American ‘pysche’ sparks US sales optimism
Photo credit: Miami International Boat Show
Maybe it’s the Taylor Swift factor – most things are these days – but the US superyacht market seems to be heading into 2024 with irresistible force.
Confidence and optimism seem to be the buzzwords despite global unease, economic downturn and an impending presidential election.
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At last week’s Corporate Jet Investor London 2024 conference a number of aviation professionals who spoke on panels were bullish about the US business jet market.
“I just don’t see anything to slow down the train,” said Don Dwyer, managing partner, Guardian Jet who acknowledged some impact from the 2012 US presidential election but saw none in 2016 and 2020.
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Don Spieth of VanGas Aviation Analytics was also confident for the year ahead.
“Last year Q4 finished stronger than most people would have guessed,” he said. “We see 2024 being a bit uphill from 2023. There’s lots going on in the world including US elections, but we do see a healthy continuation in the business jet market.”
The environment for superyacht sales in the US is healthy, say brokers. Photo: MIBS
Time to dance
Ms Swift certainly extoled the convenience of private jet travel with her dash from Tokyo to Las Vegas to see boyfriend Travis Kelce win the Super Bowl with the Kansas City Chiefs, but the dynamics of deals have changed since the post-Covid frenzy. Sellers now need to be “more fluid”, according to Matt Rosanvallon, director, Sales and Acquisitions, Freestream Aircraft. “Sellers will need to dance again,” he said.
This mirrors the climate in the superyacht world where the US is “still the leading market globally and will continue to be so”, says Richard Lambert, senior partner and head of sales, Burgess, which has offices in New York, Miami and LA.
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Cromwell Littlejohn, chief commercial officer, Northrop & Johnson, also talking to Superyacht Investor, says: “We’re sales guys so I guess we’re inherently optimistic but we’ve got to be realistic at the same time.
“Our charter market for the summer of 2024 has been very strong, both on the boats we manage for charter and on our charter brokerage team, so that’s a great barometer of where people’s heads are.”
On the sales side, Littlejohn says Q4 of 2023 was a “great quarter for us” with a “nice flurry of closes towards the end of the year” in both new builds and brokerage, including yachts such as the 78m Golden Yachts Malia and the 60m Trinity motor yacht Iron Blonde, both of which have gone into charter. The bonus tax depreciation “made a big difference at the end of the year”, he added.
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Like the jet business, “sellers are becoming more realistic”, says Littlejohn, and the market has “returned back to normal” after the Covid spike when “inventory dropped to almost nothing and we saw much more price increase than we saw price decreases, which is highly unusual in the yachting market”.
“Whether owners are reducing prices, they’re certainly making it known they’re now prepared to listen to offers which they weren’t two years ago,” says Littlejohn.
“In general, the economy is still strong, there is still lots of money out there and people still like boating so we’re very optimistic where we’re headed in 2024.”
The US is the leading superyacht market with about 60% share, according to Henry Smith. Photo: MIBS
Rules of the game
Lambert reports hearing the same signals. “We’ve seen through 2023 the US market’s been strong – confidence is there when you’re on the ground,” he says. “You do feel generally that clients are quite confident about the market, and I think we’re seeing that following through and people are investing in yachting.”
However, there is a school of thought that says US yacht sales dip in an election year as prospective clients hold off buying to see who ends up in the White House – “They want to know the rules of the game,” says Patrick Coote, MD Europe, Northrop & Johnson.
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“We’re hearing it,” says Littlejohn. “Nobody ever needs another excuse not to buy a yacht.” But he adds: “There’s a lot of optimism coming from one half of the camp and a lot pessimism coming from the other half. Some are saying we want to wait and see, some are saying I know what’s going to happen, I’m ready to roll, it’s going to get better. We thought the slight recession was going to affect us and it really didn’t, and now it’s the election. People will talk, but I think people will continue to do what they want to do and spend money.”
Shopping sprees
Henry Smith, partner and sales broker, Cecil Wright says the US will continue to be the market leader, irrespective of who wins the election in November.
“The trajectory will be the same as it always is, which is about 60% global sales attributed to the US historically,” he said. “I don’t see any reason it might go up or down particularly, although one might argue that obviously the Russian sector has gone to zero more or less, so we might see a slight increase in overall percentage.
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“When Trump won last time people went on big shopping sprees and that obviously impacted the yacht market. I can’t see Biden winning, so unless there’s an upset, I rather suspect a Trump victory will take place and as a consequence there will be an uplift in people buying boats. The US financial markets will inevitably do well as a result of him being in power. The short answer is it [the superyacht market] will stay the same if a Democrat is at the head and if a Republican gets in it will go up.”
‘You have to remain nimble’
Burgess as a company has a strategy pillar of targeting wealthy hot spots in the US, even if they appear far removed from the yacht world, such as Scottsdale, Arizona.
“We’ve identified wealth in the US and see that as a very key market; it’s established, it’s very aspirational in the US psyche for yacht ownership once people do develop wealth,” says Lambert. “Going to these various hubs of wealth throughout the US where you wouldn’t necessarily associate them with yachting is very key for us to develop those markets.”
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In the words of another CJI London speaker Marwan Khalek, CEO, Gama Aviation, the “opportunities for growth are available in all markets”.
“You have to remain nimble, have the courage to go after opportunities, not be frightened of failure and not be frightened of occasionally changing direction. This remains a highly entrepreneurial sector and you have to apply those principles.”
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