Boris Miškić

It’s a few months now since the Covid 19 virus pandemic ‘ended’, was forgotten, or replaced by the war in Ukraine, so maybe it’s time to draw breath and think about how relatively recent events have affected our lives, behaviour and plans, especially related to our orientation towards the sea and the development of nautical-related businesses.

After the first major lockdowns against the spread of the pandemic – contrary to any expected reduction in consumption other than simple survival – we recorded a significant increase in the sale of pleasure boats, new and used. Reports of a ‘doubling’ of orders came from almost all markets: USA, UK, Spain, Malta, Croatia, Italy. Despite measures taken to suppress the pandemic and maintain stable production, the shipyards barely responded to the increased demands from their dealers.

So the question arises, why do people buy yachts in times of crisis? In particular, there was an increase in orders for boats of 15-20 metres in length. Perhaps the best analysis of this behaviour comes from one of the biggest dealers in Malta, known for his very friendly relationship with his customers. The closure affected people, especially senior management, forcing them to work from home, thereby spending more time with their families. Instead of working away for 10 – 12 hours per day, managers, doctors and business people discovered the possibility to slow their pace and realize that it is possible to be successful with a little less dedication to work. They simply turned to their families, and liked it! They soon discovered an active and quality way of life that could be shared with family, away from large groups of people, on their own yacht.

Increased boat sales logically influences the demand for new moorings in marinas, as well as all other services related to marine businesses.

Along almost the entire Mediterranean, the construction and reconstruction of new and existing marina projects are being started and completed. Even the ‘big players’ recognize the opportunity for investment, so we are witnessing an attempt to consolidate marina capacity by major investment funds and groups. The largest chain of marinas in the Mediterranean, ACI Club with headquarters in Croatia, together with new partner Lurssen Group, has taken over the concession for the construction of the new Porto Baroš luxury marina in Rijeka, a project that has been solemnly mooted for almost 15 years. ACI announces further expansion, both by increasing capacity and expanding services with two new members appointed to the board of directors along with investment in the development of hotels and accommodation. There is also the possibility of restarting the project of building a network of seaplane ports and transporting guests by seaplanes.

The Marina 21 group, with its initial three marinas in Croatia, has announced further expansion and acquisitions in the Mediterranean. The company’s vision is to expand its offer to users, especially offering high-quality yacht maintenance and refit.

Lürssen Group has become one of the most important investors in Croatia in a very short time. In 2020, a new yacht and patrol boat design and engineering office was founded in Rijeka, thereafter taking over the hotel company Liburnia, and building the marina in Rijeka in partnership with ACI. They continue to announce new expansions and new acquisitions in the nautical and shipbuilding sector.

After the takeover by CVC Capital Partners, D-marin does not disguise that it wants to become the largest and most important chain of marinas in the Mediterranean. D-Marin already owns or manages three marinas each in Greece, Turkey and Croatia, Portonovi in Montenegro, and marinas under management in the Emirates. Immediately after the takeover by CVC, they took over Tribunj marina in Croatia, and recently Punta Faro in Italy. New takeovers are planned, but also the construction of completely new marinas in Croatia, Greece and Spain.

In addition to the already mentioned and already established boating markets, the construction of new marinas and the significant expansion of existing capacity is being announced throughout the Mediterranean. Malta is in the process of awarding concessions for two new marinas. In Cyprus, new mega marinas are under construction in Larnaca and Famagusta. In Egypt the development of several marinas on the Mediterranean and the Red Sea are in the initial stages, and the construction of the first mega marina in Algeria is entering its final phase.

For years, Albania has been announcing a shift towards nautical tourism. The construction of modern marinas in Vlora and Saranda should start soon, and the mega marina project in Durrës includes the modification and development of almost the entire city waterfront. Israel has plans for marinas in Ashkelon and Tel Aviv, it is matter of time if and when they will become real.

There is every chance that in a few years the Eastern Mediterranean will soon reach the level of the developed Western European countries, but what does this mean for the average or new-found sailor?

An increase in capacity could mean greater competition and a possible reduction in prices but especially in the example of Croatia, we see that this is not exactly the case. All investors are promising significant increases in the quality and expansion of their service offering, as their business models count on significant increases in price to match the mooring rentals in top marinas in the western Med, but also to financially justify new investments. We are witnessing constant, and perhaps unrealistic, increases in the prices for standard services in Croatia and in Greece, where until recently local port authorities charged extremely small fees for yacht visitors in smaller towns, the government is (slowly) opening space for the construction of new, commercial capacities for yacht berths.

Regardless of the virus that is still quietly causing problems in tourism, the war events in Ukraine, and the crisis caused by the increase in the price of energy and disruptions in the supply chain, we are certainly expecting a significant growth in all activities related to the leisure marine sector and probably a realignment of relations in the entire Mediterranean Sea.

Marine business and nautical tourism has been growing steadily and permanently in recent decades, especially in the Mediterranean,  the home of yacht charters. The real growth of the business began in the 1960s, first in the economically more developed countries of the northern Mediterranean, and today occupies a significant place in the economies of Spain, Italy, France, Greece, Croatia and Turkey. Other Mediterranean countries are also developing nautical tourism, which mostly depends on the economic and political security and stability of individual countries.

Nautical tourism, with all related business and activities, is definitely one of the most important and most recognizable tourist products in Croatia. Very good weather conditions almost all year round, extremely attractive and indented coast with more than a thousand islands, excellent infrastructure and a long tradition of nautical tourism, are the reasons why Croatia is today one of the main European and world destinations for boaters.

