THE INTERNATIONAL MARKET
OF DELUXE CHARTER
Analysis, proportions and assessments
In the past few years, the charter market of luxury yachts not
only has grown considerably but it has also been very dynamic. As
a matter of fact over the last five years, according to an
estimate of the Observatory of the Nautical Market (Osservatorio
del Mercato Nautico (www.marketingnautico.net)) the demand for
deluxe charters (of yachts longer than 24 meter) increased by 8%.
When analyzing such dynamic evolution it is very important to
specify that the demand increase is linked to the substantial
improvement of the supply both in terms of quantity - the number
of superyachts entered in the charter circuit increased - as well
as in terms of quality - the services offered by charter companies
improved considerably.
On the sides of the more traditional brokerage and charter lines,
there are new business lines such as yacht management, assistance
in the construction of new superyachts and deluxe cruises, which
significantly contribute to the business growth of the whole
sector.
By analyzing the business growth of deluxe charter companies, it
is important to point out on one hand the growing
internationalization of the operators and on the other hand the
greater integration upstream as shown by the widespread
strategical partnership with the main superyacht yards. As a
matter of fact and not fortuitously, big marine holding companies
bought the vast majority of luxury mega-yacht charter companies
because they represent an important and profitable distribution
channel of products and services - take Fraser Yachts, for
example, part of the Azimut-Benetti group or Camper & Nicholsons
Intl which recently became part of the Rodriguez Group.
An additional factor, which in the past few years contributed to
the growth of the charter sector, is the existence of new business
opportunities linked to a greater differentiation in the supply of
the elite boating tourism world, in particular, "corporate
charter" and "megayacht cruises" the demand of which have recently
registered a striking increase.
In this dynamic and continually evolving context, special emphasis
must be given to custom deluxe cruises which have become a highly
"attracting" business not only for the companies operating with
deluxe charters but also for bigger companies operating in the
cruise market.
Therefore it is not by chance that in the near future the
production of megayachts solely destined to charter may be an
interesting alternative opportunity for big yards.
Independently of the aspects treated so far, charter demand is to
be analyzed even at the light of another very important function
it fulfills in the development of the boating sector: it serves as
an anticipation to purchase. In fact, it allows the client not
only to get to know a specific product/brand but also to become
more familiar with the yachting world - a fundamentally important
aspect and crucial prerequisite for purchase.
Another element in the analysis of the market demand is connected
to the optimization of management costs. Today, the Owner who buys
a superyacht generally decides to charter his boat for a given
period during the year so that the charter revenue compensates for
the yacht's managing costs. According to a survey carried out by
the Observatory of the Nautical Market of Rome Tor Vergata
University (www.marketingnautico.net) 16/20 weeks a year of
chartering completely meet the operational costs of the
superyacht. For example, a 35-meter long yacht that cost ?10
million yields ?80,000 per week; a 50-meter long vessel worth ?24
million can be chartered for ?170,000 a week and, higher up in the
range, yachts costing ?70 million and over may be chartered for
?500,000-600,000 per week.
These last considerations clearly demonstrate how the yachting
charter business is highly attractive not only for the chartering
companies specialized in this type of innovative tourism, but also
for Owners who use it to cover the managing expenses of their yachts.
Figure 1 shows the incidence of chartering in the world fleet of
deluxe superyacht. In particular, it is estimated that last year
35% of the fleet of yachts longer than 24 meters was owned by
chartering companies and this datum further confirms the
prospective potentialities of the deluxe charter market on the
international boating panorama.
Figure 2, instead, reveals the concentration degree of the
international deluxe charter market. It is estimated that 40% of
the world market is in the hands of the so-called "big providers"
which, as described above, operate on a world scale with a well-
structured network.
Continuing our analysis, figure 3 shows the number of superyachts
used in the international charter circuit classified according to
hull length. The total supply includes approximately 850 vessels
subdivided as follows:
24 - 30 meter long: 230 units
30 - 40 meter long: 338 units
40 - 50 meter long: 180 units
50 - 60 meter long: 70 units
above 60 meter long: 40 units
In other terms, 30 to 40 meter long superyachts destined to
chartering represent 39.4% of the whole chartering fleet.
Figure 4 shows the details of each group. It is important to point
out that over recent years the number of superyachts measuring
more than 50 meters in length destined to the deluxe charter
market increased.
We talked about charter potentialities but we still must deal with
the difference between motoryacht charter and sailing yacht
charter (see figure 5).
It is estimated that the deluxe motoryacht charter fleet includes
approximately 680 units versus the 178 units of the deluxe sailing
yachts charter fleet. These data reflect the composition of the
world fleet of superyachts.
In figure 6, the chartering fleet is subdivided into the different
business macro segments. As described above, almost 80% of the
chartering market, the main business segment, is represented by
motor superyachts.
When analyzing the international chartering market the
destinations of the so-called "charter Owners" are equally
significant (see figure 7). This datum is important because the
charter company has to take into consideration the ideal
geographical areas in the different seasons of the year for
adequately managing its charter fleet. It is clear that the main
destination is the west Mediterranean with a 46% share of the
whole market, while the Mediterranean Sea (east and west)
represent 64%. Other important destinations are Croatia, which
increased considerably over recent years, and the Caribbean
respectively with a 9% and an 8% share.
The last point of the analysis refers to the turnover generated by
the deluxe boat charter. Direct turnover - the purchase of the
yacht - should be differentiated from the indirect one - generated
by allied services (see figures 8 and 9). In particular, figure 8
shows the direct turnover classified according to boat length -
because length is a differentiating factor - while figure 9 shows
the indirect turnover generated by charters according to the
different geographical areas.
Within this context, allied services are very important for the
local economy of a given geographical area. Overall, the costs
reported below are some of the main expense items directly
generated by deluxe charters:
provisions
restaurants
hotels
private transport (for example private jet)
fuel
repair yard
moorings in harbors and marinas
crew
spare parts and technical assistance
traditional tourism (museums, cultural events, etc.)
In conclusion, the deluxe boat charter market is evolving, marked
by a growing demand and by a changing supply as regards the range
of interconnected services as well as the managerial approach.
Which is the future trend of the charter market? According to a
survey carried out by the Observatory of the Nautical Market of
Rome Tor Vergata University the number of superyachts destined to
charter will increase by 15% in the next three years on the
international level. Moreover, it is estimated that charter demand
will exceed the purchase of deluxe superyachts.
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