It’s mid-January already and 2024 is moving along at a rapid pace. Whilst the industry is positive many feel that particularly the global market for charter will settle into a slightly slower growth pattern this year. I canvassed the views of some key industry players in the Australian and New Zealand superyacht charter industry keen to get an understanding for the year ahead. There is no doubt that the current global conflicts and the US elections have made people cautious, and, in many instances, they are standing back, and doing nothing seems to be their default position.
I recently read an article from Superyacht Investor where Jamie Edmiston, CEO, Edmiston said “This is no time for vanity pricing.” Whilst I think Jamie was more talking about global yacht sales than chartering, this comment resonated with me as there is a lot of talk globally and locally here in Australia and New Zealand about value for money, transparency and all-inclusive pricing in the market and this comment seemed to reflect what the market is saying.
“My experience with Aurora has in the main been positive and the charters we have conducted have received excellent feedback and fortunately I have so far met my expectations in terms of revenue. The corporate day market is certainly a key market for us and prior to Xmas we were extremely busy in this space. One thing that has really surprised me is how competitive the market is and yes there is definitely pressure on fees and a certain fickleness in the market. It is clear to me, just like any new business you have to work it and ensure all elements of the guest experience are as positive as they can be. This starts with your website, the brokers and management team you select, the crew, the food, the itinerary and ensuring that the boat is always client ready. Like a number of owners. we saw a change in the New Years Eve business and in fact had a charter cancelled at the last minute. Given a number of reasons the deposit had not been received. A lesson well learnt. To then get a charter at the last minute we were asked to discount our fee heavily which I personally decided not to do. We believe we have a competitive rate, and our offering provides value for money and like any business discounting is not a strategy you want to pursue. My experience so far has taught me you need to understand the fickleness of the market, you can get numerous enquiries and get excited thinking you have some good pending charters and then they just all disappear into the ether. Whilst the brokers I have relationships with are professional and a pleasure to deal with I have experienced one who was not as transparent, but I guess that is all part of my learning curve. I understand no matter who the client is or how much they wish to spend; they want value for money and feedback now also suggests the option of all-inclusive pricing is becoming important. Overall, I have a very positive view for the Australian charter market for 2024.“
WHAT THEY ARE SAYING IN AUSTRALIA
The Australian corporate yacht charter market is an important component of the Australian superyacht charter market, and it is great to hear this has returned to pre pandemic numbers. It appears the demand for corporate entertaining, be it end of year parties, staff incentives, networking opportunities or brand product launches, is growing with the propensity to spend on yachts no longer looked at as a negative. It would seem companies are willing to spend corporate money on business chartering for day events domestically however what appears evident is that when it is a personal holiday Australians are preferring to head overseas.
The term charter market still has some way to recover back to pre-pandemic numbers. With international borders open and likely to remain this way, the confidence for international travel has been restored. The adventurous and explorative Australians are back exploring Europe and the Mediterranean in their summer, as well as North America and Japan for the winter escapes. As a result, we are not seeing as many Australians exploring the Whitsundays or Great Barrier Reef on board yachts as we were a few years ago.
David Good CEO Superyacht Australia said, “I recently attended a brokers famil on Big Sky, a very impressive Superyacht recently purchased by Paul Darrouzet. It was great to hear the positive chat from brokers who were optimistic about the year ahead and having yachts like Big Sky available for charter. There is a positive vibe in our industry with key players like Riviera and Maritimo planning for growth and the industry remains confident 2024 will still provide good sales. Our biggest concern is access through the two canals, low water in Panama and the Red Sea security will stop or slow vessels including cargo deliveries both ways. “
Whilst the interest in chartering superyachts has increased, charterers are still being diligent with their spending. The days of exorbitant NYE charter rates seem over, with many yachts remaining unchartered and others being chartered only 24 hours prior at considerably discounted rates. There continues to be a demand for all-inclusive fees which Australians particularly prefer and are used too.
Cameron Bray, Chair of Superyacht Queensland stated, “We are seeing more charters booked through high end travel companies, as they book the entire end to end trip for their clients, and again the all-inclusive is easier for them to invoice as the client knows what they pay on the way in, and the agent knows their commission.
The tyranny of distance is still a challenge, but we are seeing Europeans and Americans slowly making their way back to Australian shores. The industry is seeing increased demand in the South Pacific for yacht charters, and one expects in another 12 months this will lead to clients taking that extra step from the South Pacific to Australian shores. Australia is still at about 90/10 domestic vs international charters whereas pre covid ratio was about 70/30.”
WHAT ARE THEY SAYING IN NEW ZEALAND
On speaking with stakeholders in the New Zealand market, the strict closures of the New Zealand border during covid, the loss of the location for the Americas cup, poor weather and bureaucratic processes have contributed to a slower start to the 2024 superyacht charter sector. However New Zealand is a destination high on the list of many superyachts and New Zealand will be welcoming a number of these in 2024. It is expected the newly elected National government in NZ will introduce initiatives that will improve the environment for the business community and the marine sector will hopefully benefit from this. Whilst vessels are allowed to charter in New Zealand it can sometimes be frustrating for agents when working with the bureaucratic processes and the lengthy times this can sometime take. An issue many countries tend to face.
Peter Busfield, CEO Marine NZ, works closely with his Australia and Pacific counterparts to promote the entire region and made the following comment.
“The New Zealand industry continues to work closely with government to streamline and refine the charter regulations and we have been able to make many positive changes over the years. With a new government now elected we will continue our drive to make chartering in NZ as simple and welcoming as it has always been. We strive to create the best possible environment for our members and for the superyachts wanting to charter here.”
Ben Osbourne, a board member of the Marine NZ Export Group commented.
“The corporate/day charter market in New Zealand has been slow this year – the general feeling is that this is largely due to the terrible weather we had last summer, many were burnt on deposits and there was some reluctance to commit this year. The number of yachts available for day charter remains steady, with very few equipped for longer term charters. We have had some visiting foreign flagged vessels make themselves available for charter, but demand from international travellers is low – land-based travel is seemingly a much more appealing option. In addition to this, many of the foreign flagged vessels equipped for longer term charter and at a more affordable price point have difficulty getting approval from Maritime NZ to charter here – this is a constant source of frustration for owners, potential charterers, and industry. We are also seeing an increase in the number of New Zealanders looking at yacht charter in the Mediterranean and South Pacific (Fiji, Tahiti).
Both the New Zealand and Australia superyacht sector have done considerable work with government to create a welcoming environment for visiting Superyachts. The investment by both countries in infrastructure and facilities has been significant. The desire to cruise down under is high so one expects the number of superyachts who will head this way will increase over the next few years.