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Let’s Make a Deal

The charter-booking process has changed — and smart negotiation is now key.

August 20, 2010
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Let’s Make a Deal

It’s not fair to say that the global recession has made yacht charter an outright buyer’s market. Some yachts are still being booked at full price, and some yacht owners have zero financial need to drop their rates a cent.

Even so, the recession has made charter the most buyer-friendly market in at least a decade. Discounts of 10 to 15 percent are regularly offered. Multiweek discounts from 30 to 50 percent sometimes appear. Yacht owners who refuse straight discounts may allow 10 days for the price of seven, or even 21 days for the price of 14. RJC Yachts reports some deals so good that confidentiality clauses are being put into charter contracts. Negotiations have become routine enough that Fraser Yachts Worldwide planned a seminar for its charter managers to hone, among other things, negotiating skills.

“There have always been clients who wanted to negotiate rates, but it was not something you could do on a charter of less than three weeks,” says Northrop and Johnson’s Ann Landry, a charter broker since 1992. “Now, yacht owners will negotiate on a weeklong charter or less. A good broker has to have different skills now. I need to have a feeling for what a week aboard a boat is actually worth. The clients are determining the boat’s worth, with the broker negotiating on their behalf, as opposed to the owners setting the price.”

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The trick, of course, is negotiating the best deal aboard the best possible yacht — and that does not always mean finding the cheapest rate. It means getting the best deal for an ideal yacht that fits your particular requirements. A great deal could be an outstanding yacht at a midrange rate, or reduced delivery fees to move a yacht to the exact location you desire, or some other perk that is of real value even with no rate discount at all.

One example of that last option is the 147-foot converted icebreaker Prometej, which is part of the Ocean Independence charter fleet. Her owner offered free use of his private jet from any major European city for charters this summer in the Mediterranean. Another example is the 56-foot sailing yacht Contessa, which, according to a marketing push by Tortola-based Regency Yacht Vacations, recently augmented its standard “inclusive rate” in the British Virgin Islands to encompass free airport transfers; cruising taxes; a welcome party with flowers, chocolates and champagne; and credits toward scuba diving, dining ashore or spa treatments.

“Yacht owners don’t appreciate being asked how much they will discount,” explains Patricia Codere, charter yacht manager with Fraser Yachts Worldwide. “Added value could be the location, an elevator or a super crew. Naturally, many yacht owners are willing to compromise with a serious charter client, but the charter brokers and charter managers need to work together to reach a fair and reasonable cost for the charter that suits both parties.”

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Terry Hines, charter marketing director for International Yacht Collection, says the majority of inquiries she receives include open-ended questions such as “What is the best price the yacht owner will give?” This is no more effective as a negotiating tactic than walking into a new car lot and asking the salesman “How low will you go on the price for this Mercedes?” — especially if it’s an absolutely pristine, new-year model that is still commanding close to its published, retail rate.

“If I get nine inquiries for a yacht asking me what extra discounts the owner will give,” Hines says, “and then one inquiry where the broker says, ‘The listed rate is $200,000. Will the owner take $185,000, because my client will pay $185,000,’ then I am always going to answer that last inquiry first. That client would have the best shot at actually booking the boat.”

Another good piece of advice is to work with a broker to find a half-dozen yachts that meet every one of your desires and then negotiate based on the broker’s knowledge of recent bookings, as opposed to simultaneously considering a few dozen yachts while hoping for a discount that won’t include too many compromises on your end.

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“Some brokers will send a client a list of 30 yachts because they want to look like they’re offering the best selection,” says Katie Wray, a retail charter broker with International Yacht Collection. “I try to find a handful of yachts that I think actually match the client’s requirements, and then I ask the client to rank them in order of preference so that I can negotiate deals one at a time. Usually, if we are reasonable nowadays, we can get the client’s first choice.”

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