The yacht industry may be on track for a post-pandemic boom.
An April 2021 report from Grand View Research valued the global yacht market at $8.15 billion in 2020. It is expected to expand at a compound annual growth rate of 5.2% from 2021 to 2028. The global yacht charter market is projected to grow from $6.83 billion in 2020 to an estimated $10.82 billion in 2027, translating into a compound annual growth rate of 6.6%. This growth seems to be fueled by the ongoing rise in high net-worth individuals and an increasing number of intermediaries, with companies such as IYC and Yacht Jerico, likely to help boost the demand through unique offerings.
A recent update from one of the world’s largest yachting firms points to an optimistic recovery for the industry in the wake of the pandemic. In a press release IYC noted that the industry reports from Q1 indicate the global yacht market is the strongest it’s been in four years. The company sold more than $450 million worth of yachts in 2020 alone, giving a strong indicator of market growth.
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Growing Number of High Net-Worth Individuals to Augment Industry Growth
According to the World Wealth Report 2020 by Capgemini, the number of high net-worth individuals increased by an estimated 9% in 2019. This growth happened despite economic slowdown, geopolitical slowdown and international slowdown. Moreover the rise of income of high net-worth individuals seems to be the highest in North America, with the report indicating a rise of around 11%, followed by Europe with a 9% rise, surpassing the Asia-Pacific for the first time since 2012.
The growing number of such individuals is likely to fuel the demand for yacht charter services, both for leisure and recreational purposes.
Luxury Yacht Market Outlook 2025
In a report by Allied Market Research the luxury yacht market size during 2017 was valued at around $5,703 million and is expected to surpass the $10,205 threshold by 2025 with a compound annual growth rate of 7.8% from 2018 to 2025.
Luxury yachts can typically range in size from 75 foot to well over 250 foot in length and are often available for chartered trips. Traditionally manufactured using woods, fiber reinforced polymers and composites, these yachts have gained tremendous popularity over the last few years. Allied Market Research attributes this growth to the change in lifestyle of people that is fueled by growth in high net-worth individuals, the rise in inclination towards leisure activities and a surge in the trend of yacht tourism.
In the report by Allied Market Research, Italy is identified as the leading producer of luxury yachts, followed by the United Kingdom, United States, the Netherlands and Taiwan. The Italian yacht production industry accounts for around 42% of the global production for 2017. In the last decade Italian brands, such as Pershing Yachts, have been well received and favorable government initiatives pertaining to lower mooring and marine resort taxes, the reform of the maritime code, and measures for easy leasing helped with the expansion of this industry.
Furthermore, leading Italian manufacturers such as Azimut Benetti, Sanlorenzo and Ferretti helped to ensure that Italy remains a hub for luxury manufacturing in the region through a continuous focus on trade and internationalization through commercial strategies and alliances.
On the other hand, the report identifies Taiwan as an emerging and promising region for yacht manufacturing, pertaining to the Asia Pacific region. Steady growth in revenue and average yacht lengths have helped Taiwan to gain traction around the world.
Differentiating From the Competition
With the yacht industry steadily growing it can become hard for charter companies to differentiate themselves from the competition. One charter company located in Miami took a decidedly different route.
Known as the only yacht charter company in Miami that offers an outdoor nightclub and overhead beam spotlight among other amenities, these yachts are seemingly a popular choice among celebrities and notable individuals. Making almost exclusive use of Pershing yachts, the company clarifies the reasoning behind their choice: “Pershing Yachts are the pinnacle of quality, craftsmanship and engineering.”
As the demand for yachts continues to grow, it may become increasingly important for charter companies to offer additional amenities in order to remain competitive.