Effects of COVID-19 on the Yacht Charter Market (Part 1/2)

Effects of Covid-19 on the yacht charter market and what have we learned from the past. #yachtcharter #yachtbusiness

The global yacht charter market, like all sectors of the economy, is feeling the effects of the coronavirus pandemic.

We are here help clear up the confusion and put the current unfolding events in perspective. As well as gather what we have learned over the past 30 years dealing with issues on the international yachting market.

This Article is part one (1) of a series of two (2):
Part 1: What have we learned from the past
Part 2: How are the industry and market reacting to the issue?

Considering buying a yacht for charter?
Make sure to also read the: How to make the most of yacht charter investment during COVID-19

We will be sending our regular newsletters to keep you well-informed of developments. But first, let’s look at what immediate Information we have at hand and what Advice you can expect from us:

Yacht-Match is here to answer all of your questions

Yacht-Match is here to answer all your questions as we navigate these challenging times together.  Our team will continue to strive to make sense of what is a formidable challenge for all of us in the industry and you as a prospective customer for charter ownership.

We remain true to our Core Values. We would like to reassure our consultancy clients and prospective customers that we will continue to work closely with you. By providing expert advice, professional consultancy services, and unbiased information. We are here to propose solutions and show you what opportunities lie ahead, ensuring what is best for you!
Take advantage of our unmatched industry expertise and impartiality!

FAQ: a working document for you to explore

Be part of a live discussion group! And our working document on how we are addressing the issues, that you may face as a potential charter boat owner.

See the FAQ page here!


Two sessions where we host a live Q&A on:
1) “Issues facing the yachting industry and the effects on the charter market” and
2) “How to make the most of yacht charter investment during COVID-19″

Join in and learn from how we address the questions and answers in our
webinars. Webinars hosted by the co-founders’ Dirk Agter & Viktor van Savooyen.

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Part (1/2)

What have we learned from the past?

Our team at Yacht-Match has extensive experience in responding to yacht charter market needs during challenging periods. That includes the 2007-8 economic downturn, the surge of immigrants crossing Turkish and Greeks waters in 2016/17. As well as hurricanes in the Caribbean in 2016-17.

The financial crisis in 2007/08 and the effects on yacht charter market.

The 2007/08 crisis was a steep learning curve for many in the charter business. The landscape and competition were similar to what is today, with an 80/20% spread between local independent charter operators depending on private boat owners to join their charter business. Some of which had a sizeable market share in their respective regions and some who were sprung up from a temporary need or other such reactions to the market.
Back then, the local more prominent charter operators were dominant in their regions and the global international charter operators were just starting their quest for leading market shares. In 2007 towards consequently the turnaround period in 2010, when the market was starting lifting again, the fleet sizes were smaller and less concentrated. And the entry of the sailing catamarans had not yet seen its impact in Europe as it already had an essential role in the markets dominated by USA charter guests.

What we saw taking place over two to three years during the financial crisis where:

(1) Local charter companies opted to sell/merge or close down:

In the hotspots, Greece, Croatia and Turkey, some of the charter business were run by management that was coming of age and motivation to see through the crisis were not there. Some of the well-known companies sold their operations to up-and-coming charter business (several whom today are the leading global charter businesses). Opportunities were ceased by the companies seeing the chance to grow and spread the global charter business with a strong local presence.

(2) Yachts sales went down and charter bookings went up:

The regional yacht dealers and importers went through tough times as sales plummeted. Prospecting buyers postponed their decision to make significant investments but continued their lifestyle. A surge in charter bookings saw charter operators being able to get more robust out of the crisis than anyone in the boating industry. This, we believe, also propelled the sales in yacht charter ownership and management, as the successful charter business saw a need to renew and increase their fleet as demand rose. The charter ownership programs started to the shape and form of investment and marketed as such. Guarantees and leasing started to slowly enter the market and also made it possible for families that for many years, only chartered and couldn’t afford a yacht themselves to enter into charter ownership programs.

The war in Syria affecting the Turkish and Greeks charter market:

The surge of immigrants crossing Turkish and Greeks waters in 2016/17 affected the international boating industry for many years to come. As we just see the revival of the yacht building industry in Turkey, with the hugely successful Sirena Yachts leading the way. We are also facing new difficulties from the political unrest in Turkey.

During the troublesome years in 2015-17 the Turkish charter market and their business, one by one saw foreclosure. All the global international charter companies (Sunsail, Navigare Yachting, Dream Yacht Charter) was not receiving enough bookings to comply to their boat-owners-charter-investment-programs and had to move their fleet to mainland Greece and Croatia. The local independent charter companies were left with long-lasting ties and stable position on the market from their years as a specialist in their regions.
The first year it affected them as well, as some of their boat owners (charter management) feel a general unease and an average of 50% decrease in their NET charter income.

Source: YachtSysDespite the turmoil of the refugee’s crisis in Eastern Mediterranean, the charter week prices kept rising and the amount of charter weeks too.

The local companies bounced back quickly as their strong ties to loyal repeat customers and charter brokers and agencies actually increased in popularity. As the other charter destinations hotspots in the Northern and Eastern part of Greece and the Adriatic Sea was quickly becoming overcrowded. Reports and testimonials were coming back from the charter guest that solidified that none of them was bothered or affected during the charter week exploring the Turkish coast.