There are almost 150,000 small yachts and boats moored in unclassified and / or organized local municipality ports, owned by the local population, mainly for sport fishing and for personal leisure use by owners and their families. Additionally, in designated Croatian commercial nautical tourism ports  and marinas there are about 14,000 boats and yachts for commercial leisure. The classification in Croatia defines 185 ports of nautical tourism, with a total of 18,625 berths, of which 64 are standard commercial marinas with annual mooring berths, with about 16,000 berths in the sea.

Statistics show that in 2020 there were about 0.4% more vessels on an annual berth in marinas than in 2019, but the same statistics also record an extremely large decline in vessels in transit. The number of daily visitors into marinas was 40.7% lower than in 2019, which causing a significant decline in marina revenues, but also a decline in all other nautical-related activities. This negative result is definitely a consequence of the Covid 19 pandemic, and in relation to the spread of the disease, epidemiological measures taken to limit the spread of the disease.

The pandemic certainly had the most significant impact on charter agencies. According to relevant information, Croatia has as much as 40% of officially registered yachts for rent in the World. In accordance with the tradition of nautical tourism, the charter activity is very well administratively organized and legally regulated. Currently, about 950 charter agencies are active in Croatia, and about 4,650 yachts are registered for exclusively commercial rental purposes.

Most of the yachts are family size vessels, 10 to 18 meters long, with 2 to 4 crew cabins. The users of this service are families, sailing schools, or groups of friends, who organize their active vacation in one of the most hospitable waters for this type of tourism. Managers, architects, doctors, workers and entrepreneurs, during one or two weeks become Masters of the ship, and decide about visits to various seaside places, or on an overnight stay in protected natural bays. Swimming in the crystal clear sea right next to the boat, or visiting cultural and historical sites, as well as an exceptional gastronomic offer, make this type of tourism very attractive. Recently, during different closures in some countries caused by epidemiological measures, people have become much more cautious. Unnecessary crowds are avoided, a kind of distancing from other groups or strangers is required. In this sense, all travel agencies are recording fewer inquiries for hotel accommodation, and an increase in interest in renting detached apartments, caravans, holiday villas, and thus yacht charters. Unfortunately for the nautical industry, instead of the season that would otherwise begin in April and end in late October, increased interest is shown most for the center of the season itself, from mid-June to mid-August.

At the beginning of the year, several thematic online conferences were held where various reports and predictions related to nautical tourism in the post-Covid period were discussed. At the International Breakfast Meeting 2021, a virtual conference organized by Boot Dusseldorf and the European Boating Industy, the reports of the European Commission’s research on travel and tourism trends in the ‘post-corona world’ were also presented. It was concluded that recreational navigation will certainly play a key role in rebuilding the tourism economy, but also in the light of the agreement on the European Green Deal and the forthcoming Sustainable Blue Economy Strategy, the opportunity for political decisions will be used to ensure improved environmental protection and cleanliness of marine areas. It is certainly necessary to harmonize regulations by individual countries, and the nautical industry will have to adapt to increasingly stringent environmental standards.

In addition to such conclusions, the results of a survey on the opinion of the tourists from European Union were presented. According to them, almost half of the tourists who are planning this year’s vacation, plan their trip during July and August. Almost a third plan a vacation by the sea, and about 13.2% of tourists plan to sail. Such results or intentions of tourists are mostly conditioned by changes in behavior in the Covid 19 crisis. The effectiveness of crisis management in individual countries and trust are key factors in choosing a destination. The flexibility of canceling arrangements, as well as health and safety protocols when crossing borders and staying, are certainly high on the list of priorities.

From the position of charter agencies, focusing on the center of the season is not the happiest solution. Most charter agencies are planning the periodic procurement of new vessels in order to maintain a high level of customer service. The purchase of yachts is most often financed through leasing, which means that there is a significant financial burden on shipowners. Often, annual repayment installments are the biggest expense in the operation of agencies, and it is impossible to reimburse it if the boat is rented for only 10-12 weeks. In order to survive, the agencies will be forced to reduce they own fleet, means to sell ships and even under unfavorable conditions. The Association of Charter Agencies estimates that by the beginning of the nautical season 2021, the number of vessels has already decreased by about 10% compared to the number of vessels in the charter in the 2020 season, and some agencies have closed their offices. On the other hand, there is an opportunity for potential private boat owners to get their own boat on much more favorable terms. Most brokers for the trade of used vessels record an increase in demand, and an increase in sales of used vessels, not just from charters. Likewise, most yachts manufacturers are recording an increase in sales of new boats to private owners.

In addition to these scanty numbers and predictions based on them, it is worth noting the general change in human behavior, caused by uncertainty during the pandemic, following of new information and changes on a daily basis, closing of restaurants, shops, schools and cultural institutions … New various conspiracy theories emerged, especially when looking at news from Northern Italy with countless deaths. People have started to divide into those who think that governments and journalists are lying and exaggerating the danger of the virus, and those who think that governments are lying because they hide real numbers and that the reality is much worse … yet, on the other hand, people in isolation they began to think about the transience of the material values, about the futility of the race for earnings through a 16-hour workday. We turned back to families and learned to appreciate free time and moments spent in nature and freedom with loved ones. Is there anything better than sailing by boat and surrendering to the sea and natural forces? It doesn’t matter if the boat is smaller or bigger, is it rented or your own.

Did we need Covid to slow down, and make better use of our time? Will we still be able to find a new balance after Covid? I believe that we will, and that nautical activity will get a new wind in the sails even after Covid.

Boris Miškić | GMBA,Croatia
Email: boris.miskic@gmba.blue
Mob +385 91 1264 461

Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA