Megayacht Roulette: An Unfortunate New Parlor Game
As long as supply exceeds demand and financing remains tight, megayacht builders are at risk.
December 16, 2010
Welcome to the 2010 Antigua Charter Yacht Meeting, an industry-only event where leading brokers from around the world spend five days inspecting more than 100 luxury charter yachts. One of the highlights of the show each year is the luncheons, during which the yacht chefs try to wow the attendees with gourmet cuisine, enough so that the brokers will tell their clients, and media will tell their readers, and charters will get booked.
Industry insiders predict that the megayacht industry could soon see some major companies merge or fold.
On the first day I attended a delicious luncheon aboard the 130-foot Christensen motoryacht Sweet Escape, as a guest of management company Northrop and Johnson. I could write volumes about the seared scallop, filet mignon, and wasabi mashed potatoes, but the real story is the conversation that occurred around the table. Top charter brokers and media from the United States and Europe sat overlooking the Antigua Yacht Club, in a warm island breeze, and shared tidbits that they had heard here and there in recent months.
The consensus was that, within the next year or two, some serious, brand-name shipyards are likely to be forced into mergers, or out of business altogether.
It would be unfair of me to name names. Suffice it to say that the shipyards seen as most vulnerable are well-known and well-respected, on both sides of the pond. The trouble is a lack of new megayacht orders, something that Oceanco CEO Marcel Onkenhout spoke about less than six weeks ago at the Fort Lauderdale International Boat Show.
As he explained it then, virtually all of the megayacht shipyards are in the same position following the global recession. They are completing the orders they had before the downturn—these yachts take about three years to build—but have no new orders coming in. The few clients who have begun calling again after a dismal 2009 are once again interested in buying, he said, but banks have tightened lending so much that financing is impossible to attain.
The gourmet luncheons are one of the highlights of the Antigua show.
These same realities were the focus of my luncheon discussion, with charter brokers trying to anticipate how the megayacht shipyard situation will affect the charter industry a couple of years down the line. Right now, according to the brokers I spoke with, yachts larger than about 150 feet are having little luck booking charters this winter in the Caribbean. While the less expensive end of the market is beginning to show signs of recovery, these megayachts may not enjoy a serious return of business until there is once again more demand than supply—something that may only occur when the new-megayacht shortage hits in the next three or four years.
That’s a dire prediction for the next few Mediterranean and Caribbean charter seasons, and it’s an unfortunate new parlor game that is likely to continue for some time. The one certain thing is that, as with any business, perception can become reality—and the perception right now, at the tables where people-in-the-know are talking quietly amongst themselves, is that not even the most historic yachting brands are immune from continued economic turmoil.
Read more: Custom Megayacht Builders: a Dark Economic Forecast
Kim Kavin is an award-winning writer, editor and photographer who specializes in marine travel. She is the author of six books including Dream Cruises: The Insider’s Guide to Private Yacht Vacations, is editor of the online yacht vacation magazine www.CharterWave.com, and writes the blog at www.BrokerageBoss.com.
