Hall 6 Azimut - Copyright Messe Düsseldorf/Tillmann
Just for private use? To buy and charter out? Or would you rather just charter? Anyone thinking of entering the world of large yachts faces a plethora of decisions.
By Marcus Krall, Luxury Yacht Specialist
The houses lining the harbour are dowsed in that wonderful soft light, just before the sun slips down behind the hills. The restaurants and bars slowly fill up with aperitif guests. Stilettos clatter on the cobblestones, the engine of a sports car blares out briefly, mingling with the babble of different languages. The last of the day’s tourists stroll along the harbour promenade, cameras at the ready to capture the action – maybe even in the hope of snapping the odd celebrity?
Anyway, we have the perfect view of this backdrop. Sitting on the quarterdeck, delivered a year ago. The stewardess serves champagne cocktails, on the table is tonight’s menu proposal from the chef and tomorrow’s planned route from the captain. My companion beams. Once again, we’ve made the right choice: Chartering a yacht is perhaps the most relaxing form of vacationing – a fine boutique hotel that’s mobile and where the guest-to-staff ratio is usually 1:1.
Sharing is not just a trend on land. Chartering yachts is becoming more and more popular. Especially after the very tricky “Corona summer” of 2020, demand is now vast and supply pretty scarce – also because many bookings were postponed from 2020 to 2021. What’s more, this temporary ownership is considered an excellent test for someone toying with the idea of becoming a yacht owner. “Chartering offers the option of not just a holiday, but also as a way for clients already quite sure that they would like to acquire a yacht of their own in the coming years to test the water,” says Adelheid Chirco, German office manager at brokerage house Ocean Independence, voicing a view many yacht brokers are sure to echo. “This allows clients to try out which yachts suit their tastes in the first place and, more importantly, what features and how many cabins they need.”
The choice is vast. yachtfolio.com, the B2B booking platform of the Mediterranean Yacht Brokers Association (MYBA for short), currently lists 1875 manned yachts between 15 and 168 metres – with prices ranging from EUR 16,000 to EUR 3 m per week.
Almost every yacht that is available to charter guests has a so-called Central Agent. This is the first port of call for all clients and brokers (with clients) looking to charter a yacht. The Central Agent markets the yacht to B2C (charterers) and B2B customers (brokers), manages the booking calendar and handles administrative tasks for the owner. Of course, the Central Agent can also book customers for the yachts they manage themselves – as an in-house deal, so to speak – but this is quite rare as most requests come from external brokers, so-called retail brokers. In the event of a contract being signed, commission is shared between the two brokers – the one managing the vessel and the one providing the customer. The retail business is more lucrative in terms of commission, but also far more unpredictable. What’s more, there is a tendency among large brokerage houses to split the commission equally as the workload for Central Agents is seeing a steady rise.
In addition to the weekly fee, which includes the yacht and crew, the charterer pays an Advanced Provisioning Allowance (APA for short), an advance on the incidental costs incurred during the stay on board. This includes fuel for the yacht, tenders and water toys, mooring fees, customs formalities plus fees for communications and the ship’s agents. Catering and any beverages are also paid for by the APA. The industry standard is 30% of the charter price; accurate accounting is the responsibility of the yacht’s captain. A delivery fee may also apply if guests wish to embark at a port other than the yacht’s home port or the one where the previous charter ended. In any case, the charterer must pay VAT in the EU member states, although this can be reduced to 6.6% depending on the itinerary.
The first charter trips were organised in the early 1970s. In Germany, for instance, Italian yacht dealer Moncada Yachts gained a foothold previously representing several brands as a sales broker and wishing to develop this new business segment. A 20-metre yacht was already considered large, commanding around 2000 deutschmarks per day; the 53-metre-long “Galu”, launched in the mid-1970s, was considered a giant. The worldwide charter fleet consisted of 100 to 200 yachts and there was no serious documentation. Communication with customers was by letter and telex, with the yachts via Norddeich Radio or other stations. “It was a wild time,” remembers Adelheid Chirco, who worked as a charter broker then as she does now and who experienced the development of the market right from the start.
