Posted March 22, 2012, 12:47 p.m.
BROKERAGE & CHARTER – A New Approach Interview by Colin Squire Stephen White, in association with two other highly experienced yacht Captain’s, Stephen warren and Stephen Hilton, has recently launched a new company, with new, or some would say old ideas, that will hopefully give Owners a viable alternative to the mainstream brokerage industry while also helping to give the Captain & crew back control of various aspects of running their yachts. I have asked him to discuss his ideas and his vision of the future. Firstly Steve how did you begin in the industry? It was April 1987 when I decided to travel to the South of France to walk the docks in search of work. I quickly found a job and worked for a while doing almost anything that was needed of me onboard a small power yacht. Then came Jessica, which is to me one of the ultimate sailboats. I spent six months on her and after that I worked on several smaller power boats. After sailing around the Mediterranean for about nine months I did a delivery to the states on a sailboat, Starship, which led to a couple of other small jobs before joining Princess Creta. I did an unbelievable Atlantic crossing on her during which we lost all of our fuel after a terrible storm and had to be re-fuelled from a Russian tanker. I arrived in Antigua and spent the winter there and I think that’s really where my love of yachting began, it defined my future, it’s also where I first met my senior partner Steve Warren. I then found a mate’s job on the 106ft Feadship, Heavenly Daze, the owner then bought the 159 ft. Margaux Rose and I became the mate. In 1990 I took the opportunity to go to Asia and join Rosenkavalier as 2nd officer, I soon became Chief Officer and finally Captain. The late Andreas Liveras bought that boat in 1993 and we brought her back to Europe. I then did some relief work on the 147ft Fifanella and then in 1993, I joined the 186ft Chamar, the boat was about a year old, and I left her in March of this year after 16 extremely enjoyable years! I have been exceedingly lucky on this journey, met some great characters and seen many parts of the world I may not have seen in other industries. Where I was most fortunate was in meeting the two owners of Chamar!, both families had a love affair with her. The original owner conceived her and built her to extremely high specifications, he understood that having good trusted crew with longevity was an integral part of making the yacht run the way that he wanted and he gave us scope to perform our tasks to the best of our abilities and to choose which shore support we required to keep the yacht moving along. When the second owner took over in 2005 and renamed her Bad Girl, he continued this system onboard and only recently sold her. She is an amazing boat in many ways and a vessel that I am sure I will have a lifetime affinity for. Let’s talk about your new company. Colin, thank you for inviting me here today to talk about the ‘International Yacht Register’. The primary focus and ethos of the company is very simple, it is to give a bespoke alternative for owners to the present Brokerage and charter market. IYR has been created with transparency and approachability and aims to put value for money and quality service back into the hands of owners, their yachts and crew. I originally had the idea for I.Y.R. back in 2004 when I started to deal more often with brokerage companies, when Chamar moved onto the charter then sale market. Before then Chamar was purely a private vessel and I dealt directly with the owner, he trusted the crew and I to run his yacht in a professional manner and we trusted him to act as a responsible owner, always making money available when justifiably needed and giving us time to prepare etc, It was a captain-owner relationship of the old style. The owner asked me to find a brokerage house to look after the charter of the yacht in late 2003 and after some tenders from various companies we settled on one to become our central agent. That same company then managed the sale of the yacht in 2005 to the second owner and again acted as central agent for charter and ultimately the second sale earlier this year. During this period 2003-2008 I began to think it was time that Super yacht owners and their captains were offered an alternative. Yachting to us is a very simple process, an owner buys a yacht and there is an industry to support what he chooses to do with that yacht, we believe that this may have been forgotten in principal and we as an industry must look after owner’s well if the industry is to continue its expansion into the next decade and beyond. In 2008 I was at the Monaco Yacht Show with Chamar/Bad Girl, just as the financial world was imploding. I observed the way the industry marketed itself first hand. After this experience I sat down with a few respected friends, two who have since become my partners, both again highly experienced captains, Steve Warren and Steve Hilton, and we came up with our way of looking after owners interests based purely on our experiences as Captains of large yachts for many many years. All three of us have had longevity in our relationships with our employers and this has given us an insight into the requirements, likes and dislikes of owners that we feel is not easily matched, we are here to offer the experience that we learned at the ‘coal face’ so to speak, and look forward to helping Owners and captains alike buy, sell, charter and run their yachts in more cost effective ways with higher levels of trust and cooperation. Superyacht brokerage, as we know it today has developed since the 60’s and you now see a better way ahead for owners. The way a yacht was run in the early days was by direct links, from the owner downwards. That is how a yacht should still be run today. The owner buys a yacht, employs a captain and