In the current economic downturn, more and more charter yacht owners are making the tough financial decision to take their yacht out of service, either for the summer season or the indefinite future – and are hedging their bets by putting it up for sale as well, as said in the “Yacht Hibernation” forum on Dockwalk.com.
“We didn’t get one confirmed charter for the Med season,” says Capt. Peter. His over-120-foot yacht got quite a few inquiries, he reports, but even regular clients seemed reluctant to sign an advance contract. “Their brokers are telling them, ‘You’re in a buyer’s market…you can book late.’”
The lack of confirmed bookings prompted the owner to cancel plans to take the yacht to Europe this spring. Instead, he says, “The plan is to get to Fort Lauderdale and let go of about half of the crew.”
The owner’s decision didn’t come as a surprise to the crew. “I was giving them warnings that things were heading this way for about the past two to three months,” Capt. Peter says. Besides, he adds, “The crew are on the Internet all the time. They could see it coming.”
The yacht now is en route for a Fort Lauderdale shipyard. Once there, Capt. Peter will shut down all expensive services on board, such as VSAT. But the greatest cost-savings will come from laying off all but a skeleton crew. “The crew is almost seventy percent of the cost of running the boat,” he says.
The yacht will not be “mothballed,” however. Capt. Peter will stay on to maintain it along with one interior and one exterior crewmember. “Mothballing a boat of this size is not healthy,” he says. “All the mechanical devices will be run once a week.”
Kent Chamberlain, owner of PartnerShips LLC, heartily agrees. “There were some lenders that were truly ‘mothballing’ them. They threw the crew off and locked the door,” he says. “It didn’t take long before it was truly damaging to a yacht.”
Chamberlain recently started a “Yacht Hibernation” division in addition to PartnerShips’ yacht management and fractional ownership businesses. It's designed to help yacht owners with “furloughed” yachts and banks with repo’d boats on their books to maintain these vessels cost-effectively without losing resale value. “We save fifty to seventy percent off the cost of operating the yacht,” he says.
Demand for the new division’s services is high, he reports. “We’re seeing more of it by the week, never mind the season.”
A yacht making use of PartnerShips’ hibernation service is docked at a shipyard, marina or even behind a private home, depending on the circumstances. The company works with the owner or lender to choose the right skeleton crew to stay aboard and maintain the systems.
While the yacht’s own captain and some of its crew often are retained, it’s important to hire “crew who know how to manage the yacht in that state,” Chamberlain says. “Sometimes there are wonderful captains who come in with the boat, and they simply don’t want to be a hibernation captain.” In those cases, PartnerShips might suggest that the engineer be put in charge of the vessel, or a captain looking for a local, nine-to-five job be hired instead.
Chamberlain reports that his company also uses its crew placement division to help the displaced captains and crew find jobs when possible.
Once a yacht is in hibernation, owners need to know that reinstating it to active duty will take some doing. Capt. Peter says, “We’ve let all our regular clients know that we’ll be in Fort Lauderdale, and we’ll be available for charters in The Bahamas.” But not at the drop of a hat. He told his boss, “Don’t expect that I’m going to be able to get this boat out of the ‘parking lot’ in a day. It could take a week.”
If enough Bahamas charters come in, it might save his crew’s jobs after all. On the other hand, since the yacht also is for sale, a new owner might come in and change the game completely.
Capt. Peter says, “What our future is, I don’t know for sure.”
Forums: Yacht Hibernation