FLIBS19: Data drives conversation of industry, what makes a yacht sell
Nov 26, 2019 by Lucy Chabot Reed
By Lucy Chabot Reed
As the global yachting fleet continues to claw back from its fall of a decade ago, Superyacht Times (SYT) has gathered and produced interesting data about yachts, sales and construction. The publication hosted three seminars during the Fort Lauderdale show, sharing its research into the construction and sales records of new and used yachts over the years. The data is produced in-house and was presented by Ralph Dazert, SYT’s head of intelligence.
The first seminar was a simple look at the state of the industry. The total fleet of yachts over 30m has grown six times since 1985: doubling from 1985-2000 (from less than 1,000 yachts to nearly 2,000), and doubling again from 2000-2010 (to nearly 4,000). This year, SYT expects the numbers to show the fleet passing 5,000.
The order book since 2008 has dropped in half, but has begun creeping back up in the past two years, with 199 new yachts sold last year. It appears as though 2019 will beat that as it has recorded 102 sales for the first three quarters thus far.
As of Jan. 1, 2019, there were 483 new yachts over 30m under construction, the highest number since 2011, midway down the recessionary slide when there were 559. About 30% of them remain for sale, same as last year.
Last year saw the fewest number of builders completing yachts of 30m and more, just 66 compared to 114 in 2009. Italy has the most number of yachts under construction — 47% of the global total — with Holland (14%) and Turkey (10%) accounting for a quarter. The U.S. is building 3% of the global total.
When viewed in terms of gross tonnage, however, Germany was the leader, with 29% of the total, followed by Italy at 24% and Holland at 23%.
When reviewing used yachts, SYT was able to discern there were about 1,800 active yachts in the world; its data looks at 1,700 of them. About a quarter of the motoryacht fleet is for sale, which is slightly up from 2018, which was up from 2017. Americans are still the largest ownership nationality, owning 24% of yachts. Russians make up the second largest group at 10%.
Merijn de Waard, founder and director of SYT, gathered a panel of sales directors to discuss the state of the industry, and asked how they saw the market.
“The market is pretty flat,” said Michael Breman, president of SYBAss and sales director with Lurssen. “We’re trying to expand our customer base and enhance the positive aspect of yachting to appeal to a broader community.”
“Owners don’t want to wait a very long time,” said Till Von Krause, sales director with Abeking & Rasmussen. “The refit market has become active because owners don’t want to wait three years from contract to delivery. Our aim is to get that to 25 months. We are working on this, and we will achieve it in a few years time.”
De Waard: Do you see used yachts competing with new builds?
“Every boat on the water is a competitor to a new build,” Lurssen’s Breman said. “It comes down to how many summers do you have left? If you can find a suitable boat on the market, you will not build new.”
Clients — especially younger clients, they all agreed — are looking for “greener” yachts.
“They have been for 20 years, but now, the demands for reduced power and clean exhaust have increased dramatically,” von Krause said.
“We need to listen to the younger generation because we need more people to get into yachting,” Breman said. “If that means we need to redesign, that’s what we need to do.”
A seminar titled “What Makes Yachts Sell” gathered about double the audience in the Superyacht Village’s main tent. Again, Dazert opened with some statistics.
Sales of used yachts over 30m (202) have just about doubled sales of new yachts (102) for the first three quarters of 2019, a larger proportion than in either 2017 or 2018.
Motoryachts tend to be on the market for about 20 months before a sale; sailing yachts a little more. That’s slightly less than in either 2017 or 2018.
The age of the used yachts that sell is going up, about 9 years old for motoryachts and 13.5 years for sailing yachts, which is slightly older in both categories than either of the previous two years.
In an effort to see if boat shows are effective, SYT looked at yachts larger than 30m for sale at FLIBS and their status one year later. Its data showed that 36% of boats sold within a year of exhibiting in a show, a little better than the market average of 33%. The asking prices of those sold yachts were also higher than the market as a whole.
Yachts of 40-50m took longest to sell, 970 days; the newest yachts sold fastest and yachts up to 10 years old took the longest to sell.
De Waard assembled a panel of sales managers to discuss what they thought makes a yacht sell.
“It’s a matter of price if you want to sell fast,” said Michel Chryssicopoulos, managing partner at IYC. “It has to be a realistic selling price. That’s the key thing to get right from the beginning.”
“It has to be properly marketed, the crew are in line with the sale, the yacht is in show condition, and the seller has to be really motivated,” said Crispin Baynes, senior sales broker with Burgess. “You put it in the right location, and then it’s about price.”
“Price is not always the motivating factor on its own,” said Mark Duncan, director of business development for Fraser. “We have to get from the owner the unique selling points, the functions that make that boat unique. If we could make a hologram of the owner talking about his boat and send it out, we’d sell it way quicker.”
“There’s some science to it, but there’s also an art to it,” Burgess’ Baynes said. “It’s emotional. You’ve got to have a seller who is significantly motivated and who is ready to meet the market. If the yacht is fully exposed and it’s still on the market after two years, you’re not doing something right.”
De Waard: Do boat shows have an impact?
“They are a necessary part of the marketing mix,” Burgess’ Baynes said. “And things happen at boat shows. Actual transactions are questionable, but a lot of good stuff comes out of it.”
They discussed the importance of the charter market not only in opening the yachting world to potential buyers, but also giving owners a way to offset some operating expenses. They agreed that about a quarter of the people who charter yachts eventually will own one.
“A hundred percent of owners were probably charterers at one time,” Baynes said. “It’s something we think about all the time.”
The final of SYT’s seminars asked two owners their perspective of yachting. Carl Allen is the owner of the 164-foot Westport M/Y Gigi and the 55m Damen M/V Axis support vessel.
Brian O’Sullivan owns the 40m Horizon M/Y Komokwa, and it also its captain. He spent five years traveled all over the world with the yacht.
De Waard’s first question for them: How are you keeping crew happy?
“That’s the hardest part of yachting,” Allen said. “We treat our crew like family. I figure if people are cooking for you and cleaning your underwear, you’d better be nice to them.”
“The most challenging thing is crew,” O’Sullivan agreed. “I’ve had one crew with me since I bought the boat in June 2012, and others who last three days. I try to make them part of the family, too. Without a doubt, crew is the hardest part of owning a boat.”
De Waard: So your advice to a new buyer?
“Owning a yacht is one of the most rewarding things you’ll do, but it’s tremendously expensive,” O’Sullivan said. “Just be ready for the costs. And dealing with crew.”
The most impassioned part came from Allen, who has a new perspective of yachting after Hurricane Dorian.
“As yachters, we get a bad name, that all we do is burn fuel,” he said. “I’d like to push back on that a little bit. After the hurricane, we were some of the first ones there. We’re good people; we’re there when you need us.”
Lucy Chabot Reed is publisher of The Triton. Comments are welcome below.