crew to run that yacht, it is as simple as that. Then you can have the shore-side assistance of the managers, brokers, ISM experts, shipyards, chandlers etc. The owner should be able to go directly to his captain and say ‘ I want this’ or ‘how do we do that?’ or ‘what is the best course of action for this?’ or ‘I want to go there’ captains are quite capable of making decisions that in today’s world have been taken away from them. If they then need other expert help they simply have to make a call or send an email to the specific person they need to contact. Most captains are aware of the best yards, for example, to handle their yachts problems if they have any, the most suitable paint company for their needs etc etc. Not every captain today has the skill, or time to run every aspect of their yacht? This is a direct result of the last five to ten years of yachting and something that needs to be addressed. Brokerage houses have been elevated into a position of authority, which in many eyes is perceived to be above the captain’s role. A lot of owners that I have spoken to, and I have spoken to some very interesting owners in the last few months, are concerned with the fact that they don’t feel they have control of their yachts. They feel that they may have been pressured into doing things with their yachts that they may not want to do. They also feel that the expenditure of their yachts is much higher than it ought to be, not entirely through the boat or crew’s fault per-se but a lot of it can be directed to the large ensemble of support that is now in place to run that boat. A lot of the owners are perplexed as to why this is. Owners are also now very aware of the money they are spending! Sure. For the last five or so years there has been a blinkered approach, which was natural with so much easy money in the system. Now owners are becoming more frugal and looking at their expenditure in more detail and if we as an industry do not bend to that there may be many a tear shed. You obviously think handing back responsibility to the Captain and crew is the way ahead? Yes, but it is only part of the way ahead. Over the past 20 years responsibility for many aspects of the Captains traditional role has been taken away. Many decisions are now being made by managers and support staff off the yacht, simply making the process of running a yacht more complicated, more expensive and longer. Why should a company in London, New York, Monaco or Miami be arranging things when a captain and his crew know best what needs to be done and the schedule of the boat. If a captain has the confidence of the owner the decision is simple. But there are lots of rules and regulations that the captain might not be aware of? There is no reason why they shouldn’t use shore support as backup, and there is a smorgasbord of different companies out there to help. On Chamar we used a small, efficient, independent company to run our ISM and take care of the regulations. We paid for the work they did but it was done on a far reduced cost to what the standard brokerage/management houses would charge. It was almost on an ‘as needed’ basis. Likewise, as another example, painting. We had a painter we used and we would sort out time with the owner and the paint people would arrive on board. How would you work with a charter yacht? I have been a charter captain for a relatively short period, five years, but on a successful charter boat. The way it works at the moment is that the yacht is advertised through a central agent in a magazine or on a website. The client goes to the central agent or to a broker he knows who goes to the central agent. All charter companies within MYBA have access to the same boats, that’s a good system and works well. In my opinion, where it falls down is that once the contact is made with the central agent the onus of operation of the charter is placed solely on the shoulders of the yacht with captain and crew. The large commission charged for this introduction is too heavily weighted in the favor of the broker. We only work in the Western Med at the moment and we have designated charter coordinators who live in the South of France. From the time the charter is booked they will coordinate with the captain, crew and charterer through the whole process right until the end to make sure the charter goes to plan. We have a network of ‘associated companies’ that we have built over our combined years at sea that we recommend for help, from Limousines to food suppliers, and in many cases we have pre arranged discounts that are passed directly onto the client. But these are only recommendations of good companies that we have used through the years and if a captain wants to use another service that’s his or her choice, all the billing goes directly through them and they should know best who they want to use. Where we differ most obviously is in the amount we charge. Instead of charging 20% of each charter, we are charging 30% of one week per annum for being with us for a year. The owner is getting value for money. Your average charter bookings for a boat each year is probably six weeks, an owner can make huge savings. As we stated at the beginning, we plan to be a ‘Bespoke service’ and are only looking to have a maximum of 30 very special yachts on the charter register, that have passed the criteria required to be on the register, thus ensuring that the charterer gets what they are looking for and the owner has greater confidence that his yacht is run to a higher standard, thus saving him time and money in the long run. This is where the interface with the Captains is most important. We insist that the Captain & crew are included in the inspection process. We will inspect the yachts to a very high standard before they even go onto the register, and then every six months, continuing that inspection process, and in that we