FACING DOWN COVID: HOW YACHTING HAS SUCCESSFULLY WEATHERED THE PANDEMIC STORM
As the dust settles on what can only be described as a wholly unusual year, the superyacht sector reports an unexpectedly buoyant performance in 2020. Despite initial market scepticism over the yachting industry’s ability to quickly bounce back from the pandemic, over 680 new and pre-owned superyachts were sold in 2020 with a total of 984 new vessels coming to the market. This positive news is in large part due to strong activity in the second half of the year. Yacht sales from July to December closed on a 21% increase on the same period in 2019 and a 7% increase on 2018.
Ranked among the top three brokerage companies globally in 2020, IYC retains a solid reputation and strong sales record. Its total value of yachts sold in the past year amount to more than $450m. Alongside the 40 pre-owned yachts sold by IYC, it also secured four new build sales in 2020, two of which are yachts over 70m.
“The consensus that prices would come tumbling down and that an abundance of yachts would come to the brokerage market did not materialise, making 2020 a very strong year”, says IYC’s Global Managing Partner, Michel Chryssicopoulos. “Despite global lockdowns and the serious travel restrictions, sales levels in 2020 reached the same levels as 2019.”
The market’s robust sales performance can be put down to a number of key extenuating factors. Worldwide restrictions on travel saw superyachts singled out as a secure haven on which UHNWIs could spend weeks, if not months, on board while remote working and cruising in comfort and safety. As such, 2020 saw a sharp increase in the number of first time yacht buyers, even in larger size segments, as well as existing yacht owners choosing to upsize.
In addition, the sharp increase in immediate demand saw many buyers opt for the short turnaround offered by pre-owned yachts over new builds. Of the yachts sold in 2020, 75% were used vessels, and 75% were in the 24m – 40m size range. It’s also interesting to note that alongside American clients accounting for over 50% of total charter bookings, the US accounted for 37% of total yacht sales in 2020, with Benetti, Sanlorenzo and Sunseeker recorded as the top three builders in terms of yacht sales between 2018 and 2020.
IYC’s outlook on charter activity remains equally as resilient. It successfully maintains the largest charter fleet worldwide and was the only brokerage house globally to list in excess of 100 charter yachts in its fleet in 2020. That is not to say that the charter market did not suffer early on. As the pandemic took hold in March, the early months of the 2020 summer charter season took a significant hit, with several charters between March and September 2020 cancelled or rescheduled.
However, come June, several European cruising destinations around the world opened up, including France, Italy, Greece and Croatia, and a surge of last minute charter requests flooded the market. As a result, a staggering 70% of global charters booked in July and August were reserved 30 days prior to the embarkation date, flipping the typical model of a two to six month lead time on its head.
Simultaneously, fewer yachts were able to make the summer season transatlantic crossing from the US to the Mediterranean, which resulted in an increase in 40m+ vessels available for charter in areas such as New England and the Bahamas. While the typical East and West Mediterranean destinations of Greece and Italy were down on 2019 charters by 33% and 39% respectively, the Bahamas and the Caribbean saw an increase of 12% on bookings, while New England enjoyed a whopping 52% increase. That said, France remained the most active charter destination throughout 2020. Compounded by the safe travel bubbles provided by private jet partnerships, the charter market weathered the Covid-19 storm surprisingly well. IYC’s charter director, Heather Hatcher, predicts the yachting hubs of France, St Barts, the Bahamas, Italy and Greece will remain 2021 charter hot spots.
Among potential factors that may impede sales growth in 2021, Chryssicopoulos lists a mismatch between buyers’ and sellers’ expectations on price, the impact of continued travel restrictions (particularly with regards to logistics for surveys and sea trials), and a decline in supply.
“I feel there is a dwindling stock of newer vessels, with a particular lack of commercial or pedigree yachts and a notable lack of stock in the 60m+ category as well,” he says. “Yards are still riding the wave of 2019 but will soon start being in need of new clients. Higher competition in the 60m+ size segment may see shipyards offering incentives and making price adjustments to boost sales.”
Despite this, Chryssicopoulos remains “cautiously optimistic” for 2021: “The pandemic has made many people realise that a superyacht is a safe haven, where one can safely isolate and enjoy multiple destinations in safety, and this realisation has fueled a steady demand.”