What Pricing Trends Do You Anticipate for the Winter 2010-11 Charter Season?

Sharon Bahmer, Boatbookings

We’re having a record year at Boatbookings. Inquiries and sales are up significantly from 2008 and 2009, and we have begun to see good demand earlier than in previous years for the High Holidays and Spring Break. These charters are generally closing at full price because supply of crewed yachts is tightening throughout the Caribbean as the market recovers. We are confident that during the upcoming winter season in the Bahamas and Caribbean, we will continue to sell most charters at their posted rates.

It pays to use your powers of persuasion when working with the charter guest who’s requesting a discount. When yacht owners are talked into discounts they often cut costs, i.e. eliminate one crew member for the charter, or remove some of the more fun amenities onboard. If a client really wants the yacht but the price is still above their maximum budget, we often suggest they book for a shorter period instead of negotiating discounts.

One positive sign: We are seeing some of our clients come back who shied off for a year or two due to the economy, so we are optimistic about 2011!

Derek Holding, International Yacht Charter Group

Before the recent downturn, the word “discount” was rarely used in the yacht charter industry. While some clients made offers and some owners accepted such, those were generally exceptions to the norm. Since the recession, we have seen an increased number of proactive offers made by owners and a growing norm of clients making offers. This is normal behavior in buying many things in everyday life, and it was unusual that our industry didn’t behave this way.

Last year, a charter manager asked when I thought the industry would return to normal. My answer then was simple, and it remains the same today: This is the new normal. Our everyday process now should be expected to include not only finding the right yacht for a client from a facilities and crew perspective, but also a negotiation stage before a contract is signed.

In my mind, an increasing number of owners are using the announcement of specific offers as basic marketing tools to get their yachts front of mind with brokers. That’s a proven marketing technique outside our industry. Do these announcements result in charter bookings for those specific time frames all the time? Probably not, but they do form a secondary message indicating which owners are open to offers. That’s an important informational tool for good brokers to have.

Ann Landry, Northrop and Johnson

Value, value, value. Charter clients are looking for value. They want the best boat for the best price—and they are getting it.
 
There is currently an oversupply of first-class yachts actively seeking charter bookings. Clients still want their yachting holiday, but they are willing to shop and shop aggressively. They can no longer be moved by, “I would hate to see you miss out on this fabulous boat,” because they know that there are several other acceptable options sitting on the dock. Bookings are more last-minute, and just about every charter involves a negotiation on the charter fee.
 
What discount trends to I expect to see this winter? Same as this summer in the Mediterranean, I would imagine. Offers of 10 to 20 percent at the start of the season, with deeper discounts coming as the season progresses. The 14-night minimum charter requirement for the holidays has all but disappeared; many yachts will now accept 10 nights and even seven. Added value (eight nights for the price of seven) seems to have limited appeal, especially to Americans who traditionally take one-week vacations. That is especially true when there are school and college schedules to be considered.
 
Clients want to see the rate slashed, they want to feel like they are getting a deal. The perfect deal often seems to outweigh the perfect boat/crew –and that’s a shame, because often there is one yacht that is perfect for the client.
 
The idea of including crew gratuity in the charter rate has come up. That seems not the best idea for several reasons. If the client has had an outstanding charter experience, he enjoys extending the gratuity to the crew. The included gratuity robs the client of that pleasure.
 
The above notwithstanding, there are a number of yachts in every size and location that have very full calendars, recession or boom. Some are negotiating rates, some are not, but the outstanding nature of the operation—yacht, crew, and customer service from the broker—keep these yachts as busy as they want to be.
 
I have said it before and I will say it again: I follow my A-List captains. They keep the boat up, they have excellent crew despite turnover, they are careful with the client’s provisioning investment, they charm the client, and they are rewarded with repeat bookings and referrals, which have become more valuable than ever in the current economy.