS

The appeal of visiting the far corners of the earth from the comfort of a superyacht has proven alluring for many. Recent years have seen a dramatic increase in the number of explorer superyachts. This particular breed of superyacht is designed to travel long distances in extreme conditions. Think reinforced hulls (sometimes ice-class), more crew quarters, ecological waste units, and the ability to travel far at sustained speeds.
Antarctica, Raja Ampat, Papua New Guinea and the Arctic are some of the new superyacht hotspots providing adventure and unique experiences, from visiting penguin colonies in Antarctica to diving in unchartered territory. Many of these yachts carry submarines and helicopters to ensure the adventures continue under the sea and off the boat.

Most explorer yachts are kitted out with all the high-level amenities normally associated with a superyacht – so that after a day’s heli-skiing, iceberg hiking or diving – guests can return to the spa for a massage, or warm up with a hot chocolate and a movie. For superyacht owners with a go-anywhere mindset, an explorer yacht is the best way to experience the most undiscovered parts of the world in comfort.

 

Photo: © The Superyacht Times

Ownership through the eyes of Serkan Borancili

Article published in the MYS Summer Magazine, #2018 | By Gemma Fottles 

 

Purchasing his first superyacht, the 30.9m Azimut Goga Migoga, in 2010 upon the launch of his digital marketplace business which was later sold to eBay, Turkish entrepreneur Serkan Borancili has spent the past eight years living out his yachting dreams. Selling Goga Migoga after a couple of years of learning exactly what he wants out of his next superyacht, it was in 2013 that Borancili set eyes on Alumercia. The 37.7m Heesen-built yacht was ideal, he says, but with a good refit project, she would be perfect - and substantially more valuable. 100 days later, Borancili and his family were cruising the waters of the Mediterranean in perfect style. Selling Alumercia in January this year following her exhibition of the 2016 Monaco Yacht Show, now, he’s looking for something bigger and better than ever before... and has some words of advice for those in the same game.

serkan borancili portrait 

Was 30m the most suitable size for your first superyacht?

I’ve always been connected with yachting - my father actually built six Turkish gulets in the early 90s. I also worked on our yachts in the summer time while we were chartering them. 30 metres is usually not a starting point for yachting as people tend to go smaller first, but for me, it was the right decision.

After cruising with Goga Migoga for two years, I realised that a planning yacht would not allow me to do all the things I wanted to do with the yacht. Yacht ownership requires a steep learning curve. But learning from Goga Migoga, I made a deep dive into the world of displacement yachts and started exploring!

What are the benefits of owning a yacht in terms of spending quality time with family?

You see so many places together - and you don’t pack! You eat together, you talk together, you visit beautiful places together. It’s priceless. I’ve woken up in the middle of the night on the yacht before, and found my family still on the bridge, excited for the next day and making plans. It’s fantastic to be so connected.

What are some of the most special cruising moments you have experienced on board?

I have many great memories. Cruising into Venice was special. Everybody was on the sun deck and we were all excited and sharing photos - what a day! Crossing the Corinth canal also was impressive. When I told my mom that it was a man-made canal from the 1800s, she actually started crying she was so amazed. Oh and of course, I have some memories from partying and cruising on the Messina Passage... It was an incredible night!

What advice do you have for first time buyers?

I always look for pedigree, layout and capabilities! But it’s all about your ‘program’. What do you want to do? How much time can you spend on board in a year, and where do you want to cruise? Do you want to charter? Stay in the Med, head to the fjords? These answers determine what you really want in your next yacht, and should be at the forefront of anybody’s decision making process.

What makes you go for a brokerage yacht over a new build project?

New builds are always exciting and it’s definitely in my future plans. Building from scratch takes a minimum of 3 years and if you’re not experienced in yachting… well, I wouldn’t dare do it without experience. Brokerage is much better in terms of getting experience in the yachting world, and of course for your budget.

There is a lot of talk regarding the younger generation steering away from yachting. What do you think?

I have lot to say on this. Disruption is in every industry, and that is what drives innovation and change. We see disruptors in the car industry, communication sectors, accommodation, transportation - everywhere. So why not yachting? We want more sophisticated yachts than ever, and to do that, we need younger owners with fresh ideas. I mean, you wouldn’t expect them to build yachts similar to those being built 20 years ago: we need more eco-friendly yachts, more unique designs, and vessels with improved capabilities. The younger generation can deliver that and should be encouraged to do so.

