YachtPlus: the future of fractional yacht ownership

John Hare, the chairman of YachtPlus, is perhaps not the most obvious candidate to drive a company which aims to tempt high-net worth individuals into parting with large sums of money for a share in a luxury yacht. An accountant by trade, and backed by a board of high-flying figures from the world of international banking, Hare's job is to get financially savvy consumers to spend money on a product which even their most ardent fans would concede are floating money pits.

But the YachtPlus product, and its business model is very distinctive, and Hare believes it is a good solution for those who like the lifestyle a superyacht can provide, but not the cost and hassle associated with owning one.

Hare spoke to Fractional Life in La Spezia, Italy, at the launch of Ocean Pearl, the company's second Norman Foster-designed 41-metre yacht, which was built a few miles up the road in the Sarzana naval dockyard. Ocean Pearl is identical in design to its predecessor Ocean Emerald, which was launched in 2009. Ocean Sapphire, the third Foster-designed yacht is scheduled for launch in May or June of this year, with a fourth to follow by the end of 2010.

As befits a company which is new to the yachting industry, these boats are very distinctive and have caused quite a stir, with their striking grey hulls inspired by the shape of a dolphin breaching the water's surface. “The Foster yachts are actually quite surprising,” says Hare. “The exterior is quite masculine and aggressive, but inside it's a very calm and relaxing environment. The design has certainly got us noticed and made an impact in the industry, but it's put some people off too – mainly those who like traditional yachts. We need to get people on board to show them the difference between the exterior and interior.”

Each of the four yachts will have eight owners – the first two have sold out, and four shares in Ocean Sapphire had been sold when we spoke in mid-March – and will spend winters in the Caribbean and summers in the Med. Owners have come from Mexico, the US, Europe, India, Hong Kong and the UK. They pay €1,875,000 for their 1/8th share, which entitles them to 30 nights aboard, 21 in the Mediterranean and nine in the Caribbean, plus €200,000 per year in maintenance fees. The yachts will be sold after eight years, with owners receiving a 1/8th share of the proceeds.

At first glance this seems like a huge amount of money, but when you consider that to buy a boat like this outright would cost around €15 million, plus at least €1.5 million annual costs and a lot of associated headaches, the YachtPlus model begins to make good sense.

And so it should. The company's founders are money men, with backgrounds at companies such as Goldman Sachs. “We essentially created something for our own use, something that didn't previously exist,” says Hare.

“What we're doing is essentially a copy of the NetJets model,” he adds. “A yacht is the most logical asset to share as it always depreciates in value, and running a yacht is very expensive – it can cost more over a few years than the purchase price. There is an argument that the current state of the economy is perfect for our model. People are much more cost conscious these days, and what better way to cut costs than by sharing assets?”

Hare sees YachtPlus as a bespoke travel company which uses yachts as its medium. “What YachtPlus provides is a luxury lifestyle with bespoke travel – the yacht is the mechanism to provide it.You can compare what we offer with the best hotels – there is no maintenance, and no hassle for the owner. It's a similar concept to a hotel, taken into the yachting industry – we are essentially a service provider. Once you get in to yachting you realise how much hassle it is – it's like running a huge, very expensive house. A lot of people want the lifestyle it can provide, but not the hassle. They want luxury and privacy. With YachtPlus it's like being in a top hotel, but you don't have to share the space with other people.”

“Most of the owners have no strong desire to own a yacht – it's more about what they want to do with it. A lot of people can afford what we offer but don't need the status symbol and the madness that comes with owning a yacht,” adds Hare.

In the future, the model will move away from owning a share of a particular yacht. Hare says: “The company will become more location driven rather than yacht driven. We'll diversify into different kinds of boats, including sailing yachts. The model will move toward ownership of a fleet rather than a specific yacht – owners will be able to choose whether they want to sail or motor, and there will be a wide range of locations. Our customers will ultimately have access to a fleet which will address different needs. There will be boats specifically for cruising, for families, for sailing with your mates, for exploring or for two couples. There is also the potential to have the four Foster yachts stationed in four different oceans.”

Assembling this fleet will involve a range of purchases. “Now we are established, we'll move to existing yachts – the Foster yachts take three years to build, and with the way the market is at the moment, you can buy yachts for less than the construction costs. Eventually we'll be buying a mixture of existing yachts and new constructions – I think yards will be keen to offer competitive prices on builds, but in 2010 it's very much a buyer's market for existing yachts. There is an excess of supply at the moment, but this will change eventually. We've also been approached by an Italian owner of a 30-metre sailing yacht with a view to fractionalising that,” says Hare.

Fractional Life will bring you all the latest news from YachtPlus, including new additions to the fleet.

www.yachtplus.co.uk

25/03/10

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