Managing the Yacht Charter Season in the Med

Yacht charter brokers and charter managers in the Mediterranean have been experiencing a slow start to the season but, over the past two weeks, and despite considerable turbulence in the world at large, the market seems to be picking up.  

Bookings in the Med so far this season are still lower compared to last year, across all market sectors and all charter companies, confirms Fiona Maureso, President of MYBA, the Worldwide Yachting Association and Charter Director at Northrop & Johnson France, adding that, ‘Clients of all nationalities are understandably cautious in the current climate but ultimately recognize that chartering a yacht is still one of the safest holidays they can plan for their families.’

Currently there are in the region of 800 charter yachts over 24 meters in the Med this season, representing a considerable choice for prospective charter clients, many of whom are repeat guests or have a very clear idea of exactly the type of yacht they are looking for. Of course much of this information is readily available online, including special offers and reduced rates for longer bookings. It is also possible to negotiate some very good deals and in the current climate clients are increasingly aware of this.

The Backdrop to the Upturn

Speaking to brokers and captains, clearly everyone is aware of the immediate challenges, and there are many.

The most obvious and most talked about is the risk of terrorism, a global threat that is not limited to Europe. In response, and to prepare the yachting community, a number of security companies have produced guidelines for security and safety awareness both at sea and ashore.

Perhaps more relevant, and at the top of everyone’s mind, is the possibility of encountering a migrant boat while on charter. In reality it’s very unlikely that this will happen, and captains are very well aware of the areas to avoid. A number of organizations have also collaborated with the yachting media to circulate guidelines on safe passage planning.

Joss de Rohan Willner, Captain of 62.5m MY Baton Rouge, and a founder member of the PYA (Professional Yachting Association) confirms that fleet circulars have been distributed, and active discussions have been taking place on various captains’ forums.

The advice of David Summerfield, Head of Risk Consulting at Securewest International, is to work closely with your charter manager to understand what risk management procedures they have in place to give you the reassurance you require.

More broadly, much of the world is currently politically or financially unstable and naturally this causes a degree of hesitation. The UK and Europe are also reeling from the shock from Brexit, although Joss says ‘We haven’t seen any effects of Brexit so far but it’s early days.’

At the same time, Spain’s government is unsteady, Greece and Turkey are volatile, a state of emergency will remain in France until the end of July, and the EU recently extended sanctions against Russia.

Under more normal circumstances, France in particular is a popular charter destination for both Russian and Middle Eastern clients. However, difficulties taking money out of Russia and a drop in the ruble have affected Russian bookings says Thierry Voisin, President of the ECPY and managing director of WOY charter and management. Tove Johnson, Charter Broker at Fraser Yachts agrees, ‘It’s been difficult for the Russians this year, we see a huge decrease in Russian bookings both for yachts and luxury villas’.

Meanwhile, Annemarie Gathercole, Senior Charter Broker at YPI Group in Monaco, points out that Ramadan finishes only this week, which has delayed Middle Eastern bookings, although many of these clients tend to book last minute so reservations are likely to pick up very soon.

One thing that everyone agrees on is that, for those who can afford it, chartering a yacht is a hard habit to kick. Many seasoned charterers come back year after year and, perhaps for these clients, experience also engenders confidence despite the uncertainties that abound.

The Reservations Landscape

Depending on who you speak to, the reservation landscape also varies considerably, with some companies doing much better than others.    

Guy Booth is Captain of MY Aurelia (37.3m), a successful and award-winning charter yacht operating in the Med this season. He had nine weeks of charter bookings in 2015 and says, ‘Last year was a little slow to kick off but by the first week in June we had five weeks booked. This year we’ve got one. It seems the Americans at least may prefer to holiday closer to home in New England, the Bahamas or the Caribbean’.

It is well documented that different nationalities have varying ‘risk thresholds’ so this may also impact their readiness to book a charter this year.

However, Robert Bleecke, Captain on MY Seabluez (36.58m), another successful charter yacht, is not experiencing a lack of reservations. Last season he had 13 charter bookings and so far this year firm bookings stand at nine with two more pending. Clients last year were mainly American and this year it is more of a mix.

Joss on Baton Rouge is similarly upbeat, saying, ‘We’re booked up from June to September and we already have a booking for 10 days in the Caribbean at the beginning of December.’

