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(voiceover), Mark Duncan, Diane Byrne
Welcome to Megayacht News Radio, the first and longest running podcast series dedicated to the large yacht industry, hosted by Diane Byrne, the editor of MegayachtNews.com. We feature conversations with engaging and inspiring people in yachting from shipyard CEOs, to designers, from yacht managers, to young entrepreneurs. And yes, even owners. You’ll learn how they got into yachting, how they’re building better businesses, and especially how they’re helping people like you get more enjoyment out of the yachting lifestyle.
Diane Byrne 00:02
Welcome, everyone. It’s no secret that boating and yachting have been booming due to the pandemic, with people from all walks of life realizing that being out on the water with just your family is one of the safest and most calming ways to spend time. The upper end of the industry that we cover, of course, has certainly been no exception. But some recent news from Fraser Yachts related to this really caught my attention. First, Fraser reveals that the average age of its customers today is 10 years younger compared to prior to the pandemic, with the youngest clients, let’s just say young enough to be my own kids. And we won’t even go there. Secondly, Fraser saw a 175% increase in sales from 2020 to 2021. These in turn have brought new comers to yachting, new buying and cruising attitudes, and some pretty interesting business opportunities. So to talk about all of this, Mark Duncan, the director of marketing and business development for Fraser Yachts, is joining me on the podcast today. So excuse me, Mark, welcome to Megayacht News Radio.
Mark Duncan 01:17
Thank you very much, Diane. Pleased to be to be with you.
Diane Byrne 01:21
Good to have you. So something that astounded me when I was reading all these great numbers was another stat actually, it was that over 40% of Fraser’s current customers are first time yacht buyers. That is an absolutely remarkable number. And to a certain degree, it doesn’t surprise me that we have that many newcomers in the industry, but still, it is a pretty notable number. So what do you think is behind this huge shift? Besides the pandemic? Is it, um, you know, is it an overall change in attitudes that kind of got accelerated by the pandemic?
Mark Duncan 01:59
Yeah, I mean, you know, that’s, that’s a great question. I mean, I mean, you’re right, at the fundamental basis of all of this, it really has to be said is the COVID effect, you know, that that point, were all of us thought, tomorrow, you can’t actually take for granted get the most out of life. And if you’re not getting the most out of life, change your life and get on with it. So yes, I mean, that’s what resulted for 90%, if not more, of those who decided to buy, or indeed charter a yacht for the first time in their lives. You know, it’s the whole thing about safety. But it’s the whole thing about freedom, and being together; all these things, you know. So that’s a big, that plays the largest part of it. But, you know, there’s a couple of other things that are, that are also feeding into this. And that is influencers, the amount of content that has now been shared on social, online, about yachting, the yachting experience that, frankly, five years ago, 10 years ago, it couldn’t find for love nor money anywhere, you just couldn’t find it. So what it means is that those for whom yachting, the whole concept of yachts or yachting, is not a thing. It’s on the radar, thanks to the press coverage during COVID, thanks to influencers and social media. It means a lot more of these people who traditionally just would never have known it was a thing, never knew it was a potential, never knew it existed, are now been fed and seen and exposed to all the great things that you know, that yachts and yachting offer. And that’s making a big difference. I mean, a very big difference. And that ties into a statistic that you pointed out in your introduction, when it comes to the the lowering of the average age of clients in our industry. Because that’s what’s bringing in what we say younger, but you know, while they are younger, I guess they’re not usually young, but they’re younger. That’s bringing people who, you know, traditionally in yachting would never have really been exposed to it. Because traditionally in yachting if you weren’t already in yachting yourself and enjoying it, or you didn’t have friends or family that were enjoying it, and therefore they could tell you about it. It’s very hard to find out about it. So, you know, I think that’s the COVID effect, the media coverage, the influencer coverage, social media coverage, the number of occasions now where yachting and the experience of yachting has been discussed in forums and seminars, are signs of yachting you know when it just a luxury experience experiential experiences, if you will. The fact that it’s it’s it’s now on the mainstream, it’s now in front of people, more people’s radar than before I think that’s what’s feeding into two things. The increased number of new blood, new interest, new demand that’s coming into the industry. But also it’s having an effect on the on the age differential. Let’s talk more about that age shift, because that that really is remarkable to like I said in the intro. in the superyacht sector, generally speaking, I think it’s pretty safe to say that in recent years, if you’re going to pull an average age, customers, typically in terms of buying, say, 50 up, charter, probably similar, I would think, although maybe a little bit younger, not much, much younger. But what age groups specifically are you