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The ownership chalice

Article published in the MYS Summer Magazine, #2017 | By Juliet Benning

 

Year after year, new yacht orders are not proportional to the financial growth of the world’s most wealthy individuals. By studying the path to ownership by the industry’s most loyal clients, we can better understand how to attract new superyacht buyers.

The world has no shortage of wealthy individuals, but when it comes to superyacht sales the maths do not add up. Relatively few UHNWIs are taking a bite of superyacht ownership, instead preferring to spread their assets across property, private jets, cars and art. In 2016, Wealth-X found that there were 2,397 billionaires worldwide with a total wealth of $7,400 billion. Yet the SuperYacht iQ found that new orders of superyachts over 30m amounted to 144 in 2016, 184 in 2015 and 159 in 2014. These numbers don’t seem proportional. Many believe that this low level of interest or commitment stems from a lack of understanding how to navigate the yachting industry.

In order to encourage new yacht ownership, it’s important to study the industry’s existing enthusiastic and passionate owners. Furthermore, the industry can only grow as fast as its berthing and shipyard capacity. What remains clear, however, is that the industry will continue to grow with a slow certainty – owners passing the passion onto their offspring and friends. These present owners are the industry’s greatest asset; ambassadors for a lifestyle so precious and unique that no other experience will come close. So how did these owners come to yachting and in what ways can we attract more?

One sector which continues to generate new owners is the art world. A resurgence of interest in art, particularly in Miami and San Francisco from technology billionaires, has meant that if you do your research, these assets are almost guaranteed to increase in value. Take, for example, Jean-Michel Basquiat’s Untitled (1982), sold last year by Christies for US$57.3 million (€52.1million) or Pablo Picasso’s Femme Assise (1909) sold for US$63.4 million by Sotheby’s. Stefano De Vivo, chief commercial officer at CRN explains that the art circuit is very much on the shipyard’s radar, “Many of our owners are art lovers and collectors usually attending Art Basel's three shows in Basel, Hong Kong and Miami Beach – for modern and contemporary art, as well as the Biennale di Venezia, which covers cinema, art, theatre and architecture.” Adam Papadakis, sales broker at Camper & Nicholsons corroborates saying, “Art Basel Miami is an event that triggers a significant rise in yacht buying enquiries.” The cultured yacht owner doesn’t stop at art, and events such as Monaco Grand Prix, the Cannes Film Festival and the America’s Cup have all triggered an interest in superyachts and ownership enquiries.

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Rewinding several decades before these glittering contemporary events, childhood is a place where the germinating seeds of yacht ownership are often planted. What also seems important is where an individual grew up and those living near the coast are more likely to catch the yachting bug. Joaquín Folch Sr, owner of Buka, a 36.8 metre Heesen motoryacht, grew up in a nautical environment on the Costa Brava, “My father was incredibly sporty, with a love of cars, planes, motorcycles and yachts. We completed our nautical degree at the same time and when he passed away in 1988 I inherited the 19 metre yacht he had bought with two more friends.” Similarly, Leon de Mercier, the owner of a 33 metre Gulf Craft yacht says, “I come from an Australian boating culture – that meant fishing and watersports with my grandfather and dad. It was only when I was a university student, aged 21, visiting the Southampton Boat Show, that it dawned on me the scale of larger yachts.” In the UAE, Bimal Bhatia, the owner of a smaller Gulf Craft yacht, watched Dubai Marina grow out of nothing and, anticipating the potential of yacht ownership, took one of the first berths available, later filling it with a small speed boat. Erwin Bamps, CEO of Gulf Craft, attributes waterside developments in the Middle East to an interest in yacht ownership, “The creation of multi-functional waterfront infrastructures and leisure marine destinations leads to faster and more sustainable growth of yachting communities.”

Many owners expect to hand down their passion for yachting, having shared quality “family time” onboard. “My sons will have Buka in August when she returns to the Balearics,” Folch says. This means we can expect a steady influx of new owners who have inherited the yachting passion. Referrals from friends also brings a high number of new owners: “Our current customers act as brand ambassadors, with word of mouth referrals being our single biggest source of new sales leads,” says Bamps. Papadakis prefers this way of meeting new clients, “The majority of my favourite and long-term clients come via recommendation of existing clients. A recommendation by an existing owner opens up a door that could have been closed for years and it brings so much more satisfaction because it is an indication of the owner’s happiness with his yacht.” Friends and business associates were responsible for Charles P. 'Buddy' Darby’s first superyacht experience, “It was a business-related trip way back in 1984 onboard Monkey Business, a 90 foot Broward motoryacht. My first social yachting experience was aboard Themus, a 156 foot Trinity motoryacht with friends for The Heritage golf tournament in Hilton Head, South Carolina,” Darby now owns the 47 metre Perini Navi sailing yacht, Andromeda la Dea.