can build up a history of the boat, a history of the crew and we can find out exactly which boat suits which charter guest best. Would you also give MYBA brokers access to your clients boats. Of course we would and would welcome their enquiry, If a MYBA broker comes to us and says ‘I have a client for this boat’ then they have to have their normal commission which would be pre agreed with the owner at the time of joining the register, but would not affect what the owner has paid to be a part of our organization, he would not have to pay us more. When it comes to the sale of the boat where do you stand. By investigation we think that at present the average take for a broker on the sale of a yacht is around 7% of the price. We work on a sliding scale, at Euro 50 million and above our commissions are 1.5% down to 2.5% at 10 million, we cap it at 10 million. Below 10 million we will not be operating at the moment but we will happily talk to owners if they want to talk to us. If a MYBA agent comes to us and wants to buy one of the yachts on the Yacht Register, it will be again pre-agreed on entering the register with the owner that that agent will get 3.5% of the sale price. We welcome interaction with MYBA agents, or any other agents for that matter, to use us if they want to, but we will be setting our fee at the beginning at what we perceive to be fair commercial rates. What do you want to see in the future? First and foremost a fairer deal for the owners of these wonderful yachts that make the industry what it is today. The industry needs to change with the times and I stress again that is why we are offering this alternative to the incumbent system of brokerage and charter management. As far as the crewing aspect, which I know you want to talk about, there are areas for the future that need to be addressed. Too many of the younger crew now, because of the way that yachting has changed over the last 5-10 years, are resting back on their laurels and using the material platform of the boat to justify how good they are. If you are sitting on a nice big shiny Lürssen, Feadship, Abeking whatever, great, you have got a fantastic platform to work from but it doesn’t make you a good crew member. Today there is less emphasis on doing your job and learning your job in the correct manner and more emphasis on getting as high up the tree with as many qualifications you can as quickly as possible. We have developed our inspection system with a 50 point spectrum which does not only take into account ISM, ISPS which are the lowest acceptable standards by the IMO, but It also takes into account the hygiene of the boat, the knowledge of your bridge, engineering and interior crew, the knowledge and hygiene of your chef, the wine knowledge for example of your chief steward or stewardess. It takes into account the actual background of the crew, the maintenance history of the boat, our inspections are meant to be thorough and actually mean something to anybody looking at one of our fleet. We feel that this will create a better class of crew, better safety and a better overall experience for the charterer as well as helping the owner keep crew and maintain his yacht efficiently and cost effectively. The inspection process is covered within the 30% of the one week’s charter fee with justifiable costs on top. If an owner turned round to us and said ‘I have a problem with the boat, can you go and have a look at it and give me advice with a report’ then yes there is a reasonable daily fee for our time. What if the yacht is traveling and there is a big problem on board. I must reiterate this, the captain is the guy who must manage the boat, with as much or as little shore assistance as he and the owner feel comfortable with. He is the guy at the blunt end who at 3 o’clock in the morning, when they hit a storm, when the port engine goes out, he is in charge of that boat. When a guest is sick and they need to find a port, he is the guy who is there. We are on the end of a phone if he needs us and we will help him all we can but he is the guy with the responsibility, he must manage that boat and the owner must have trust in him to manage that boat and the captain reversely must have trust in the owner to allow him to manage the boat and make the important decisions. What about accountancy. So you are asking for complete faith again with the owner allowing the captain to handle all the accounts for the boat. I have never understood this idea of having shoreside accounting as such. All the captain is doing is preparing his accounts which are then being sent to the shoreside management company and they are just copying the accounts on to their system and sending them off to the owner. Why can’t the captain send them direct to the owner. I guarantee that 99% of the owners have their own accountants, their own personal assistants who can check through the accounts if need be. I am not saying just give the captain loads of money and let him get on with it. It needs to be checked and we will recommend people to do that if needed. Going on from that we have just been looking at your website which is now live and so people can go on there see the site to join you if they want, call you up, have a chat and you will talk to them… We welcome questions. It’s a new idea and it’s an idea which obviously will evolve. It’s a business run on sound principles that the owners are the most important part of our industry and that they must be given honest clear advice at a cost that brings them value. Transparency of operation are also paramount in our ethos as well as working to help maintain owners enjoyment of yachting and help cultivate the owner – captain & crew relationship I think Steve we have just about covered everything and good luck, it will be interesting to see where it goes. Contact: [email protected] Tel: +44 (0) 20 7321 3750