Over the last twenty years, sail and motor yacht dimensions have increased several fold. Together with size increase, management costs have also gone up. Costs linked to on-board crew, docking fees, logistical and administrative expenses, and daily expenses such as food and fuel are directly proportional to the size of the yacht. As a yacht’s size increases, so does each expense item, and the management of the yacht becomes increasingly complicated. This helps us understand the need to rely on companies specialized in super-yacht management. But how are annual expenses divided up?
Sail and motor yachts between 40 and 45 meters, the average length present today in Mediterranean and international marinas, incur an average annual expense of apx. 1,000,000 Euros, composed of berthing, fuel (for an average of 100 hours of navigation), maintenance, dry-docking and administrative costs (permits, insurance). Based on an average crew of five to six members, 400,000 to 500,000 Euros will be dedicated to direct and indirect crew costs.
Percentage-wise, expenses can be broken up as follows:
- 30%: maintenance related directly to the yacht, it’s systems, wintering, shipping to and from the Caribbean (300.000 Euros value);
- 25%: personnel costs, including recruitment, salary determination and performance evaluation, extras (250.000 Euros value);
- 15%: owner use expenditures, related to the time the owner and guests spend aboard and relevant fuel costs (150.000 Euros value);
- 10%: logistics such as berthing reservations and chandlery supplies – included here are sea-toys such as tenders, jet-ski’s, helicopters and other leisure time expenses (100.000 Euros value);
- 10%: consumable items such as cleaning products, interior accessories and decorations (100.000 Euros value);
- 7%: administrative expenses related to flag and ship registry, insurance, management and agencies, safety on board and other certifications and requires (50.000 Euros value);
- 3%: remaining expenses such as the Concierge, marketing and communication for chartering (today, the only positive item on a yacht’s balance sheet) (50.000 Euros value).
For bigger yacht over 80m, kind of expenses do not change if not in their single value which is going up as related to larger size.
What’s up during the 2014 for yacht management companies and their managers?
With the Maritime Labour Convention 2006 (MLC) implementation cited as the most significant development within the yacht management sector this year, 2013 has seen yacht managers direct their focus and energy to ensuring their fleets are compliant. There is no doubt that the new standards provide a higher level of safety, which should be the cornerstone of running any vessel, but the real goal for the future will be, in an increasingly regulated environment, to maintain the true purpose of the vessel: the joy of yachting for the owner.
Yacht managers today have to deal with a higher level of legal, commercial and administrative knowledge. With increased regulations threatening to have an impact on overall owner experience, it is imperative that management companies keep abreast of such developments and also manage owner expectations.
Yacht managers have continued to notice a significant rise in port state control (PSC) inspections this year. the increase of PSC has meant that the vessel and its documentation must always be audit- ready.
Looking at the trends emerging over the past few years in the yacht management sector owners’ demands have grown. A new generation of owners has higher expectations and demands total professionalism in every area of their lives. They want 24-hour access to up-to-date information, completely transparent accounting, structured maintenance and more comprehensive crew training.
Another evolution perceived by yacht managers is in the change in attitude towards the role of yacht management over the past decade. Management has become a must- have. Crew understand that they need management because there are too many sides to look at. It’s not only technical, providing guest services and a couple of contracts; it’s also about having a proper HR service and qualified people. In general, more owners and captains appear to appreciate the benefits of professional management – not least a significant reduction in their own exposure to the potential liabilities of yacht ownership.
A further progression for management is the increasing involvement in the sales process. Management is influencing the brokerage side more and more. The buyer now wants to know about the quality of the materials, the build, the finishing, the equipment, the latest technology, and what the costs of maintaining. The different types of engines and communication on board are. It is still a toy for them, but they want to know where they are spending their money and how they are spending it
Floating Life Holding is a Swiss company, specialized in the management, charter and sales of super- and mega-yachts. Floating Life manages the “company boat” in a completely professional manner for the owner, relieving the owner from any possible problem related to the management of the yacht. In order to better develop its project of excellent client service with the highest specialization, Floating Life has organized itself as a Group. The Holding manages the following companies: Floating Life Charter & Brokerage, Floating Life International dedicated to the core business of the Group, which runs from yacht management (including management of the Yacht Plus Fractional Ownership Program), to Crew Management and New Custom Construction & Survey. Another company belonging to the Group is Floating Life Italy, which already manages Floating Life Style, a brand for crew uniforms production.
Floating Life Style is now also available for e-buying at the new online store “Floating Life Style“.