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An industry on lockdown

The response of the superyacht industry to the arrival of COVID-19 in Europe was, by and large, Trumpian. The mood was optimistic. This doesn’t happen to us. We are special people. Some brokers even went as far as to reassure potential charter parties that a superyacht is somehow immune from the virus, given that they are scrupulously cleaned from top to bottom, inside and out, 24 hours a day, and additionally, they are at sea. This ignored the possibility of an outbreak and the entire yacht, guests and crew, subjected to quarantine offshore.

The charter industry has quickly reached agreements with their insurers to include an additional clause in the charter contract, a so-called addendum, which allows the client to cancel without penalties and deposits refunded in case of escalation. There will be many worried people who have deposited funds before this clause was added. In many cases, the principle of Force Majeure will allow them to cancel but the lawyers will have to look at the deposits paid.

Regardless of how a superyacht can ever be exempt from the laws of physics and contagion, the likelihood is that most cruising areas in the Med will be on lockdown by the time the season starts. Even if superyachts are allowed to continue to operate – unlikely – it is simply not permissible for affluent guests to continue to enjoy a vacation while whole communities are locked up at home, scared and worried and possibly deeply pissed off. This would be a public relations debacle  that societies and their legislatures will not forget.

 

It is perfectly understandable why the brokerage industry is loath to admit that all is not well. They all have offices in the most expensive parts of town, Monaco, Antibes, Pall Mall; they have staff and lifestyles to pay. To make a splash in the brokerage industry you need a steady high revenue to cover the high-cost base. But the industry has to be an honest broker, the shining office by the sea. There needs to be a unanimous collective decision to lock down the industry until the coast is clear and society at large feels confident enough to resume a normal life. How long this will be is another matter. The season in the Med has not started yet and by June this may well all be over. In which case the industry will have seen to have presented a united front in the face of a common threat.

The USA response has been similarly muted. The Superyacht Show in Palm Beach is still scheduled to go ahead ( as I write), though this will probably be canceled as the contagion expands exponentially. The investment in the show has been huge with many of the world’s most luxurious yacht berthed there. However, many of the super-rich have bunkered down for the duration of the pandemic. Given that the virus lasts for 30 minutes in the air and can travel four and a half meters before breaking down, no amount of deep cleaning and hand sanitizers is going to lure them into a crowded yacht show.

Another issue facing yachts is crew rotation. Visa restrictions and border closures are making it difficult for crew to reach yachts. The existing crew may have to stay put but for how long? That is the question the whole world is asking. How long?

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The brokerage industry is well known for its exclusivity. The joke is that you can’t join MYBA until you have brokered a yacht and you can’t broker a yacht unless you are a member of MYBA. Some of the brokerage companies have deeper pockets than others and can afford to adopt a Darwinian attitude to some of the arrivistes who find themselves stretched. Old money versus new, and unlike Covid-19, many of the older organisations with a strong  asset base are less exposed than the young.

The superyacht industry will doubtless rise to the challenge. Deposits refunded. Small operators helped financially. Crew compensated. A public relations phoenix will rise from the ashes of a short season. The industry relies on a network of suppliers in the Med who depend on the season’s earnings to cover the downtime. This financial assistance will ensure that the industry will be able to deliver the same level of services after the deluge. The last thing we need is for the virus to infect the financial well being of the entire industry forcing suppliers out of business.

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