Friday, November 20, 2009

Global Superyacht Forum 2009 - It Is Not All Smooth Sailing...Referrals May Put Wind In Some Sails (err, Sales).

I just returned from four days in Amsterdam attending the Global Superyacht Forum sponsored by The Yacht Report Group and held in conjunction with METS, the world's largest marine hardware show.  It was a very interesting, if not terribly upbeat, few days.




Without boring you too much, the focus on the non-technical areas of the superyacht industry was basically the industry has changed significantly and will not be returning to the glory days of the bubble.  Owners are having concerns about shipyards being able to complete work properly, if at all, and shipyards are faced with owners who are defaulting on contracts, canceling contracts or delaying work (both new-build and refit). 

Also, the three to five year backlog of work bragged about just two years ago has all but disappeared.  New build shipyards are looking at completing most of their work by the end of 2010 or early 2011 and there really is not much in the way of new contracts forthcoming...and with some of the cancelled contracts having recently occurred, 2011 is looking sort of like tomorrow.

This problematic situtation is due, in large part, to the lack of bank financing (a concept we all understand....too well) which has not only affected the new-build, but the resale market that is now all but non-existent.  News of a significant superyacht being resold is, well, news.  During the forum discussions I raised the issue of why banks - during the bubble - looked at a silly ROI (return on investment) analysis and ignoring the common sense concept that yachts - like cars - are really depreciating assets, both of which assisted not only in hyper-inflating the prices, but which allowed people who could not afford a yacht to buy one...and now drive the prices down as they need to unload them.  (Sounds like the housing bubble doesn't it?  Now just add some zeros!)

One point raised by three superyacht owners (I understand two remain billionaires) is their upset with lack of service.  The concept of a new yacht having a 12 month warranty, while the television on the yacht having a 5 year warranty, seemed both illogical and greedy.  The failure to even offer a 10% discount on a servicing...and they are very expensive...was mentioned as a significant sore point.

And then it struck me:  The greediness of the past years caused the yachting industry to stop doing what, for example, The Yachts of Seabourn, has as its cornerstone:  Never saying "No".  It is, in real terms, the concept of making things as easy as reasonably possible for your client (yacht owner or yacht guest) and finding a way to make things happen.  As I then urged during a Q&A session, the luxury yacht business needs to follow the luxury cruise business which thrives on referrals.  Glossy ads may get some clients, but the real long-term clients are ones that were referred or refer others.

The moderator then turned to the three superyacht owners and posed a question, "How may of you have made a referral to the yard that built your yacht and, if you have, how many?"  The answer was what I expected, but was shocking to most:  A total of one referral had been made and that referred person lost interest within a year.  No referrals in hard times has meant no business.

So I now pose this to you:  How many of you actually refer clients to a particular cruise line?  Why or why not? 

And I also ask, "How many of you refer people to your travel agent?"  If you do not, is it because to you it is all about price (see above if you think that is a good answer!)?

Join the discussion at The Gold Standard Luxury Travel Forum!