Undoubtedly your reputation as a yacht builder is only as strong as your last client’s review. But the pathway to yacht ownership is very commonly made up of a series of yachts in ascending size. Leon Le Mercier’s journey began with an Azimut 105 with a much narrower beam than his current yacht, Joaquín Folch Sr’s first vessel was a15 metre speedboat and Buddy says that his family have always owned yachts. Once the aligned with a certain ship builder, this loyal clientele often become repeat customers. Heesen’s Sara Gioanola explains how important this is for the shipyard, “Many of our clients have built two or even three boats with us. For example, the owner of 37m Ilona later built 50m Sky. Similarly, the owner of Sibelle went from a 44m to a fully custom 50m yacht.” Yacht requirements grow in direct proportion to both family and fortune sizes. For those looking for a new potential client, Joaquín Folch Sr might be tempted to upgrade his Heesen, “As long as my physical and economic health holds out, I might consider upgrading Buka. I wouldn’t want to go any larger than 42 metres as this is already on the limit of my navigational license, but it would be good to get something more modern.”

Chartering is another obvious entry into yacht ownership that also gives the industry considerable media exposure through high profile or celebrity charter guests. In chartering a cross section of different yachts, a new owner will be better equipped to identify a yacht which suits their individual needs. Papadakis has observed, “There has been a great influx of ‘nouveau riche’ clientele into yacht chartering during the last four to five years. They’re very wealthy, educated and world-travelled people who had previously had very little or no exposure to yachting. A large percentage of which will eventually graduate into yacht ownership. I can see some exciting times ahead.” Geoff Moore of West Nautical has found that 80% of their yacht owners have chartered previously. Of course, most ownership “rights of passage” are facilitated by a trusted broker. Buddy Darby says of his, “Hank Halsted from Northrop & Johnson has been my go-to broker for years. He’s sold me almost every one of my boats.” Sara Gioanola reveals how Heesen’s broker relations are fostered through dedicated broker and client events which have been run for the past seven years, “70% of our clients come through brokers,” she says. Captains will also have a tremendous influence over which shipyard an owner may choose.

The Monaco Yacht Show is frequently used by new owners as a sounding board to compare a yacht they may have already selected for purchase. Yacht owners are enthusiastic and annual visitors to the MYS. Joaquín Folch Sr says, “I’m heavily involved in the Monaco Yacht Show and visit every year.” This year, with more of the show’s efforts going in finding and communicating with UHNWIs and their advisors, it’s certain there will be brand new clients just waiting to be initiated into superyachting. You can bet many of them, once committed, will be asking themselves why they didn’t do it sooner.

The next wave

Article published in the MYS Summer Magazine, #2018 | By Justin Ratcliff

 

How do we attract a new wave of superyacht owners? All eyes are on emerging UHNWIs, and the yachting industry is busy engaging with the priorities of millennials in the hope they will take to the water like the previous generation did.

 

The European owner of 49-metre M/Y Aurora, which premiered at the 2017 Monaco Yacht Show, is Rossinavi’s youngest client to date. In his early 30s, he wanted a yacht that represented his millennial mindset: fast performance, dynamic design and a flexible layout. Prompted by the growing number of young UHNWIs, last year the Italian shipyard partnered with the International University of Monaco (IUM) to research the likes and dislikes of the emerging millennial market.

“We’ve been looking at millennials to understand how they spend their leisure time and how that transfers to the yachting lifestyle,” says Federico Rossi, COO of the family-run shipyard. “For a full-custom builder like us, it’s a fascinating market that goes beyond the bare statistics to emerge from our research.”

Technology, innovation and the environment were just some of the priorities to emerge from the study, which Rossinavi factored into a series of superyacht concepts specifically aimed at younger owners. One of these concepts, the Mark 48, was created by David J. Weiss, a young American designer who took inspiration from the design language of science fiction and—more specifically—the futuristic flying suit worn by Ironman in the Marvel movies.

“It stands to reason that younger owners are going to appreciate adventure and sports more than mahogany and cigars,” says David. “It’s a question of priorities, and luxurious comfort is less important to them than owning something new and surprising.”
For young, self-made millennials still growing their business interests, yachting is an occasional pastime rather than an enduring passion.

