Ranging from a lick of paint to a five year survey or a complete overhaul, refit is an important and varied sector of the superyacht industry. Because it encompasses work that owners are obliged to do to maintain the basic functions and safety of their yachts (as well as work to upgrade onboard lifestyle) it seems logical that it would have weathered the global financial crisis (GFC) better than new build or second-hand sales.
The three yards consulted for this analysis support that supposition, all confirming a steady or steadily increasing supply of work over the past few years. Pendennis and Amico & Co have both expanded their refit offerings recently – the former with a facility in Palma de Mallorca and the latter with a yard in Loano, Liguria – and Monaco Marine intends to expand its existing sites in the near future. Finding the space, rather than the custom, seems their prime concern.
‘We’ve been at full capacity for refits,’ says Toby Allies, sales and marketing director of UK yard Pendennis (which, unlike the other two, also offers new construction). ‘It’s very difficult to say whether it’s increased or decreased since the GFC, but the last few years have been the busiest we’ve ever had.’
There may be plenty of work to go round, but the distribution of clients suggests financial stress has affected refit in some regions more than others, as Alberto Amico, president and managing director of Italian refit yard Amico & Co has found.
‘Ninety-six per cent of our turnover is from clients that are not from Italy,’ he says. ‘The refits we have done in recent times are more from areas outside the European community. The numbers are from Australia, China, Russia, the US and much less at the moment from Saudi Arabia or Europe.’
Amico believes this is due to the mood of European owners, who are still hesitant to splash out if they don’t have to. ‘They want to avoid spending perhaps one or two million euros in this moment,’ he says.
But surely the bread and butter work of maintenance has not been affected by this mood? While the majority of owners still commit to basic upkeep, Allies believes that since the GFC, a higher proportion are letting it slip. ‘There are boats that have just been left,’ he says. ‘Out of a fleet of, say, 4,500 boats not all of them are in use. It may look as if refit is a reliable business activity because people have got to look after boats, but the number that are being looked after has reduced.’
But Vincent Larroque, group sales director of refit yard Monaco Marine, has found that while financial difficulties may be keeping some yachts from the refit shed, they are pushing others towards it. ‘We experienced that some boat owners have decided to keep and upgrade their vessels rather than to change for a new one as they were used to do before the GFC,’ he says.
Buying to sell
As well as encouraging owners to spruce up their old yachts with a refit, the economic climate has led to knock-down prices on second-hand yachts. Buying one of these and refitting it might be an attractive alternative to a long and expensive new build.
‘There are more enquiries in terms of purchasing boats that have been part built or been for sale for some time, with people looking at completing them or more sophisticated refit work,’ says Allies. ‘There’s definitely a large increase in enquiries in that area. Not necessarily purchasing – but exploring it as an alternative to new build. There’s lots of talk about it, but the number that have actually happened is a small fraction.’
Larroque feels that the economy’s effect on the new build market must also be taken into account when considering the attractiveness of this type of operation. ‘There are good opportunities on the market to buy a second-hand yacht and then to refit and adapt her to an owner’s wishes,’ he says. ‘At the same time, some yacht builders are desperate to fill their order book and are offering new builds at very aggressive pricing. Depending on the yacht type and on the owner’s wishes, the financial equation is not necessarily obvious.’
It is another benefit to buying cheap and refitting that he believes will be most attractive to clients. ‘It is faster to refit an existing vessel than to build a new one. This can be a critical point in the decision process, especially with some new owners, [who are] rather younger than the average and buying their first yacht without wanting to wait two to three years to get her.’
And improvements in the industry are likely to make refits faster. Having your yacht refitted is a more efficient business than it used to be – at least partly because owners are less willing to fritter away money on disorganisation and delays.
‘There is a very slow process [towards] having the refit managed in a better way,’ says Amico. ‘For the moment it’s probably only in the budgeting and contractual side. Contracts that are made in a better way, safety insurance is something owners are taking a bit more care with.’
Allies believes there may be reasons other than money for this improved organisation. ‘There’s a financial aspect to it,’ he acknowledges, ‘you want a plan earlier, so you can reduce risk and uncertainty. But there are a lot of boats looking for refit slots in the top facilities, so you need to secure your slot earlier.’
The expansion of yards such as these should help alleviate that glut, but what further changes would improve refit? Clients currently receive quotes from several shipyards, with different evaluations and solutions, so knowing exactly how those figures are arrived at is important – as is proper planning by the owner.
‘There is a request both from the owners’ side and from the shipyards’ side for higher transparency, better preparation with clear and detailed specifications,’ says Larroque.
Allies agrees that transparency is the key to helping owners make the right choices. ‘There needs to be greater transparency in the superyacht sector in terms of pricing and clear structures on commissions and charging,’ he says. ‘Clients need that to be able to compare yard to yard. At the moment they are going round in circles trying to work out what the charging structure is from one facility to another.’
Renovating working practices will be difficult, but who better to undertake such a task than the world’s best refitters?