The start of the 21st century saw a similar explosion in demand for large yachts. There has been unprecedented activity in the industry and since 2004 the global superyacht fleet has nearly doubled in size. But this short period has also experienced every extreme of the market. Starting with a limited supply and a seemingly insatiable demand, this quickly reversed to supply vastly outstripping demand. The recovery is underway with sales and charter bookings increasing, however there is still an over supply of smaller entry-level yachts and heavily discounted deals can be negotiated across the size ranges.
The established yacht brokerage houses have felt these peaks and troughs acutely. Expanding from their traditional brokerage roles to provide management and technical services, they opened global offices and took on huge marketing campaigns in order to win market share. As the industry contracted, they lacked the flexibility to adapt to the new climate and very nearly went out of business.
The attitude of the buying and chartering client has changed significantly post the economic crisis. He is far more knowledgeable, much more experienced and risk-adverse and demands a far higher level of service. All at much better value. The industry is adapting to these changes and a new type of broker has emerged.
Take yacht charter as an example. With an over supply of yachts the charter client no longer expects to pay the advertised charter rate. He also expects yachts to compete for his business, while still delivering the unique experience and levels of service that only chartering a yacht can deliver. With this comes a demand for an independent broker, with the knowledge and ability to identify the best options available and negotiate on the client’s behalf.
When it comes to sales, in order to win the listing of a yacht for sale, brokers have been guilty of setting unrealistic initial asking prices in excess of the market value of the yacht. This has resulted in an average 25% reduction on the final asking price across all ranges of yachts. This illustrates the gulf between the expectations of the buyer and the seller, and the poor advice received by both parties from their brokers. Again we see the requirement for independent and market wide advice.
The new broker
The modern buyer now demands a more bespoke and personal service. Starting to answer these demands are a small number of yacht consultancies, of which Messum Yachts is a good example. These independent brokers specialize in the purchase and charter of yachts for their clients. They provide their clients with impartial and market-wide advice on the best yachts available and then handle all of the negotiations and arrangements on their behalf.
Their key tenants are independence, experience, flexibility, and integrity. Working closely with only a small number of clients, their aim is to foster a close working relationship, so they are better able to respond to and deliver each of the client’s individual requirements.
Yachting in the 21st century offers new, exciting, and diverse opportunities. For clients looking to charter, there are over 1,500 different yachts available in locations as diverse as the Arctic Circle, Pacific atolls, and Mergui Peninsula to name but a few. For buying clients, new technologies and materials have made boats bigger, faster, and more efficient, alongside manufacturing techniques that have been able to engineer more value into the build process.
As the industry expert, the role of the broker is an essential part of the buying and chartering process in helping the client navigate his way to his ideal yacht. The key challenge to be met is ensuring the services the broker provides are impartial and offer both value and quality; something the new yacht consultancies seem best placed to achieve.
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Messum Yachts Limited
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