Technically, the factor that most ensures a happy ownership and successful charter of a large yacht, is good crew.
Chartering the yacht out
Owners seeking to maximise on their investment charter their yachts out and yes, the income it generates can go some way towards offsetting the costs of maintaining and running a superyacht. To charter successfully, it is best to use a charter yacht broker to best maximise the potential business, tailoring bookings to fit the yacht’s calendar around an owner’s uses and ensure the smooth management of all charter operations.
The specialist who looks after the interest of the yacht owner is the wholesaler or charter management broker, while the person who handles the client making the booking is the retailer or, more often called the charter broker.
From the superyacht owner’s point of view it is the charter management broker who is the more important of the two. Generally within the larger brokerage houses there is one allocated manager for each yacht, to ensure a personalised service. It is their job to market the yacht to their own in-house retail brokers, to external brokers worldwide and through their clients, the charterers.
The marketing plan
The marketing aspects of the job include handling the press and media relations, production of yacht related marketing materials and the attendance at marketing events, which would include boat shows, open days, and familiarisation trips.
Marketing a yacht for charter plays an important role and no longer is a glossy brochure considered enough when it comes to marketing yachts that charter out at figures in excess of half a million dollars a week. Now the must-be chartered yacht almost has to have a web page with its own virtual video tour and most of the charter brokerage houses produce lavish annual, if not quarterly, publications in which yachts are frequently covered in spectacular fashion.
The charter management broker keeps the yacht’s diary, acting as the central agent or clearing house, as it is often referred to in this specialist world, and undertaking the detailed screening of all enquiries, dates, ports, feasibility, clients and their charter history. It is this person who issues charter contracts on terms approved by the owner and this is followed up with asking for, receiving and remitting both charter funds and the Advanced Provisioning Allowance (APA). It is this wholesaler who supports the owner, captain and charter broker on each charter to ensure all details are in order and resolving issues when they are not.
Yacht charter disputes
As with all contracts, yacht charters can lead to disputes and litigation. The most common disputes that are seen include:
• No shows, late cancellations or failure to pay - this is a dilemma for owners and their charter management brokers as it can often be difficult to arrange a replacement charter at late notice.
• Damage caused by charterers and their guests - repairs to fixtures and fittings on a superyacht are often expensive.
• Delays - whether in starting the charter or during the charter period, this will lead to a loss in sea time which may result in a claim by the charterer.
• Disappointment - this may be with the crew or some aspect of the yacht. Charterers are spending significant money to charter superyachts, so their standards are very high.
Although owners will usually delegate the charter arrangements, and any subsequent disputes, to their charter management brokers, Daniel Crockford from Keystone Law always advises owners to be aware of certain aspects of the charter agreement, as any dispute eventually affects the owners’ bottom line. The terms they recommend
that owners should be aware of are those dealing with:
• the disputes described previously overleaf;
• the complaints procedure (including time specific notices);
• the dispute process (usually by way of Arbitration);
• and the relevant law which will be applied to the agreement.
Finally, the owner needs to consider what attitude they will adopt in the event of any disputes. This will be a balancing act between financial loss and reputation. On the one hand, the chartering of superyachts is big business and large sums of money are involved. As a result many owners treat such disputes as they would any commercial matter and see them and litigation as part and parcel of the whole business of chartering out yachts. On the other hand, it must also be remembered that the superyacht charter market is relatively small, and the reputation of the superyacht is very important when charterers decide which superyacht to charter.
There are upwards of around 500 brokers worldwide, both wholesale and retail. Charter brokers who work inside the wholesale side of the market have to support those who work inside the retail sector and vice versa, because it is a symbiotic relationship where both parties are working towards the perfect charter, that somewhat elusive goal.
A retail sales broker mainly takes care of the individual and potential clients. Their real value is the relationship they form with their clients. They must gain that person’s trust and find the solution that best fits their needs in much the same way an employment recruiter finds the right person for a job. They have to be personable, insightful, confident and highly knowledgeable in order to solve the many problems that can sink a successful charter. They work long and hard to create a strong and durable relationship with their clients in the hope that a loyal bond grows between them. Not surprisingly the more successful of these specialists tend to be those who have been doing it for the longest.
Crewing your superyacht
Many charterers ask the obvious questions - itineraries, price, available toys - but the quality and number of crew is critical for a successful charter. Finding crew who can give the owner of a superyacht the peace of mind that comes with knowing that the yacht is being both safely run and well maintained can be stressful.
Rupert Connor, managing director of the Luxury Yacht Group says, “Technically, the factor that most ensures a happy ownership of a large yacht, is good crew. I believe there is no point buying one of the finest superyachts in the world if you do not put a first rate crew on board. Far too many owners buy great yachts, crew them badly and then wonder why their cruising and chartering objectives are not achieved.”
Adrian McCourt says, “It is not beyond the wit of anyone to realise that it is the crew who win or lose a superyacht owner or charterer. Fairness, support and decency from the manager will pay dividends. Managers and captains should work together as partners, with the common aim of providing the client with the service that the superyacht owner has paid well for.
Motivating factors differ between individuals but essentially most crew want to be treated fairly and with respect. Of course, the manager has a right to demand safety, dedication, loyalty, focus and competence in return. If not, both parties have choices to make. Training, supervision and support are essential, as is communication. The manager needs to know the crew as well as he knows the owner. The superyacht owner needs to feel the yacht is the owner’s home, not the crew’s and this is down to the manager to get right. To paraphrase Bill Clinton’s 1992 campaign slogan, ‘It’s the management, stupid.’”