“They don’t think of a yacht as an end in itself, but as a sort of floating pied-à- terre for attending events like the Monaco Grand Prix or the Cannes Film Festival,” says Antonio. “They’re not interested in huge cabins, but they are into water sports and lots of exterior space for entertaining large groups of friends. They might spend a weekend on board in Sardinia, go back to work, and then join the boat the following weekend in Ibiza. It’s a different concept from the traditional two-week cruise in the summer.”

With the focus on open-air socialising, water sports, gym and spas, formal dining rooms and salons—already something of an anachronism on yachts—will be even less relevant in the future. This shift in how yachts are used is driving designers to look afresh at conventional general arrangements.

“There’s a lot of talk about blurring the barrier between exterior and interior on yachts,” says Luca. “In most cases, this usually just means putting in bigger windows or sliding glass doors, but that’s only half the battle: you also have to provide better circulation flow between the inside and outside on different deck levels.”

But there is a risk involved in designing yachts for a specific demographic. Defining what distinguishes one generation from another is not an exact science and grouping millennials into a single homogenous group is unlikely to result in solutions that suit everyone.

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This much became clear at the Superyacht Design Symposium organised by Boat International earlier this year during a debate among millennials whose parents own large yachts. Sebastien Vibe-Petersen, who co-owns the 54m Perini Navi sailing yacht Parsifal III with his father, maintained that hybrid propulsion is essential for attracting younger owners. But Alex Gibbs, whose family owns the Sunseeker Predator 115 Elysium, believes that lithium ion batteries are a stopgap technology and argued for “a bigger push in all industries towards a better solution.”

Another generalisation is that millennials value life experiences more than material possessions. They will still want the use of superyachts, but will be less interested in owning the asset. In fact, they may even see ownership as a restriction.

“We are going to see a time when the traditional idea of yacht ownership starts to follow the same path as car-sharing services: more convenient than a traditional taxi, and a real alternative to owning a car,” says Erwin Bamps, CEO of Dubai-based Gulf Craft. “There are huge challenges ahead, but also huge opportunities for those companies that find the right balance in the evolving market.”

Fractional ownership is not a new concept, but has enjoyed only limited success in the yachting world. Penny Hammond-Smith, a business development consultant based in Monaco, worked with Rossinavi to coordinate the IUM’s research project as part of its course in luxury management. She warns against over-emphasising the ‘sharing’ behaviour of Millennials.

“Sure, they’re going to do things differently and we will have to re-package the product, but I don’t believe the yachts will change that much and I don’t see the ownership concept going away anytime soon,” says Penny. “Eventually they will want their own product like the rest of us. Things change, but human nature stays the same.”

‘Re-packaging’ the product further involves how the industry communicates and interacts with the emerging market. In the past, owners were typically introduced to designers or shipyards at boat shows or via yacht brokers. Today, first contact is more often made directly through social media channels.

“It’s a much more immediate and personal form of communication, for them and us,” says Hotlab’s Antonio Romano. “From our point of view, seeing their photos on Facebook means we can get a pretty good idea of their interests and tastes before we even meet them. It makes understanding their needs or preferences that much quicker and easier.”

Social media and messaging apps are also affecting the way yacht brokers do business with owners. David Seal is a broker with Northrop & Johnson and an active vlogger. Most of his business leads, especially amongst younger clients, come from his YouTube channel.

“Just the other day I was thinking I don’t get as many emails as I used to,” says David. “But then I realised I have more and more clients who contact me through direct messaging on Facebook or with Whatsapp—and they expect an immediate response.”

The average age of superyacht owners is decreasing, but whether millennials will fill the generation gap remains to be seen. Merijn de Waard is the founder and director of the Superyacht Company, which has complied a database of more than 4,800 yachts over 30 metres in length. Research is ongoing, but his records show that self-made owners under the age of 40 make up only a tiny fraction of the total.

“This is not surprising when you think that they’re still busy with their businesses and owning a superyacht is not yet a priority,” says Merijn. “The important thing is that they charter yachts, and the industry has to be very clear about what it costs to run a yacht. In some cases, you can buy a large yacht relatively cheaply, but the running and maintenance costs over a period of five years can be much higher than the initial purchase price.”

The charter sector is strong and getting stronger, which suggests that prospective owners appreciate the yachting lifestyle and are checking out the market, possibly as a preamble to buying. In the meantime, it’s worth remembering that in 1988 when Donald Trump acquired 86-metre Nabila and renamed her Trump Princess, he was just 42 years old.

