Capt. Virginia Wagner of the charter yacht Matau does an outstanding job on maintenance.

Osborn couldn’t help but wonder aloud whether the unprecedented number of breakdowns—during the holidays, weeks of charter when owners command the highest fees—were a result of lackluster maintenance during the economic recession. This is a time of year when owners know their yachts need to be in prime condition, especially if charters are already booked. Had owners skimping on maintenance during the past 12 to 18 months finally caught up with megayacht performance?

It’s a question that caught my attention because I, too, have been hearing about an unusual number of megayacht breakdowns in recent weeks. I also have been a party to one—the first time that’s happened to me in a decade of covering the megayacht industry.
I was aboard a Benetti motoryacht in early December that was supposed to take me from Antigua to Sint Maarten. We never left the dock because of an engine failure. And one of my fellow guests was a charter broker working feverishly to salvage another charter that had just been canceled because of a mechanical failure. She said it was only the second time in 10 years that such a thing had happened to one of her clients, and yet there we were, with two megayachts encountering the same problem in a single week.

My own recent experience, combined with Osborn’s comment, makes me wonder if there is, indeed, some truth within his rumination. Of course there are plenty of megayachts whose owners have invested heavily in maintenance during the recession, but common sense tells me that perhaps there are also more owners holding back on spending than previously thought.

This trend, if it’s real, affects far more than the charter industry. It also affects brokerage yachts, whose value is determined in great part by upkeep and maintenance.

We are still in a buyer’s market for charter and brokerage alike, but even the best deal can quickly become a nightmare if a megayacht fails to move when the captain nudges the throttle. My suggestion to anyone buying or chartering in the near future is to request a copy of all maintenance logs, as well as any recent surveys. Some brokers might tell you that this request is overkill, especially for a charter booking, but they’re not the ones who are going to be stuck at the dock if a problem arises.

Having been in that position myself just a few weeks ago, I can say unequivocally that your best option right now is to take an extra step in the due diligence department.

Editor’s Note: Kim Kavin is an award-winning writer, editor and photographer who specializes in marine travel. She is the author of seven books including Dream Cruises: The Insider’s Guide to Private Yacht Vacations, and is editor of the online yacht vacation magazine CharterWave.

I’m just back from the Miami International Boat Show, where traffic on the docks was a bit light to my eye but reportedly composed of serious shoppers as opposed to tire kickers. I’d like to put what I heard about the charter market into broad context for you first, before diving into details farther below.

Leading mid-range and large-yacht builders such as U.S.-based Sea Ray and British-based Sunseeker told me that they were selling enough new boats to consider the show “good for the current economic climate.” That’s a heck of a lot better than their tune at this time last year, when sales were all but nonexistent.

The brokerage market, too, seemed to have an air of hope in Miami. I spoke with the captain of a 112-foot Westport who told me that his motoryacht was now the least-expensive for sale in its class and getting serious offers from potential buyers. That, to him, indicated that the brokerage market has hit bottom and may be starting to turn around. His sense jived with my conversations with multiple sales brokers, who argued that now is the time to snap up the best remaining deals, as the brokerage market is poised to begin a slow but likely rebound.

With all that said, the sense that I got from the half-dozen charter fleet managers I met in Miami is that the charter industry, too, may be experiencing cautious optimism for the first time in nearly 18 months. The market for crewed charter appears to still be mixed according to many specifics that I heard, but in general, charter brokers’ phones are ringing again.

I was told that a good number of the charter inquiries coming right now are for the Bahamas during next month’s Spring Break and the Easter holiday in April. In years past, those dates would have been booked months ago and current calls would be for “last-minute” charters during the summer in the Mediterranean, but, as the managers put it, at least the calls are coming.

In terms of pricing, every charter fleet manager I spoke with confirmed for me that price negotiations are the order of the day, and that perhaps as many as two-thirds of the charters being booked today are coming at negotiated price reductions, extra days aboard, or some combination of the two. Some yacht owners are refusing to negotiate their prices at all (and some are still finding clients who book boats at full price), but the yacht owners who are willing to negotiate appear to be giving at least 10 percent to 15 percent off published weekly base rates.

Other charter yacht owners are giving more, but as quietly as possible. Charter fleet managers at several companies told me about cases where discounts were given as high as 40 percent to 50 percent off published base rates, but qualified their statements by saying the circumstances were particular to the specific yachts and clients involved. In at least one case, the charter client was required to sign a confidentiality contract in order to receive the sizable discount.

What does all this mean for the upcoming high season in the Western Mediterranean? It’s hard to say. I’m keeping my ear to the ground.

Stay tuned.

Stories on BrokerageBoss.com show drastic price cutting that could affect future charter reservations.

One of the most interesting comments I heard during Antigua’s industry-only charter yacht show came from Terry Hines, the charter marketing director for International Yacht Collection (and a longtime industry player whose views and insights I have learned to trust). Hines made the comment during a public presentation about recent changes to the MYBA charter contract that many reputable charter brokers send to their clients. While talking about future bookings and explaining how the MYBA contract protects charterers in the event of a yacht’s sale before a charter can commence, Hines quipped: “Every retail charter broker needs to be watching the brokerage markets very carefully right now.”

The comment was based on what she is seeing both within the International Yacht Collection yacht sales division and across the yachting industry as a whole: Some owners dramatically dropping the prices on their yachts for sale, hoping to find a buyer fast as the global recession lingers. Such sales, of course, could hinder or outright cancel any charters that are planned for dates after a new owner takes control of any given yacht.

Since I heard Hines’s comment two weeks ago, I have taken her advice and watched the brokerage markets carefully. And, as is usually the case, she has turned out to be absolutely correct.

Just this morning, the BrokerageNews blog reported that Merle Wood not only just signed the 191-foot motoryacht Islander for sale, but also immediately dropped the yacht’s asking price by $5 million, from $24.95 million to $19.5 million. Islander is currently being marketed for summer 2010 charter by Peter Insull.

Last week, I reported that RJC Yachts had dropped the asking price on the 147-foot motoryacht Aquasition by $1 million, to $12.9 million, while continuing to offer her for charter this winter. Also last week, BrokerageNews reported that Merle Wood had announced a sale price drop on the 102-foot charter motoryacht Liquidity, from $2.299 million to $1.695 million. On December 11, BrokerageNews reported that International Yacht Collection had announced a $1 million sale price drop on the 155-foot charter motoryacht One More Toy, now offered at $21.8 million.

For charter clients, I think this perspective on the interlinked charter and brokerage markets offers two smart lessons to be learned.

First, ask your charter broker whether the yacht he or she is currently recommending for your vacation is also for sale and, if so, whether there have been any recent announcements of price drops. That will help you understand whether the yacht’s owner is seriously trying to sell the yacht at the same time charters are being booked.

Second, take a hard look at any charter contract before you sign it, and make sure it gives you recourse in case the yacht’s owner sells the yacht before any travel dates that you book. The phrase “liquidated damages,” as I understand things from Hines’s presentation, is the key to ensuring that you are in fact protected.