The Economic Impact of Coronavirus on the Luxury Yacht Industry

It’s been an unprecedented year, with the COVID-19 pandemic wreaking havoc across the globe and turning many businesses, including the travel industry, on its head. No sector has been spared, including the luxury yacht industry. 

Indeed, with borders closed overnight, airlines grounded and entire populations ordered to stay at home, the economic impact of coronavirus on the luxury yacht industry was never going to be negligible. 

And for a number of weeks this spring, the luxury yacht industry literally ground to a halt, with crews marooned on yachts in the Caribbean, entire shipyards working from home or furloughed and the summer’s charter plans thrown into doubt. 
As countries started to recover from the COVID-19 crisis and borders reopened, the luxury yacht industry got a late reprieve. But was it enough to stave off economic peril?

The economic impact of coronavirus on the charter industry 

Global lockdowns made the start to the Mediterranean charter season extremely difficult, with charters cancelled left, right and centre due to the COVID-19 pandemic. However, once travel restrictions were lifted, superyacht charter enquiries rapidly picked up as concerned clients sought safe ways to enjoy a holiday, with many brokers reporting figures that soared above previous years. Some of our clients reported that, despite the break in chartering and the fact that they were seeing more business from families who don’t typically charter renting smaller boats this summer, their financial gain had only increased from last year. 

With extensive testing for crew and clients before yacht charters as well as new hygiene protocols, guests have been able to travel in absolute safety in all the usual summer charter hotspots such as the French Riviera, Italy, Croatia and Greece. The Eastern Mediterannean countries of Croatia and Greece have, up until now, been less affected by coronavirus, and have seen a particular upsurge in yacht charters.  

However, these countries and much of Europe are currently suffering from an increase in cases and restrictions could well be reinforced, as they have been in some Spanish regions. Enforced quarantines of two weeks for all travellers coming from Spain, France and Croatia will also mean that many clients hoping for a September luxury yacht charter will have some difficult decisions to make. 

Many yacht brokers are seeing that clients who traditionally book yacht charters in the Med over the summer have shifted their plans to travel instead to the Caribbean this winter.

Has COVID-19 made it more expensive to charter a yacht? 

The COVID-19 crisis has without doubt led to an increase in costs for yacht owners, such as additional cleaning, personal protective equipment (PPE) and testing for crew and clients. But brokers are adamant that these costs will not be passed on to the guests. However, they also stress that yacht charter prices are unlikely to decrease as the cost to maintain yachts in tip top condition so that they meet all the safety requirements has never been more expensive.

Another change for yacht charter agencies has been the need to modify charter contracts that allow clients to rebook or cancel their holidays in the light of the pandemic. Sudden changes in travel restrictions are now a norm, and brokers are having to adapt accordingly so as to make charter agreements as water-tight as possible.

The economic impact of coronavirus on yacht sales 

Investing in a superyacht is a huge expense and not one that can be taken lightly. In previous years, sales have often been concluded at any one of the number of international yacht shows that take place over the world. However, due to COVID-19 many of these shows have been cancelled, starting with the Superyacht Show Palm Beach in March and more recently, the Monaco Yacht Show, which was meant to take place at the end of September and typically represents the end of the Med season. 

The lack of yachting events, coupled with the closure of shipyards to clients for health safety reasons, has meant that yacht brokers and shipbuilders have had to rethink their marketing strategies to make them COVID-proof. Digital tours have now replaced physical ones, but even the most hard-selling brokers will admit that when clients are making such a big investment, nothing can replace a personalised visit. And while there may be an increase in people considering buying their own superyacht to escape the horrors of coronavirus, it may be a while until these dreams are converted into sales.

How has the yachting job market been affected by COVID-19? 

Unfortunately, like in so many industries, the coronavirus pandemic has had far reaching repercussions for the yachting job market. March, April and May have traditionally been the busiest time for yacht recruitment. However yacht jobs fell by 80% this April compared to April 2019. And of those that managed to keep their jobs, 25% said they had been forced to take a pay cut; according to YPI CREW

Shipbuilders have also been hardly hit, with Sunseeker announcing job losses as well as Westport in the US, who have recently laid off 300 employees as a result of Covid-19.  
While the yacht charter industry was, in some ways, able to recover from the first round of lockdowns, thanks to the privacy and safety that being aboard a yacht offers, it is hard to say how a second round of border closures will affect it. What’s more, with global financial uncertainty affecting yacht sales, and knock on effects from this seeing decreases in yacht job availability, both onboard and in shipbuilding, it is clear that the industry is suffering. However, we are a highly resilient industry and here at Relevance Yacht, we are confident that the industry will recover. To discuss innovative ways to boost your business, contact our team today.

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