seeing now? Well, again, you’re spot on. I mean, when I joined this industry, I think the average age of client, so that’s about 20 years ago, so the average age of client that was buying a boat would have been 60 plus, so 60,65, and the average age of the lead charterer, so the person that actually books the charter on behalf of the guests, wasn’t far removed from that either. That was sort of the the average age group. And when we had, we had clients that were 80-something, still feeling like they were 30-something, you know, but that gives you an extent. What has happened in the last, and it really is very quick. I mean, it’s the last, it was starting before COVID. It got accelerated by by the COVID effect, is that we’re in I think our average use, as you noted, is now 50, 55. So that’s a 10 year drop, in probably five or eight years period, which in our industry is phenomenal, because I think that average is of 60, 65 has been around since the beginning of superyachting, 30 or 40 years, you know. But I think that comes down to what we said earlier about the fact that more people, I mean, you know, that famous statistic, Diane, that out of all of those people in the world that are blessed to be able to afford to enjoy luxury yachting, superyachting, only about 10% Actually were and we as an industry, as you know, have been struggling for years to try and reach the other 90%. So what COVID did, and I’m a sort of a glass half full type of guy, right? So there’s, there’s, there’s good things to everything in life. What it did was it put yachting on the experience of yachting and and what’s possible for yachting on many more people’s radar. So what that meant is that many more of that 90% that we weren’t talking to or weren’t engaging with, we are engaging with now. But it also meant that a wider range of age groups and nationalities and cultures were exposed to it as well. So I mean, we have clients, we were working with a client not that long ago, who I think just turned 30 and was buying a 30, 35 meter yacht. So what’s that 90 feet? 100 feet? Yeah, first ever first ever purchase. never even been on a boat, you know?
Diane Byrne 08:04
Mark Duncan 08:05
But, I would expect to see that, that sort of trend continue.Because I mean, obviously that when you look at the the market set that is that works with yachting, and where the wealth comes from, where the possibilities come from, you know, increasingly, they are entrepreneurs. And increasingly, they’re from tech, and increasingly, sometimes from health, sometimes from the more traditional backgrounds of of property, or mining or whatever, but tech is very high on the, on the on the list there. And of course, if you know, I mean, most of the most of the guys and girls in tech today, you know, are well, actually very young. And then you have all the social media guys and the internet people and the influencers and all of that. So, yeah, I mean, I expect to see it going down, probably in the next five years. You know, eventually. I don’t think it’s ever going to get much less than 40, 45 to be really honest. But yeah, it’s, you’re right. It’s a major major change.
Diane Byrne 09:13
Yeah. Is there also a change in in their priorities that comes along with the the age difference? Are they looking to do different things or more maybe even have different questions than the typical client would, because they’ve never been experienced to it before and because they’re a completely different generation?
Mark Duncan 09:31
Yes, and no. I mean, for a lot of the younger ones… Well, let’s talk about the age group. So the younger ones are very much about the experience. I mean, that the yacht is important, of course, but they’re very much about the experience. So it’s very much about ‘what can we do either onboard or on land or at sea. So what can we do? Can we dive, can we swim, can we SeaBob, can we can we go heli skiing? Is there a submarine? Can we have parties? Is there a wellbeing center?’ Is there you know, all of these the that’s a really top focus. Food very top, very, very top on their priority levels, what sort of food what sort of what are the crew like? So very experiential focused, and then the, this is very much for charter. So then the yacht feeds into that into that mix, and the charter broker will find the right yacht to feed into the mix. In terms of purchase, it is very much I mean, the yacht’s important, very much important when you’re purchasing, but what they’re looking at, yes, the quality of builds is important, although they, if they’re new to the market, they’re taking the guidance of the broker that they’re working with, because they don’t really know. But what is, two things I think that are very important for them is ‘what can we do?’ Again, experiential. And number two, ‘how much is it gonna cost to operate the vessel?’ So ‘what are the running costs of this likely to be for me?’ And increasingly, they are investigating the notion of ‘if I wanted to charter my boat out, to for for charter, how would that work, and what would be the likely sort of revenue stream that can be enjoyed from that?’ So those are the those would be the top questions. Because they don’t really know the market as such, they’re not necessarily ‘I want to buy a Feadship, or I want to buy an Oceanco, or I want to buy a Benetti,’ but there’ll be learning that along the way, because obviously, when when the broker is working with them to understand ‘how you want to use the vessel, where do you want to go, do you want to do transatlantic stuff? Do you want to, you know, where do you want to be in the world?’ Then obviously, all of that factors into it.
