Hire-rates of the Caribbean
This time of year usually marks the beginning of a season of rum, sun and sand for many charter clients looking to hire a superyacht in the Caribbean. But something strange has happened – demand for the tropical islands has plummeted compared with last year and no one is quite sure why.
“You’re seeing something interesting on the charter side in the Caribbean,” Daniel Ziriakus, chief operating officer and president, Northrop & Johnson tells Superyacht Investor (SYI). “Right now, for the winter season, we have about 42% of all sizes of yachts still available.”
Northrop & Johnson says that the number of yachts booked for Caribbean charter is lower than the pre-Covid levels of 2019.
“If you want a 50, 60 or 70-metre yacht you can still find inventory,” adds Ziriakus. “Last year you couldn’t find anything. People were outbidding themselves, offering more money to take the other guy out of his contract and pay the damages. It was just pure mayhem.”
Ziriakus had hoped that bookings would pick up after Thanksgiving. Whilst there has been some improvement, he says it has not been enough to turn around the poor start to the season.
It’s a trend confirmed by other charter operators in the region. At international sales and charter brokerage West Nautical, annual charter bookings were split around 60% Caribbean and 40% Mediterranean last year, with January this year becoming a record month for the industry. But the end of this year is completely different.
“The Caribbean charter market is quite odd at the moment, and I feel like I’m missing something,” JJ Carey, charter manager, West Nautical tells SYI. “I have hardly any bookings for the Caribbean. I would say 90% of my bookings this winter are in the Mediterranean.”
She adds that clients are notably moving eastwards toward the cruising waters around Turkey for the warmer temperatures compared to France.
Clients are booking vessels in the Med for 2023, with Carey saying she has already taken 20 charters. “Things normally seem to pick up around March, but people are booking a lot earlier than in previous years. Now, a lot of yachts are becoming available to book earlier, with some already allowing bookings for 2024 purely down to the number of enquiries we are getting.”
Carey says some American clients are more interested in the Med because they had already been to the Caribbean several times. She adds that there is also a difference in class between the yachts available.
“When you look at some of the options in the Caribbean, you could be looking at 2002 models, some of which are really bad quality,” says Carey. “Whereas when you look at the Mediterranean for a same-size boat you are looking at a brand new or year-old catamaran. It’s not a fair comparison.”
Some of her clients were also looking for yachts similar to the size and quality of vessels chartered in Europe. “And I have to say ‘Well, you’re going to be spending double the amount for a less good boat’ unfortunately.”
Inescapably, the current economic crisis is likely to impact superyachting if the economic climate worsens. Ziriakus says that there are no signs of it impacting clients, yet.
“However, if interest rates keep climbing like this, especially in the States, and if the stock prices keep falling, if it starts hitting corporate earnings or their portfolios go down in value, of course it will impact us,” he says.
“It will impact us more on a psychological basis. People will have other things to figure out in their lives than booking a charter or buying a $20m boat.”
Carey goes a step further to say that the economic uncertainty has already had an impact. Some clients have become increasingly price-conscious about their charter experience. Some have even cited expensive flights to the Caribbean as a reason for choosing the Med instead. Clients appear more cautious in their approach to signing on the dotted line.
“I’ve noticed that people aren’t willing to commit, or their budgets have been lowered,” she says. “I have clients which normally have a budget of around half a million and they’ve lowered it to £300,000 all inclusive, but still expect to get a half a million-pound style boat. It has definitely changed dramatically over the last year.”
After a record summer for charter, both Ziriakus and Carey both cited a “hangover” like feeling to the current market. “My gut is telling me this is a little bit of a trend because we saw the Caribbean or the winter season slowing down a little before Covid already,” says Ziriakus.
He adds that next year, many clients seem more likely to spend over the summer in the Med rather than focus on the Caribbean. Carey agrees. “However, I think it’ll be a little bit more equal. So, I suspect that the percentage will be around 75% Med, 25% Caribbean,” she says.
Image Credit: 274ft (83.5m) Feadship, Savannah from Edmiston available for charter in the Caribbean, with weekly rates from €1m.