How has the yachting industry coped with the year 2020?

Article written by Pierre Souriau, co-founder and COO of Marinescence Media.

As we already know, the year 2020 will have been a black year for many industries. But others, having taken advantage of the new challenges imposed by the crisis – the digital boom, the increase in purchasing power of the Ultra-High Net Worth Individuals (UHNWI), the proper application of health measures and the ability to adapt quickly – have managed to make the most of it: starting with the very exclusive yachting industry.

YACHTING TRENDS IN 2020

To date, more than 60,000 pleasure yachts (from 20 to 160 meters) populate the world’s waters. An exponential growth for more than 20 years, which Covid-19 will not have put at fault. Faced with the traditional Caribbean and Mediterranean Sea, new destinations are emerging, such as Montenegro or South East Asia, now considered as fashionable basins. Not exotic enough? Why not try the North Pole aboard an exploration yacht?

While the UHNWI could be said to have a taste for ownership, the growth of charter yachts suggests a contrary trend. Charters are in fact increasingly popular. Count, on average, 10% of the purchase cost to be paid each year for the operation of a yacht, divided between crew salaries, fuel, maintenance, decoration, port fees or food. To add to the 100 million euros to the purchase of a 90-meter boat, (50 million for a 65-meter), and you will have a good estimate of the expenses to be planned before investing in your own yacht. This being said, chartering is a less engaging alternative. A 40-meter yacht can be rented at around 100,000 euros per week (excl. VAT). If it looks like a floating palace, the prices jump according to the length of the boat and reach the million euros per week. Please note: these budgets exclude additional costs (food, drinks, activities on board) which amount to a minimum of 30% extra charge.

2020 is also the year of accelerated digitalization of business initiatives and working methods. Centralization of information, large databases, digital intermediation between customers/suppliers and marketing opportunities are more than ever the digital revolution in today’s world. And for tomorrow’s world, industry players are increasingly called upon to make a commitment: how can the environmental impact of yachting be mitigated? To do this, institutions are mobilizing. In Monaco, and for the past seven years, the Monaco Solar and Energy Boat has been held every year, which rewards projects for boats with eco-responsible, water and solar propulsion, and thus encourages their development. The Oceanco company, a mastodon in the construction of superyachts, has just unveiled its Oceanco NXT project, a movement calling on yachting players to join forces to pool their forces in the service of boats that respect underwater life.

This year of upheaval has not prevented the young yachting industry from setting up innovative projects and establishing its attractiveness to the wealthiest, supported by the rapid measures employed by professionals in the sector to overcome constraints, such as barrier gestures. In a worrying health context, wouldn’t a yacht be the safest place in the world?

Yachting at the time of Covid-19: impact and measures

Within a few weeks, the principle of social distancing became a familiar notion, then a daily preoccupation. And travel plans, hampered by means of transport and accommodation ill-suited to physical distance, were put on hold.

Lockdown weakened a number of companies: due to lack of sufficient cash flow, small structures went bankrupt. Large historical companies have also been heavily affected, such as Bénéteau, the world leader in pleasure boats, which has closed two sites and plans to cut 1,390 jobs.

But these examples are the exception. The worrying month of March, with its uncertain markets, quickly gave way to a boom in private travel modes, offering, in fact, distancing, freedom of movement and security. And the summer season, which was highly dynamic and boosted by the spectacular increase in the number of yachting visitors observed in the previous months, will have confirmed the resilience of the yachting industry in the face of the crisis: in the United States, yacht sales in May 2020 were up 19% compared to 2019. Purchases often influenced by the virus, for the increasingly wealthy wishing to preserve their vacations, in the Mediterranean for Europeans, in the Caribbean for Americans, and in the Maldives and the Seychelles for the wealthiest among them.

The charter market has adjusted its offer, both in terms of prices and onboard activities. Fewer shore calls, more dining experiences and changing itineraries. Rapid marketing initiatives on behalf of products and services adapted to the particular situation. As a result, recruitment data has remained steady. According to Nicolas Pélisson, Director of Marinescence: “The offer has adapted to market expectations. This year, we are hiring a lot of French and Italian crews for yachts based in the Mediterranean this year, to the detriment of English or South African sailors for example, because boarding procedures are more complicated for non-EU nationals. The observations are the same in other regions of the world: a maximum of local manpower is solicited, but the demand is there. »

The yachting industry has been able to weather this pandemic year and the attraction of UHNWI for these floating palaces, combining isolation and freedom of movement, has been all the stronger. Industry professionals have been able to seize the opportunities of such an upheaval, adapting their offers and rigorously complying with screening and distancing protocols.

In the mist, companies that shine

Companies that have succeeded in diversifying their sales and using digital levers to support their diversification will have been the first to benefit from the rebound in yachting.

Examples illustrate these opportunities seized on the fly: the company BWA opened a new office in Norway to meet the increasing demand for a yacht concierge service. H&V Yachting has digitized all its procedures to handle more requests. Gourmet Deliveries, responsible for supplying yachts with food and beverages, has deployed new sanitary, purchasing, order entry and delivery processes to continue its business. Marinescence deployed a video interview application to continue its remote crew recruitment missions. YachtSafety now supplies yachts with protective equipment against Covid-19 and Absolute Magnitude has developed disinfectant solutions better adapted to the type of boat.

The breaches opened up by the health crisis have enabled certain players in the sector to take innovative steps. A performance that stands out in this very closed industry, where financial issues and quality and confidentiality standards predispose the historic companies to be particularly wary of young entrepreneurs and newcomers.

This article was written by Pierre Souriau – Rackham Ventures, rackhamventures.io