Diane Byrne 11:48
Right? That makes sense, makes a lot of sense. Because of this boom, obviously, we’ve seen a lot of brokerage inventory, essentially fly out the door, right? We’ve seen built slots book up for the next several years. And we have waitlists now, four or five years down the road. Is that putting pressure on the brokers, in terms of not being able to fulfill demand? Are we also seeing say demand wane a little bit because of that?
Mark Duncan 12:22
In terms of demand waning? No. Even with respect to what’s going on in our world today, no, demand is not that we’ve noticed yet is not winning at all, either for charter or for or for purchase. I mean, you know yourself, Diane, in any particular year, you’ll always have about 2,000 superyachts–and just for your listeners. when we talk about a superyacht, we’re essentially talking about yachts that are above 79 feet, 24 meters–so there’s almost about 2,000 roughly, yachts that are officially for sale every year. And the normal years, the market would have sold 350, something like that in a year. Since COVID, we’ve been looking at 700, 800 sales in a year, but there’s still the other 1,200 that are still available. Right? So has it got to the point where there really is no inventory left for anybody who wants to get in? No, we’re not there yet. Overall, it is definitely true to say that the larger the yacht you maybe want to do enjoy and look after, I mean, if you’re looking at 300 feet and above, yeah, it’s a little bit tight there right now, by sheer nature, the fact that there’s considerably fewer of them. But when you, especially if you’re coming to the market, new, most people not all, but most people will probably start with a 79-foot, 150-foot boat or something like that. And that’s where the greatest volume of inventory is available. So it’s not too much of a problem yet. Clearly, if we keep going the way we’re going it will be, about a year’s time, but certainly on the pre owned market, no, it’s not too much of an issue. Right now. There’s a lot of good product there. And in addition to what’s publicly available for sale, there’s a whole bunch of stuff that’s not publicly available, but it is right.
Diane Byrne 14:24
Mark Duncan 14:24
In terms of the new build. I mean, obviously, again, you know, I mean, you can you can do a semi custom build, you can buy product models that are pretty much ready to go apart from the interior. You can do a semi custom or you can do full custom. In terms of a full custom build, which means literally building from scratch, yeah, you’re right. I mean, most of the respected, tried and tested quality yards in the world today don’t have slots available until 2025, some of them even 2026. So if you want to build there, you have to wait until 25, just to get the slot, and then three or four years to wait for the boat to be built. But there are still opportunities. And of course, what’s happening now is a lot of the yards that are not necessarily those top, most popular builders are really stepping up their game now and on on basically making an offering to say, ‘you can build in our yards, we do have some availability, we bring in the best talent for your for your build from all over the world, and we will build your yacht.’ So there’s a wonderful opportunity for those yards in other parts of the world in other countries to really step up to the plate. So for the moment, okay. But like I said, if it keeps going on like this, then. Yeah, I mean, in a year’s time, if demand keeps like this, then there will be a bit of a bottleneck.
Diane Byrne 15:56
Right, right. So what you were just saying about the build slots has, brings to mind another question. And this is something that I’ve asked a number of people in the industry in recent weeks, and I’ve actually also asked some owners, because it’s interesting to see the different perspectives. And there’s kind of a meeting of the minds if you will, on this subject. The concern is that, as great as it is that there’s so much desire and so much happiness, shall we say, to wait for years, etc. to build a boat, inevitably, there could very well be something else that will come along that’s going to capture this person’s attention–maybe two owners, maybe five owners, who knows what the number is. But we know yachting is a want, right? It’s not a need. It’s a heart driven decision. So what happens when something else comes along that is attractive and exciting and interesting and engaging, and the industry maybe has not done enough to keep that owner content to wait? What can we do now, to make sure that they stay engaged? I’ll give you an interesting answer that an owner gave to me. He thought that charter should be leveraged more. And he thought actually, some of the builders could leverage it, perhaps from the standpoint of saying, ‘Okay, well, we know 10 of our owners say, are out there in chartering. Let’s connect them to those yachts through the brokers who represent them. And let’s have them experience what it’s like to be aboard our projects with our quality so they can feel the rooms, they can see how everything’s arranged.’ I thought that was a very interesting suggestion, but I’m wondering if there’s also other things that might be able to be done with all the relationships that so many companies, yours included, have made with other luxury? Like other luxury players?