The Yacht-Match team can personally testify that although Turkey has gone through some turbulent years, we have never encountered any difficulties when sailing the Turkish waters. On the contrary, the experiences we have gathered and the people we met during our holidays are unmatched to any sailing experience in the Mediterranean Sea.

As the region swung back in full effect in 2018 and the demand again was higher than the supply, new political decisions were made in Turkey not to go missing on VAT from the charter market and business done in Turkish waters. Turkey enforced the rule in early to ban foreign-flagged boats from operating as charter vessels in Turkish waters for the 2019 season. All global charter companies in Turkey had to cancel their 2019 bookings and those who started to set up their bases in Turkey again and recover a reasonable share of clients that they long not had been able to serve now had close down altogether.

What we learned from the Turkey/ Greece crisis:

(1) The smaller independent and local charter companies bounce back quicker

If the market is fluctuating, and it’s expected the charter bookings for the season will disappoint, the smaller charter companies are often better prepared. They don’t have an oversized fleet and don’t have to deal with a lot of yacht investors, as opposed to the bigger charter companies who are responsible for plenty of investors and guaranteed programs. This results in pressuring the teams within the organisation and ultimately the yachts.

(2) A huge demand for specific boat models in Turkey:

The demand and shortage of bigger sized catamarans are notable in Turkey. As the rest of the international charter destinations saw an influx of catamarans and the market shifting towards bigger sizes and a new generation of charter guests demanding easier holidaymaking on the water – the natural contender to fill this spot is the sailing catamaran. As of today, the Turkish market is strong and still on the rise and several of our selected charter operators are looking for catamaran boat owners and charter ownership investors.

Hurricane Irma and the northern Caribbean charter market

The hurricane Irma in 2017 tore through the Caribbean, killing at least 100 people and laying waste to entire islands. In the path of the category-five hurricane, the most powerful recorded in the Atlantic were superyacht destinations, and yachts and marinas have suffered damage and an estimated total loss of +600 yachts, a sizeable portion of them with commercial licenses. Whole islands where being laid to ruin. Most of us thought it would be the end of the Caribbean charter market and tourism as the whole infrastructure around the business where gone. The capital needed for the rebuild would deter many of the existing local and global charter companies from taking the chance and staying put. The resilience of the locals and immediate response from the local government and the international yachting community would have it the other way. Already within 6 months, the site was marketed again a destination to visit and with a supportive infrastructure and boats that would promise the charter guests a memorable holiday, not the same as before, but now more than ever – the holidaymakers and charter guest where needed as part of the plan to rebuild the destination

With an expected total loss of +600 yachts, sizeable portion of them with commercial licenses, the Caribbean Charter market will continue to demand a portion of new build from the well known shipyards and builders in Europe.

What we learned from hurricane Irma’s effect on the Caribbean charter industry:

(1) The catamaran craze started to become a factor

The Caribbean charter market has by and large been dominated by catamarans, sailing and motor. By the end of 2017, the market’s demand (both the charter and the retail/private ownership) was quickly surpassing its supply. Charter operators were first seeing a steady demand for bigger yachts, +50ft with 5-6 cabins to accommodate the large groups of charter guests, who wanted an inexpensive way to enjoy the cruising lifestyle for a week or two. More and more charter brokers and charter operators quickly realized that the catamarans would be the better option for the new generation (Millennials) of charter guests. Thus, enter the Catamaran craze.

All sectors of the international charter market have seen a steady demand for catamarans since before the hurricane Irma. The race to compensate the loss of a large fleet of missing catamarans in the charter market in the Caribbean combined with the growing interest on the retail (private ownership) market and the rest of the top charter destinations eagerness to renew their charter fleets with catamarans has led to an unprecedented surge in prices on both the new yacht sales prices and the pre-owned market. Most catamaran producing shipyards have lead times of a minimum of 18 -20 months for new orders, leaving the regional dealers and importers desperate to negotiate production slots with the yacht builders to stay competitive against the global charter companies with their formidable buying power. More and smaller catamaran/multihull- builders are entering the charter market, such as Neel Trimarans and Seawind Catamarans. Even side projects such as the ideal charter catamaran created by the famous French shipyard Dufour Yachts, the Dufour 48 Catamaran, has been put into production specifically to fill the gap and comply with an overwhelming demand for sailing catamarans.

The International Multihull Boat Show hosted yearly in April in La Grande Motte (France), has grown in size and popularity since its start in 2010. Where many other local boat shows and well-known events have seen a decline and some have been forced to cancel, the interest for multihulls both in private ownership and charter will most likely drive the organisers to find a new larger location or organise multiple events per year.

(2) The international charter market community comes together

You would have thought that with the immense competition within the international yacht charter market there would be a massive change taking place in the region and the global charter operators would move in and take over…

Will the demand for catamarans continue and can it be considered a good investment?

Request recorded webinar, where we explore the alternatives and the numbers over the last 7 years and the coming 6-7 years.

Related Article:

read more in Part two of this article: How is the industry and market reacting to the issue?

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