Y.CO: Charlie Birkett interview
Y.CO co-founders Charlie Birkett and Gary Wright started their journey as yacht crew, working at the ground level. In 2004 they opened up an office in Monaco, employing 10 people – now they have grown to one of the largest management companies in the industry and employee 120 people around the world.
The company continues to grow but the market is shifting. After a few years of downturn, we are seeing some people return to yachting in the wake of the “Trump bump” but this is also a new generation of buyers. These new customers are savvy and are wary of pricing, they will work for the best deal and will not buy for the sake of it.
We sat down with Charlie Birkett, now the acting CEO of the company, to talk about the market and how businesses need to adapt to these new customers.
How is business?
We have had a very positive 2017. The charter market is supporting the industry at the moment, the brokerage market is still quite shallow and, while we have got a lot of new construction projects on the drawing board, we don’t have as much of a brokerage market as expected.
This was the story before Monaco at least. Things might change in the future. There are not a lot of great products on the market so those looking to buy a boat cannot find the quality or the platform that they want to invest in.
How do you find customers?
It always starts with charter, that’s where you build relationships. We would always recommend that a client charter a number of different yachts before he commits to buying.
Our sales team is incredibly important as well. When we first thought about starting a yachting company, we were predominantly a management company, so we had to make sure we were covering all services and employ a good sales team.
The sale team now in Fort Lauderdale, I would say, is one of the best teams in the market.
What is the biggest thing stopping people buying yachts at the moment?
The distance between what someone will want to sell the yacht for and what people want to buy the yacht for is too far apart. When you price a yacht, especially in the brokerage and second-hand market, you always have to consider what it would cost to build that new.
You also need to look at where it compares to other yachts on the market or that have been sold in that period. You cannot compare 2012/2014 with 2017 in terms of pricing, at the end of the day it’s only worth what someone will pay for it.
We generally look at the gross tonnage and work out quickly where it is priced. If you do that, you will see that some of the boats on the market are tremendously overpriced. Maybe that’s one thing we can focus on in the industry.
Is it a buyer’s or seller’s market?
I would reiterate that the distance between what someone wishes to pay and what someone is wishing to sell for is quite large.
However, there are a lot of interesting opportunities if you are a buyer. There are one or two yachts around at a time in every category that are interesting and can be bought at the right price, but certainly not at their listed price.
We saw a lot of people sell their yachts after the financial crisis. Are you seeing many people come back to charter or buy again?
Not a lot of our clients sold their yachts. Out of 110 yachts under management or contract, only two or so were sold in that period due to the financial crisis. That might have been coincidental but I’m not sure. But we are getting people who haven’t chartered for about two or three years coming back definitely.
Do you think we will see a return to the 2007-2008 boom?
No. I just don’t think we will see those days where people will be paying a premium for a new product that was 20-40% more than what it cost to build. This next generation of buyer is much more focused on value for money. They know they can buy or build something for $100 million from a shipyard so they are not going to buy anything for $195 million.
This next generation, the ones that are now buying, are smart, savvy business leaders, they are .com entrepreneurs and have made their own money. I do not think we will see the days of selling the opportunity and experience again.
Are you seeing any customers in China?
We have had a few Chinese clients this summer. We have worked with local agents there on a number of enquiries and there are one or two well-known Chinese businessmen that are contracting yachts with better known shipyards. It’s a market we are taking seriously but it’s a market that needs to mature.
Their domestic market has not picked up as much as we thought it was going to, mainly because of the luxury tax that is applied on products that aren’t built in China. However, once they start experiencing their domestic market, like every other major country that has bought into yachting, they will understand that they need something bigger and they will understand what they want to do with it. The next generation of Chinese people who will be coming into wealth will be more western trained and more western educated, and will know what they want.
If there is a perspective buyer worried about yacht depreciation, what yards would you recommend?
Every buyer should be mindful of depreciation and every brokerage house should brief that client on the level of depreciation they can expect from different shipyards. Buying from reputable shipyards that have warranty and refit abilities like Lurssen, Feadship and Oceanco (and many others) are better in this respect than buying from a shipyard that has not had any pedigree at all and has only built only one or two yachts.