June 25, 2010
Yacht owners may have hit a bit of an economic snag over the past two years, but they are still under way, according to the people who work directly with them, megayacht captains.
The actions of yacht owners affect the careers of everyone in the yachting industry, so at this month's Triton From the Bridge captains luncheon, we invited captains to tell us what is in the boss's mind and wallets.
"There's a lot of money on the sidelines, and since people are seeing that it [the banking crisis] didn't cause a complete global collapse, money is freeing up," a captain said.
"Everyone seems to be more frugal, but the guys with money still have it and will continue to have it," another captain said. "They are all looking for deals."
At the monthly luncheon, individual comments are not attributed to any one person in particular so as to encourage frank and open discussion. The attending captains are identified in the photograph above.
The discussion centered on the financial situation in the yachting industry and not the economy as a whole.
"People say 'the economy this and the economy that', but not really in boating," a captain said.
While it may look and feel like yacht are moving again, it may not necessarily be from owners.
"Lots of these owners are in the car and construction industry and they have or had strong cash flow when things were good," a captain said. "The economy is cyclical -- this time more dramatically so -- and some of the guys that are more down don't have time to use their boats. They need to be working all the time to get things back moving."
Instead, yachts are being signed into charter fleets in an attempt to offset operating costs and to just keep them moving, they said.
"Agencies and management companies push a lot of owners to charter, telling them they'll make money," a captain said.
One captain reminded attendees that the people who own yachts are financially savvy and they have learned how to protect their investments during economic fluctuations. How they do that is by watching costs and maintaining caution, one captain said.
Therefore, several captains said they are less aggressive in negotiations with owners over salaries than they used to be and most agreed they try to spend less where they can in the yacht budget.
"I do think owners are re-evaluating everything," a captain said, "They won't downgrade, but they might cut something. If the family likes the pool at a marina, they are not going to give that up, but they may give up something else."
"People with money know how to use difficult times to their advantage," another said.
"The big thing is to save the owner money before he asks," added a third.
The captains in attendance knew of their peers who were out of work and the group agreed crew are still being let go as cost-saving measures for the owners.
"I don't think we're seeing high-profile examples like the Highlander anymore," a captain said, referencing the Forbes family yacht that was mothballed in 2009.
"I do think there are lots of captains unemployed," another captain said. "I know someone in crew placement that said they are still getting calls from out-of-work captains."
"A situation that is still going on at the corporate level is that they will call and ask, 'how many crew do you have, 14? How about 12 instead?' and then we make it work," said a third.
All the captains agreed that the crew who are left, including themselves, have to do more work due to cutbacks.
Perceptions over the past two years have been that owners lowered their visibility and did not use their yachts for fear of appearing ostentatious in the face of cutbacks and lay-offs within their companies.
But several captains think public perceptions are not a large consideration for most owners.
"A big issue is whether the boat is a company asset," a captain said. "If it is, then that can look bad when guys are getting laid-off."
"The yacht really shouldn't be a company asset because if it is an owner's personal asset, then it's his business what he does with it," another said.
On the other hand, some owners have begun spending money on their boats.
"I have a guy that was waiting for money to come from a lawsuit he won and when that came in he was back in business," a captain said.
"I've got an owner building two new boats," another said. "He loves yachting and will stay in it."
"I think lots of them put off work two years ago, and now they realize it just has to be done, no matter what," said a third.
Several captains acknowledged that owners are selling their yachts, but that finances had nothing to do with the desire to get rid of them; instead, they were personal desision, including that their wives weren't interested in yachting anymore.
One captain pointed out that no one may ever know the real reason an owner makes that choice.
"No one wants to say 'my wife is making me sell,' right?" this captain said. "How honest is your owner or what does he really tell you about his finances? He doesn't have to tell you about his business."
While the group was divided on whether the economy is recovering, they did agree that owners will continue to make way in choppy seas.
"There are just too many variables," a captain said. "We will always have ups and downs."
"We will see more buyers," another said.
"And," added a third, "owners will still push for a deal."
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