 

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The Anatomy of a Yacht Broker

Let us settle this debate once and for all. What exactly does a yacht broker add to your chartering or yacht buying experience?

Article published in the MYS Summer Magazine, #2018 | By Risa Merl

 

There are some out there who might question or underestimate the value of working with a yacht broker. After all, anytime you part with money it can be tempting to try to cut costs. But we also know that cutting costs often means cutting corners, which only costs you more money in the long run.

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A yacht broker should possess a particular set of skills and qualities that will make them indispensable to their client. The ideal broker, that’s him (or her):

Knows lots about yachts
Most yacht brokers get into the field because they are highly passionate about yachts. They either grew up sailing, worked on yachts as crew themselves or both. While previous experience working on yachts isn’t mandatory to being a world-class broker, it can certainly give them an edge in understanding the inner workings of crew, yacht design and an owner’s preferences.

Captain and crew whisperer
During a yacht charter, brokers work behind the scenes as the intermediary between captain and crew to ensure every detail of the trip meets your exacting requirements. If there is a particular request – or any concert arise during the trip – a quality broker is the one to make sure everything goes smoothly.

Travel guide
A broker will have a good understanding of the cruising grounds where their clients want to go. They should be able to give you basic details and hidden secrets about the most popular destinations. Beyond this, they will present ideas for new itineraries that are off the beaten path or suggest places to try in shoulder seasons, where you can enjoy wonderful places but save money before the crowd rush in.

Seaworthy
A broker won't just be there on the business end, they can either personally accompany you – or set you up with the right people – to attend the yacht's sea trials and surveys to make sure that everything is in order. Your broker will delve deep into the technical muck that is a survey so you don't have to, renegotiating the deal if necessary. They are your eyes, ears and sea legs for the entire affair.

 

Value added
Brokers will also give you itinerary and logistical advice on where to start or end your itinerary that can help you save money on VAT (value added tax). Starting or ending your trip in different ports can make a big impact on reducing VAT, which will affect the overall price of the charter.

Legal eagles
There are many steps involved in buying a yacht, and many rules involved in chartering that differ wildly by country and cruising grounds. Your yacht brokers stay up to date on this legalese so you don’t have to, making everything as simple as possible so your only job is to enjoy your time on board.

Yacht tailors
A charter or sales broker makes it their job to get to understand their client’s unique tastes and preferences. This allows a broker to tailor their advice to their client’s specific preferences and personal needs, finding them the right yacht to charter or buy. It’s a skill a website simply cannot replicate.

Honest opinions
When it comes to chartering, you’d never have the time to scope out every yacht you might want to charter in person – and you’d never want to make such a big decision based on photos on the internet alone. This is where a skilled broker whose honest opinion you can trust comes into play. Charter brokers travel to yacht shows all over the world, go on board all the latest yachts for charter, get to know the captains and crew and sample the chef’s cooking. They do all this so they can give their client’s their objective, honest opinion and quickly find you the right boat, every time.

Deal maker
Part of a broker’s job is to negotiate the best rate for their charter client. In a “direct” situation, without a third party to do this, it isn’t nearly as easy. Likewise, having a broker do your deal making means that the yacht’s owners are paid 50% on the first day of the charter and the remaining 50% at the end of the charter. This gives the broker room to negotiate on your behalf if the charter is not up to snuff.

Network advantage
When you work with a sales broker, you aren't just tapping into this one person's knowledge, but you are gaining access to their vast network. Sales brokers will be plugged in with contacts in the top shipyards, the best designers as well as other brokers, so whether you are designing a new build or buying a pre-owned yacht, they can find you the perfect team and ensure you get the best deal. Likewise, if you're instead buying a marina slip as an investment, a sales broker can help you find the ideal location for your yacht.

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Market pro
Just like you wouldn’t try to buy or sell a home without a local realtor who knows the area and the comparable prices, you wouldn’t buy or sell a yacht without an expert broker who knows the state of the industry. Superyacht sales brokers have a deep understanding of market values, pricing and trends, and they utilise this knowledge to help their clients set the right price and get the best deals.

Worst case scenario saviour
At the end of the day a yacht is moving object filled with many other moving parts, and as much we try to avoid it, sometimes things do go wrong. A broker who is calm under pressure and proactive at solving problems is invaluable if unfortunate situations do occur. They deal with the headaches while you keep enjoying your holiday.