The truth? You can’t handle the truth!
On day two of The Superyacht Forum, the industry finds itself under the microscope…
Where to begin with our review of day two? With Ian Malouf, of course. Ian’s conversation, which opened day two, was possibly the most candid I’ve witnessed in my eight years attending the forum. And I can’t help thinking that I agree with most of what he said.
From the murmurings and mutterings reverberating around the room, I believe I’m in the minority. But one could be mistaken for overlooking the fact that Malouf had many positive things to say about the industry, including his respect for the quality of managers, and whichever Spanish shipyard is his now-preferred refit option.
However, there was justification in his swingeing attack on brokers. Now, The Superyacht Group has been accused of broker-bashing in the past, and we have taken steps to address this of late, with Felix Sowerbutts’ intelligent market reportage among the best in the business. And I can see the value of brokers; the best in the business account for about three-quarters of sales, after all! But it is hard to argue with Malouf’s point about the charter market, “what are brokers doing for their 20 per cent? In my opinion, not enough.”
Justifying a 20 per cent levy on the work of an intermediary in any sector is, quite frankly, ridiculous, or in Malouf’s words, “delusional”. And it is hard to discount his assertion that many of his peers are being turned away from chartering precisely because of that. “A relationship is worth two or three per cent”, Malouf asserted, which is what he is championing with his new venture, the much-talked about Ahoy Club.
I think his price point for a brokerage transaction, which he says should be one per cent for the buyer’s agent and 2.5 per cent for the seller’s agent, is squeezing the brokers too much and would risk eradicating the value and knowledge they offer. But he is absolutely right, that a market adjustment is required, even if it is just one or two integers less.
We often talk about the call to action at this forum, and a lack of output or tangible results. But here was a client of the industry being open and honest about where we need to improve, and I was slightly disappointed at the sections of the audience who put up their defences so readily, when they should have taken it as constructive criticism. I hope those I sat near were in the minority.
It was much the same in the next session I attended, where Martin Francis and Terry Allen brought a refreshing dose of honesty to proceedings by acknowledging the opaqueness of yachting. “You never get a straight answer”, said Allen, while Francis compared his cruise industry work to yachting by saying there was no justification for the fact cruise construction costs one-tenth of a superyacht build.
Allen pointed out that it is possible to reduce the cost of yacht building, (by 60 per cent, he claimed), if clients are prepared to provide naval architects more time to design the product, they will ultimately reduce the cost. Stirring stuff indeed, and encouraging to see the industry outlining its flaws, while telling the clients exactly that there are steps they can take to improve things too.
So, to the afternoon. And, perhaps fuelled by wine, conversation was again ramped up. It’s been a strangely self-flagellating day for the usually defensive superyacht industry.
Delving into the role of brokers and owners’ reps in new build processes, the stellar line-up of Derek Munro, Terry Allen, Fabio Ermetto, Peter McCarthy and Barin Cardenas didn’t pull any punches.
I’ve come to know Cardenas fairly well of late, partly through our shared beliefs surrounding market opportunities and inhibitors. Cardenas is a ‘broker’ by trade, but an example of someone who brings expertise and knowledge to their role, which in my opinion, is why he focuses on new build projects. Likewise, Munro is among the most respected advisors in the business, and has most recently shown his wares in the form of the spectacular Black Pearl.
Alongside Ermetto, who rightly stated that a new build broker is entirely different to a salesperson, this panel conveyed why the new build brokerage sector is, perhaps, the most deserving of its percentage.
In our quest to map out ‘The Perfect Customer Journey’ today, it could, on the surface at least, appear that brokers of all types have been made the scapegoat for stunted market growth. And lest we forget, as I said in the opening session yesterday, we are actually enjoying a period of modest growth across the board, exemplified by more second-hand transactions and a slight uptick in new inventory.
However, the industry discourse is of the desire to gain a greater slice of the UHNWI pie, and catalyse more pronounced market growth in the medium-term. And if we are truly committed to that as a collective, we have to accept the criticism being levelled at the industry by people like Malouf, who was joined on stage for the final session by fellow owner-investors Philippe Bacou and Matty Zadinikar.
These individuals are better placed to define what they want from yachting than any of us. And if they are telling us the sale and charter models need revision, perhaps it is time the industry listened.
BY WILLIAM MATHIESON