Kathleen Mullen of Tortola-based Regency Yacht Vacations is just back from attending this month’s spring charter yacht shows in the Virgin Islands. Here is her take on the market, from an exclusive interview that I conducted this morning.
I know the spring charter yacht shows in the Virgin Islands are generally smaller than the fall shows, but this year apparently was even smaller than usual.
There were two shows, one on St. Thomas in the U.S. Virgin Islands and the other on Tortola in the British Virgin Islands. Last year at the spring shows, there were 14 boats in St. Thomas and 22 boats in Tortola. This year, there was only one charter boat in St. Thomas and about a dozen boats at Tortola.
Why the huge drop-off?
I think it’s just another indication of how hard hit the area has been economically. The Virgin Islands are not like the Mediterranean, where the boats are a lot bigger and the boat owners have deep financial resources. They can complain about charter dropping off there because of the economy, but the yachts can often still stay above water financially. That’s just not the case with a lot of Virgin Islands boats. They’re smaller with thinner profit margins. When the charters don’t come, there just isn’t as much of a financial cushion.
Is there no charter business at all in the Virgin Islands right now?
I wouldn’t say that. Some very good charter boats were not in the shows this month because they had charter bookings on the same dates. In years past, they might have passed up those bookings to put themselves in front of brokers at the show for future marketing, but this year, the boats are choosing the bird in the hand.
How was the turnout of brokers?
That was interesting, too. It was a low-key boat show, mostly just local brokers from the islands, which usually is not the case. There usually are at least some brokers who come from the States and other off-island locations. And that, actually, could have played into the number of boats that attended. From the point of view of the boats, it costs dockage fees to enter the shows. If the brokers are all local and already know your boats, why spend the money to be in the show?
All across the Mediterranean right now, I’m hearing that charter is a buyer’s market. Yacht owners are negotiating rates, offering extra days onboard, and in general giving more than they used to give in order to secure charter bookings. Is that happening in the Virgin Islands, too?
It’s not, and it’s a real problem.
Potential clients are calling and saying that they want a really good deal because it's a buyer's market, but as I said before, this market is not like the Mediterranean, where the boats are bigger and the profit margins allow for negotiations and wiggle room. In the Virgin Islands, we’re now at the end of our second year of economic downturn.The boats that remain available for charter are good boats operating as economically as they can. There’s not really any place for these owners to go, to offer a lower price. The owners get to the point where the charter will make them zero dollars. People don’t like to work for free. And you can’t blame them.
Now, from the client’s point of view, the problem is real as well. The recession has shaken out of the industry the clients who were really stretched thin financially, and most people are saying there’s at least another year left before things will start to get better. I don’t think it’s all gloom and doom, but the middle class funded the moderate Virgin Islands charter boats. That’s who the charter clients have always been. I’m not sure how soon they’ll come back, if ever.
Of the boats that were at the shows, did you sense good maintenance and attitudes toward charter?
I did. There were some very nice, good-looking boats. I felt like what I saw looked great.
One example is the 76-foot sailing catamaran King’s Ransom. I just love that boat. The crew are very nice and enthusiastic, and the boat always looks great. That crew will always get my clients whatever they need.
I also liked the 62-foot sailing catamaran Catsy, which used to be in the Sunreef Yachts fleet but now has new ownership. The crew that used to be aboard the 58-foot sailing catamaran Bliss are now on Catsy, and they’re great. Plus, it’s a good, nice, very spacious, comfortable boat.
There also was an interesting powerboat, a completely refitted 1994 Broward that’s 120 feet long—which is big for the Virgin Islands. The boat is called Freedom, and it’s part of the Flagship fleet, being run and part owned by a man named George Custer who ran charter boats here in the islands a long time ago. What I liked about this boat is that he’s doing an all-inclusive rate, which is hard to find on powerboats, let alone one that big. Freedom can take eight guests, and the all-inclusive weekly rate is $55,000. So it’s not a cheap vacation, but it’s a good value for a 120-footer.
I feel like I should wish you good luck going into the rest of the year.
Like I said, I don’t think it’s all gloom and doom. We are starting to get inquiries now for Christmas and New Year’s, and the shows were good timing in terms of assessing the current condition of the boats and seeing which crew have changed. There are still great boats available for charter in the Virgin Islands, that’s for sure.
To learn more about chartering yachts in the Virgin Islands, or anywhere in the world, contact Kathleen Mullen through the Regency Yacht Vacations website.
Editor’s Note: Regency Vacations is a sponsor of CharterWave, where this blog originates.