Where bookings are slow, First Officer Sam Squire on MY Nassima (49m) suggests, ‘Maybe charter agents are just a bit slow off the mark, not pushing charter sales as hard as they could and becoming a bit complacent.’  

Time to Get Creative

It’s true that if ever there was a time to be more creative and stand out from the crowd it is now. Those brokers who are thinking outside the box, packaging special itineraries and tempting offers have bucked the trend and are doing rather well.

Adelheid Chirco, Charter Director with Ocean Independence in Dusseldorf has a central agency fleet across the Med. Her yachts over 40m are doing well with almost full calendars while, ‘The ones that suffer more are the smaller units between 25 and 35 meters. There is just too much competition for them, in particular in the South of France.’

‘New yachts are being launched on the market but older yachts continue to charter as well, so clients have more choice. Also yachts with a particular layout or with a specific interior design that does not match the request of a wider clientele are not so easy to charter – but this has nothing to do with a particular season. There’s a steady clientele who want their yachting holidays every season and they try to secure the same yacht as the year before to obtain a repeat client discount.’ she says.

Bleecke also stresses that a good reputation is something to shout about saying, ‘The yacht’s reputation is always a great marketing/selling point. We have had so much great feedback over the years and that for sure helps’.

Similarly Adelheid says, ‘I simply believe that a clientele is built up over years and years and I get most of my new clients via the recommendation of a satisfied charterer.’

Market Snapshot

According to analysts at Wealth Insight, in 2014 the global population of ultra-high-net-worth individuals grew by almost 5,200, meaning a total of 65,335 people have joined the ranks of the ultra-wealthy over the past decade - a rise of 61%.

Of course not every rich person likes boats, although many more might if they were exposed to the possibility. This is a topic that comes up time and again in discussions with leading brokerages, where a lot of time and effort goes into finding new ways to reach potential clients who have the means but no exposure to yacht ownership or yacht charter.

Adelheid and Tove also spoke of growing competition from concierges, real estate agents and internet companies all of whom are winning clients from established brokerages. This is not a consequence of the current climate, but many feel strongly that it’s a reason for the MYBA name and what it represents to become better known and understood.

‘Not enough clients are aware that booking a yacht with a MYBA company assures them that they are in the hands of a professional yacht broker who will assist them not only to book a yacht and plan every last detail of their holiday, but who will also step in if something does not go to plan.’ says Adelheid.

Tempting Offers

Just as we saw after the financial crash of 2008, the charter market plunged until brokers responded by being more flexible and inventive with their offers. As a result, the summer of 2009 was busier than expected which ushered a huge sense of relief. Similarly in 2016, those charter agents and yachts ready to relax their tariffs, or offer discounts or incentives, are better positioned to get the lion’s share of bookings, confirms Maureso.  

Even so, some have been slower to do so, ‘For the past four years we’ve been inflexible with our charter rates and have charged full delivery fees but, now, for the first time, we’re looking to broaden our reach and have reduced our charter rates, offering discounts for extended bookings and delivery fees are also negotiable.’ said another captain.

In terms of itineraries, Joss confirms, ‘The ‘milk run’, France, Italy, Corsica, Sardinia and Sicily remain popular.’ However, there is a huge choice of charter destinations and many believe that boats should be more ready to move around. Right now there’s an increased demand for itineraries in the Aeolian Islands, Spain, Croatia and Montenegro, destinations that are relatively unexplored and with much to offer.

‘For us the Balearics are really cutting edge and exciting; you’ve got value for money and an excellent chance of finding an anchorage all to yourself because there are so many. You’ve got fantastic food, brilliant marina services and good provisioning sources. The people are lovely.’ says Guy.

Whatever the political climate, yachting is a competitive industry like any other and, as it continues to evolve, becoming ever more accessible to more people, even established brands within it are having to up their game. Charter brokerage is no exception and, rather than fret over a slow start to the season, industry insiders remain optimistic and embrace the bigger picture. Business is tough the world over, times are changing, and success depends on our readiness to adapt to a changing market and seize the opportunities ahead. 

 

Related Articles:
Mediterranean Migrant Crisis: Planning Ahead
Personal Safety Ashore: Aide Memoire
Migrant Boat Encounter: Procedures for Captains

* Photos: OnboardOnline; Ibiza - Shutterstock