Managing uncertainty

The team at Pantaenius discuss uncertainty in the superyacht charter and owner market

Dependent on the unrestricted movement of guests and yachts around the world, the superyacht charter market was severely disrupted by the COVID-19 pandemic throughout 2020. With postponed bookings to be fulfilled, as well as pent-up demand, this year has seen confidence return to the market in time for the Mediterranean summer season.

“I don’t think I’ve ever had to juggle so many enquiries,” comments Jacqui Lockhart, Retail Charter Broker at Camper and Nicholsons. “I have some charters postponed from last year but, on top of that, I’m getting lots of enquiries from repeat clients as well as new clients that we haven’t dealt with before and it’s getting increasingly difficult to find the right boats that are available. It seems like everybody’s woken up – people are wanting to get away and they see these yachts as a safe way to go on holiday.”

Eleanor Bloodworth, Yacht Charter Broker at Y.CO, has also observed an increase in activity. “It's very different from last year when there was a significant amount of fear and concern about travelling,” she adds. “This year, a much greater proportion of clients have the desire to travel, particularly because many are fully vaccinated.”

While both the vaccine rollout and lifting travel restrictions across Europe has created a window of opportunity for many to go on holiday, the changing travel requirements and restrictions in some countries continue to present challenges and uncertainties for the market, and add another layer of complexity to each enquiry and booking. British clients, for example, have experienced some of the greatest issues when booking charters due to the UK government’s last-minute decisions regarding its quarantine requirements for travellers returning from overseas.

“We’ve seen a lot of clients go to contract and be 99 per cent of the way there, but then don’t go through with the booking at the last minute because of the fear of changes in travel restrictions,” explains Bloodworth. “But that is the reality of the charter market right now. It takes willing clients and a lot of flexibility on everybody's part – client, owner, broker and charter management company – everyone has to be very solution-oriented to make things happen, which is a slightly new mindset for the market.”

As a result of this uncertainty, the most popular destinations for charter this summer have been those that are most open to tourism, which includes Croatia, Greece and the Balearics. Many American clients that would usually charter in Europe have chosen to charter closer to home, with increased demand for charters in New England, and some charter yachts have even sailed to the UK in an attempt to attract British clients. “Any owner with a commercial frame of mind will take their yacht somewhere where there’s a lack of competition,” advises Lockhart.

Another additional consideration for charter yacht owners and their crews in a post-COVID world is incorporating new health and safety measures on board. This includes putting systems in place to handle effective turnarounds, such as allowing an extra day between charters and hiring external cleaning companies to ensure that the yacht is thoroughly disinfected for new guests.

Testing of the crew and guests, as well as social distancing prior to and during a charter, is also essential. “Limiting contact with others ashore is a big change for the crew, but necessary to ensure all charters can go ahead,” adds Bloodworth. “If a crewmember or guest were to bring COVID-19 on board during a charter, that charter is going to be affected as well as the next one, so there is a lot at stake for everyone.”

While charter bookings are not yet back at pre-pandemic levels, there are sure signs of a return in confidence and an uptick in activity. As the world starts to open up again, the charter market is perfectly positioned to offer wealthy individuals the chance to travel and holiday again in a safe and stress-free environment, and there’s no doubt that this aspect of superyacht chartering will appeal now more than ever.

INSURANCE CHECKLIST FOR CHARTER YACHT OWNERS AND CREW

From an insurance perspective, preparing for a charter is straightforward: an email or phone call to Pantaenius is enough to start the process. As chartering means an increase in risk, insurers will generally apply an additional or higher premium to the existing policy to include the commercial activities. It is important to disclose the circumstances under which the charter activity will be carried out, so that we can assess the risk and provide new terms.

Once the new conditions and premiums have been advised and approved by the insured, the extension can be put in place very quickly so as to not delay the charter activities. However, there are other questions that the yacht owner or operator should ask themselves when it comes to chartering:

·       Does the owner need to comply with any local requirements?

·       Does the owner need to comply with labour regulations on commercial vessels?

·       Will the superyacht compete in any superyacht racing events?

·       Does the owner need a local tax representative?

·       Are the clauses in the charter contract in line with the cover of the yacht insurance in terms of, for example, accident insurance, personal effects, emergency accommodation etc.?

·       Will there be additional or rented tenders and toys used during the charter that need to be declared to the insurance provider?

·       Do the crew have the necessary qualifications?

·       Do the crew have sufficient medical and accident cover to comply with MLC 2006?

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