Mark Duncan 17:58
Well, I’m a bit annoyed because you steal my thunder there. I mean, I was gonna say–
Diane Byrne 18:04
Quit quick, rewind!
Mark Duncan 18:09
So, you know, all people are different. So some real clients that we’re really talking to right now, some, some of them are, ‘I want to own a yacht, I want to own the yacht that’s personal to me, I want to, that’s what I want, I know I want that. And in the grand scheme of things, waiting for four or five years to get to get that perfection, that thing for me is that’s okay.’ For others, it really is, they’re more impulsive, it’s ‘I’m not going to wait that time, it’s just not gonna happen.’ So that the options for that person are ‘okay, take a look at the pre owned market and refit accordingly.’ And that can be a very good option if they find something that is refittable to the to the extent that they would need it to be. So first option is in this case, in this scenario for that person is ‘let’s have a real deep dive into the pre owned market, and let’s see what refit options are available there.’ And that’s really a deep dive into the yachts that are maybe not officially for sale either. So let’s really go down that route. Now in the event that we don’t find anything, or there’s really nothing there, or the refit is practically like rebuilding the boat from scratch, which maybe isn’t going to work, then you’re right. What we are saying is–because the way we look at it, Diane, at Fraser, is this. What people are really buying into is the experience. It’s the experience of being on a yacht with your family, or your friends with a sea breeze in your hair and the whole detox of just getting away from everything and you know that feeling. As soon as you step on board and the yacht sort of goes away from the marina or the or the harbor and you get out there, it’s just a completely cleanse, isn’t it? I mean, you’re cleansed, you relax, you start having real conversations, they’re not conversations that are, you know, in between a meeting and then another urgency that you’re trying to grab with your son or your daughter or your wife or your husband or whatever. It all of a sudden becomes real, you’re living in the moment. That’s what yachts and yachting are all about. And there’s two ways you can access that. You can own it, i.e. buy your own by your own yacht, or you charter it. You never need to own your own yacht. Just charter it. You can charter it once a year, four times a year. We have some clients that charter five times a year, you know, who would never dream of wanting to own their own yacht. So, chartering, you’re quite right. And I agree with the the the owner or the client that you were speaking to, who you mentioned. Chartering is one of the most undersold elements of our whole industry, and one of the most important and simplest ways to access that experiential stuff that we’re talking about. So what we’ve been saying to the these potential buyers is ‘charter,’ you know, ‘just enjoy chartering, not only will be great because your your family will get to get a feel for what it’s like, and what’s possible and everything else, but you’re enjoying the experience, you’re not missing out.’ Because at the end of the day, there’s very little, I can’t really think of anything else in the world that you could do that gives you what yachting or yachts–or even boating for that matter–what that gives you. I can think of it. It’s not a hotel, it’s not a private island, it’s none of these things. So chartering the experience, maybe instead of owning the experience, perfect. And you’re right, as an industry, globally, I think we’ve all realized that, you know, chartering is a proper option, and it’s just another way to access the experience. And at the end of the day, the real thing that we are offering is access to the experience, and then it’s up to the person whether they want to own it, or whether they want to charter it.
Diane Byrne 22:10
Mm hmm, good point. One last question. I’m going to switch gears a little bit. On the subject of sustainability since that’s a big issue these days, I know Fraser recently signed the commitment charter for the new Monaco Capital of Advanced Yachting initiative. That initiative has a very strong focus on building a responsible future for yachting. And I recall when Fraser announced the signing, the company called attention to its commitment to the United Nations Sustainable Development Goals, especially in reference to human rights and anti discrimination, which are two aspects of of sustainability that really are not being talked about in the industry. Much of the chatter is–and I shouldn’t say chatter, really–but most of the conversation has revolved about being ‘green,’ so to speak. I found that very telling that this was put out very publicly by Fraser. So can you talk a bit about that?
