Natural Selection at Work?

17 April 2009 By Claire Griffiths

To get a feel for the economic currents swirling out there, 20-plus captains were surveyed at the 9th Azimut-Benetti Yachtmaster in Marrakech last month. The three question survey produced mixed results.

To the statement, “My boss has changed his yachting lifestyle drastically,” just under 50 percent agreed that budgets have been cut, crew dropped and itineraries sliced. Others disagreed, claiming it was too early to tell or that owners were low profile and modest and would remain so.

To statement two, “There are large cost savings possible on my yacht;” again, just more than half disagreed and warned of the impact of short-term savings on the yacht’s future performance. The only real option to make savings was by dismissing crew.

Finally, to “Crew salaries will drop,” a small majority disagreed, but accepted that entry-level salaries are likely to drop and wage rises will be less dramatic. Interior crew salaries are already out of line, some said. The change in exchange rates has meant some captains have suffered pay cuts as high as 25 percent. Hein Velema, CEO of Fraser Yachts, gave his impressions of what the future holds for the yachting industry during the seminar.

Choosing to keep his thoughts carefully balanced between the good, the bad and the ugly, the summary holds few surprises – the credit crunch is going to weed out the weak and leave a stronger, fitter industry in its wake. The wealthy have lost money and it has become less socially acceptable to be seen owning a yacht, Velema says. What’s more, yacht finance options are limited. But on the other hand, there still exist a large number of wealthy people waiting for the right opportunities to come along. Real yachtsmen, Velema believes, will not abandon their boats.

On the supply side, shipyards with high debts will find it difficult to survive and new shipyards that have yet to build up enough “fat” will go under. But costs of materials and supplies will drop and stable shipyards will increase their market share. Efficiency will increase.

Service-wise, Velema believes, there’s a strong focus on cost saving with crew salaries dropping and yachts being put to sleep (he knows of one yacht once 38-crew strong now down to only six). But on the sunnier side, charter revenues have become more important with charterers making last-minute bookings. There are plenty of experienced crew available and Velema believes the number of yachts will keep growing in the next couple of years.