International charter market recovers from disaster

International charter market recovers from disaster
The Almafi Coast

With Croatia charters currently underway, local charters in south of France, and in Balearics and bookings all over the Mediterranean from July, Toby Maclaurin, Sales Director for Ocean Independence, is feeling positive. But it’s been a rough ride for the superyacht charter market.

“A few weeks ago, the international charter market was a disaster,” Maclaurin says, “but it’s looking more positive now, and on the charter side we’re signing about ten contracts a week. It’s not where we should be at this time of year but is much better than last month.

“The season’s starting six weeks late and at a greatly reduced level, but there’s no shortage of enquiries, it’s really picked up in the last two weeks.”

Yacht charter is a third of Ocean Independence’s business, with a fleet of 100 yachts directly managed and, through various industry platforms for sharing with other brokers, 2,000 bookable craft. Although the head office is in Switzerland, the company’s heavily invested in UK.

Maclaurin says its clients are an international variety, but many are based in London. They’re looked after by a team of 35 brokers who act as ‘holiday consultants’ or charter managers, and it’s them who’ve borne the brunt of cancellations.

“The industry standard charter contract did not handle the situation [pandemic] at all,” he says. “We were left in a position where clients who had booked were unable to cancel and claim force majeure. This meant if they had to cancel, they had to pay penalties, and some were really quite high – 50% of charter in some cases.

“Our brokers were faced with a situation they’d never been in before – telling people not used to hearing the word ‘no’ that they couldn’t cancel (without penalty), and also telling them they couldn’t have full refund under the contract.

“Although the vast majority of clients were exceptionally understanding, a small number immediately started reaching for their lawyers. We’ve never known a situation with correspondence from so many lawyers and so much general unhappiness.

“A number of our brokers were taken close to the edge of their ability to cope with the stress. None of the brokers ever want to repeat those weeks again in their professional lives.

“It was extraordinary to us in many ways, that in a lot of these conversations, we were expected to have nothing – as if our work had no value. The perception was that we hadn’t done any work, but the reality is that we do 80% of the work before anyone steps foot on a yacht.

“For those brokers on the front line, this was a position they’d never been put in before. There were lots of challenging conversations on the charter side, seeing how differently people react to hearing news they don’t want to hear. The team had to adapt to conflict resolution. Their first word is normally ‘yes’ and then we set about making ‘it’ happen, but this time every case had to be discussed on an individual basis. There is no automatic facility in the industry to resolve the matter.

“Even the reactions of the owners completely varied,” Maclaurin says. “Some didn’t want anybody to lose out, with no problems of full refund and cancellation fees. Other owners, who invest heavily as a commercial proposition, wanted to make sure they didn’t lose out.

“Thankfully we’re on the back end of all that now, with one or two discussions left. It’s been quite testing, but the number of new bookings now outweighs the cancellations on a weekly basis.”

UK quarantine rules are Maclaurin’s next hurdle.

“Clients are being cautious and waiting for announcements on quarantine rules,” he says. “Two weeks in self-isolation is a massive challenge. Our customers across Europe are also waiting to see that Spain and Italy don’t go backwards in their phases. We’ll know that in the next ten days – and people will feel more confident in signing.”

The ramifications for charter companies are going to stretch well into 2021. Maclaurin says instead of getting into further conflict, some owners and charterers mutually decided to postpone charters until next year, and thus removed the immediate problem. But next year is already filling up with bookings, so capacity is already allocated. It means it’ll be harder to earn back what’s already lost.

Even so, there is bright news.

“Our private jet brokerage has never been busier,” he says. “It was initially set up for customers to get to their yacht or charter, but now it’s being booked for any need. People who hadn’t taken advantage of the service to date are doing so now, especially if they’re travelling with their family in Europe.

“Sales are coming alive again and even though customers and yachts are all in different countries, business will pick up. There’ll be a long delay. But it’s happening.”

Latest News