While spacious sailing yachts of the Jongert type were in demand in the 1980s – especially among German-speaking owners – this ratio reversed over the years. Since the turn of the millennium if not before, the market has been dominated by motor yachts. The desire for comfort and volume still ranks first today. The number of cabins on board and the yacht’s décor, especially inside, are perhaps the most important decision criteria when choosing a yacht. Customer structure, meanwhile, has hardly changed, according to Chirco. Around 80% of all charter trips are taken by families. Often three generations are on board, for whom such a trip is the ideal way of bringing the family together. For years, the most popular yacht size has been a 30 to 40-metre motor yacht, which may cost between EUR 50,000 and EUR 100,000 a week.
While the market as a whole is stable, booking behaviour has changed drastically. Customers or their brokers make reservations at much shorter notice; you could even call it last-minute these days. “In the past,” says expert Chirco, “charter trips were planned a long way in advance. Today, bookings sometimes come in as little as three days before departure; and we’re talking high six-figure sums here.”
Social trends are therefore reflected here, even in ultimate high-end tourism like super yachting. Brokers and owners have to come to terms with this, as well as with the fact that more and more booking platforms are springing up without any advisory role. Almost all reputable brokers organised in the Mediterranean Yacht Brokers Association advise charter bookings to be made through a reputable agency, as they are informed about the latest legal regulations and, based on many years of experience, can put together the best itineraries. In addition, brokers – unlike booking portals – personally inspect the yachts and can professionally classify crews and equipment.
There is no question that chartering is an ideal way for casual yachties to enjoy luxury at sea. But who actually charters out? With just under 1,900 yachts registered in the yachtfolio system, by no means the lion’s share of all owners: around 7,000 yachts over 30 metres in length are currently floating around the globe. If you take the official length to classify as a mega yacht – i.e. 24 metres – the number is much higher. Only serious statistics have never been collected so far but we can assume at least 10,000 units. In addition, an average of around 800 more yachts are under construction; around 120 shipyards worldwide are engaged in production.
All these yachts can certainly be compared to small companies. Almost every one of them have permanently employed crew – on 25-metre yachts there are between two and three members of staff, on 50-metre yachts it is 10 to 14 and on 100-metre yachts sometimes 70 to 100. Added to this are costs for berths/moorings, repairs and maintenance, for instance. The annual cost of maintaining a yacht is between 5% and 10% of the purchase price, depending on the condition of the yacht and the owner’s requirements. A 25-metre yacht, including professional management, will incur costs of around EUR 450,000 per year.
When owners or prospective buyers ask whether charter income can fully compensate for these expenses the clear answer is no. With an estimated six weeks booked per year, a 25-metre yacht can perhaps generate EUR 200,000 per year, of which around EUR 150-160,000 are received by the owner. However, it can’t hurt to choose a fairly neutral interior, have as many cabins as possible and equip the garage with the latest toys in order to get as many bookings as possible.
Anyone investing in a yacht must look at the acquisition from a non-monetary perspective. “A yacht,” a well-known large yacht owner once said, “is an investment in your quality of life.”
About boot Düsseldorf boot Düsseldorf is the largest boat and water sports fair in the world and every year in January it is the meeting point for the entire industry. Here exhibitors present their interesting innovations, attractive new developments and maritime equipment. The next boot will be held in Düsseldorf from 22 to 30 January 2022. The nine-day trade fair extending over 220,000 square metres and 17 exhibition halls will host the international market and offer an exciting insight into the entire world of water sports. There is something for everyone here. The focus is on boats and yachts, engines and engine technology, equipment and accessories, services, canoes, kayaks, kitesurfing, rowing, diving, surfing, wakeboarding, windsurfing, SUP, fishing, maritime art, marinas, water sports facilities, Destination Seaside and chartering. All necessary information can be found on the boot Düsseldorf website: boot.de.
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