Mark Duncan 23:11
Yeah, I mean, Well, first of all, I mean, as a company, I mean, we, especially in our with our position in the in the industry, we got together three or four years ago, and decided that we’d had enough of just paying lip service to all of this. And we actually wanted to do something concrete, and not just a one off thing that’s concrete, but consistently, concrete, that’s becomes part of our DNA. And not just the DNA of all of our employees and staff around the world. But with our clients, our captains, our crew, our whole ecosystem. And to sort of lead the way or at least do our, do our part, to bring certain things to people’s attention, whether they agree with global warming or whatever, you know, all of that aspect, but to get it on the radar, and encourage–not tell, not push–encourage captains, crew, owners, and our own people to do certain things that can make a difference no matter how small, right, because it starts from that. So we created this campaign, which is called FUTURE, which is Fraser Unites Together to Universally Respect the Environment. And we put in a pledge and a program internally to all of our offices worldwide, which is a basically a motivational document, a mission statement, and a whole bunch of actions that we expect and encourage our people to honor and do and take part in, and that’s everything from getting involved in local community actions for beach cleans or sea cleans, or all the way down to ‘turn the light off when you leave the office,’ all the way to ‘turn the the air conditioning off when you leave the office.’ You know, it’s the whole spectrum, right? We managed to get ‘green’ electricity into certainly into the Monaco offices. So there’s a whole bunch of stuff. When this came up, with the Monaco Capital of Advanced Yachting–and obviously, His Serene Highness Prince Albert is very, very good and very concerned to make sure that all of these issues stay on people’s radar, and he plays an enormous part in his role within the world to make sure that that happens–so this initiative really caught our eye. And given that Fraser’s worldwide headquarters are actually in Monaco, it sort of made sense to be part of it. So one of the things that they signed up to, and they are adhering to with this initiative is the 10 principles of the UN Global Compact. And as you rightly say, Diane, which many people don’t think of, you know, that covers human rights, it covers employment, it covers the environment, it covers anti corruption. And within those headings, you have a whole bunch of breakdowns. So it’s everything from having respect and taking responsibility for your environment, both in terms of nature, the planet, all of that, but it’s also taking care and having respect for the people you work with, the people you employ, how they’re treated, how they can, how a company can help them live their lives better, how they can be motivated to also take part and give back into the world. And of course, all the way down to stuff like anti corruption and what we do there. And anti corruption is a little bit easier, because quite frankly, no matter where you are in the world, there’s a whole bunch of regulations for that anyway. So you’re following, right? Right. And there are a lot of regulations, as you know, already within yachting, most of which come from shipping when it comes to environment and sustainability and fuel efficiency and operational efficiency. In fact, that’s one of the things that, you know, I keep coming across is that outside of our industry, I don’t think people realize just how far advanced shipping and yachting is when it comes to very high regulations in terms of the maintenance, the design, the functionality, the resources that a yacht or a ship is using. And what its carbon footprint is compared to even to cars, frankly, it’s a very high level, very high standard, which with the IMO TIer 4 and various other regulations coming in over the next few years is getting higher, you know. But yeah, so we’ve signed up for that. And for us, it’s a global, it’s a global thing. You don’t just take the environment on its own because frankly, a big reason why the environment is the way it is, is because of people. So you’ve got to factor people in. And then you got to factor in where they work and what is the what are the ethics and the thoughts and the DNA of where they work and so forth. So, yeah.
Diane Byrne 28:19
Yeah, this is a perfect note to end on. So thank you so much for joining me on the podcast today. It’s been great to take this deeper dive into what Fraser has been doing and the philosophy the company has, and it’ll be great to see where things go next.
Mark Duncan 28:35
Great. Well, we’ll catch up in a year. I’ll tell you where we’re at then.
Diane Byrne 28:39
Mark Duncan 28:41
Thank you, Diane. Pleasure to see you, Diane. And keep going with your podcasts. I think they’re a great idea.
Diane Byrne 28:47
Terrific, thank you. Well, everyone if you’d like to learn more about Fraser Yachts, you can visit the company website, which is fraseryachts.com. That wraps up this episode of Megayacht News Radio. Thanks as always for listening. Until next time, I’m Diane Byrne.