What exactly does a superyacht management company do apart from having expensive offices in expensive locations such as Monaco and Pall Mall? The names are distinguished: Burgess, Fraser, Camper Nicholson, Edmiston. They are mostly British, established in Monaco or Antibes with ancillary offices in prime yachting locations.
A yacht management company has three separate functions: operational management, sales and charter. Each function requires a different set of skills and knowledge base. Embed from Getty Images
Show a little tenderness
Operational management covers every possible aspect of a yacht from the safety procedures, refit maintenance, regulatory compliance, protection of asset, crew payroll, supply credit, insurance, flag registration. It’s a substantial investment for anyone and an asset of such magnitude needs a lot of Tender Love and Care.
Access to knowledge
A dedicated yacht manager is appointed to each yacht. The manager may handle many yachts depending on their size. The very large yachts have structured team management in place. The yacht’s manager must have at hand a wealth of experience and specific skills required for dealing with any issues that are likely to be encountered.
The yacht manager’s greatest function is as a gateway to knowledge, sourcing professionals either internally or from specialists in their field.
Two areas where knowledge is usually outsourced are Tax and Law. These are very complex and a wrong call can expose the owner to significant financial risk.
A yacht manager must also be psychologically astute and aware of the client’s own psychodynamics. Difficult truths have to be explained: the reasons why a specific expensive option is best in the long term or why local regulations impose limitations on choice.
Once a particularly aggressive owner started swearing and abusing my staff about the cost of fuel reducing her to tears. I explained cheap fuel would reduce the engine’s performance and their longevity. I asked him to stop swearing at my staff. He changed management company the next day. In hindsight i was wrong. We should have picked up on his elevated stress levels. That is also part of good yacht management
That is the more mundane side of yacht management. Sales are where the money is. There are two sides to the sales story: the sales interface and the marketing of both the company itself and the asset.
The margins are huge but so are the overheads. Monaco does not cheap. Nor does Pall Mall nor any of the high rent locations where top management companies set out their stall.
If you act cheap you get cheap.
Internet marketing is not all that expensive for a prominent media presence, relative to the value of the sector, compared with other luxury brand sectors. The yacht shows are a whole other cost bracket for brand promotion. You got to dig deep for a prime location at a yacht show. The big boys boss it out between themselves. A presence at the many yacht shows throughout the year can cost millions. If you need to know the price, you can’t afford it.
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Chartering is the only short term activity that demands a short term relationship between client and yacht. The expenses are laid out plainly, upfront. There are no maintenance issues (unless any of the charter party guests have damaged the interiors). Some clients return to the same yacht season after season. Others will ask the charter company to mix in different suggestions for the following season.
Management companies excel in brand promotion. The industry values relationships with clients, be they owners or charter parties. Added to this is the sensitivity that the yacht management sector displays in protecting its own collective brand.
Although in theory there is nothing to stop anyone setting up a yacht management company, there is a high standard of entry into the various associations and central agency that defines the pool of yachts managed. Some call this a cartel; it is, in some respects, more like a medieval guild.
If someone not in the magic circle brings a client to purchase or charter, no yacht agency is going to walk away from that. There will be profit-sharing and commission and other mechanisms in place to allow the new entrant bringing a potential client into the market. In this case, that person is normally referred to as the owner’s representative who has a special status in the yacht management universe. The owner’s representative may have rolled up their commercial activities into a separate special purpose vehicle( SPV) which defines the distinct fiscal obligations of the yacht as an asset and the yacht management agency.