According to many press reports, 2016 looked to be a very positive for the Yacht business prior to the year’s most important superyacht event, Monaco Yacht Show, followed by the Caribbean season. Florida had also recovered from stronger American economic performance, taking the entire Caribbean region on a strong wind forward mode. Even Greek has overcome the bottom of the business and looking for better days.
But what of what many dubbed “Asia’s maritime capital” Phuket, Thailand?
The global yachting industry was hit hard by the financial crisis both in terms of sales and charter revenue but has gradually shown signs of improvement over the past couple of years.
However, the charter market seems to have also seen a surge in celebrity status this season, with a flurry of high-profile names bringing yachting vacations into the media spotlight.
The charter market seems to have also seen a surge in celebrity status this season, with a flurry of high-profile names bringing yachting vacations into the media spotlight.
Ibiza has been the destination of choice for much of this attention, with everyone from Leonardo DiCaprio to Rihanna embarking on luxury charters in the Balearic Islands on board a host of well-known vessels.
Likewise, perhaps to the shock of Phuket, Thailand, a number of more far-flung destinations such as Tahiti, Papua New Guinea and New Zealand have gained in popularity as providing unique cruising vacations for the whole family.
In an interview with SuperyachtNews.com, OCEAN Independence’s commercial director, Toby Maclaurin offered his take on the developments: “The charter market is looking a little better, if not comfortably better than last year in terms of volume of business…. We’re relatively pleased about how the average value of each transaction has changed.”
Although many in the industry remain understandably cautious. Greece was arguably one of the hardest hit regions, with both political and financial unrest portraying a poor image of the country in the media contributing further to the down turn.
However, SuperyachtNews.com say during Mediterranean Yacht Show, there was significant change in attitudes toward the future of the charter market, as a number of charter yachts that were fully booked for the whole of summer.
George Pappas of Big Blue Yachting commented: “The charter market between 2009 and 2012 was very difficult for us – for the country’s image and the financial setbacks – and when the image of a nation is not something that portrays security that means that people become hesitant to visit there.
Let’s look closer to Thailand:
Thailand, particularly, the Andaman Sea area, off Phuket Island, is often called the best in Asia. And in recognition, global citations come pouring in. For example, the Christofle Asia Boating Awards crowned this Phuket island off Thailand’s southwest coast as “Asia’s maritime capital.”
But what is often missing from the discussion about Thailand’s boating industry, is the economics and business behind the activity. This missing link is important as gaining government support for the boating industry could become easier.
For example, the latest figures, from the Tourism Authority of Thailand (TAT), TAT projected that “Maritime Tourism” pours more than US$306 million into Phuket’s economy each year.
However, how much does, in this case Phuket’s Island boating, add value to for example, real estate or the overall attractiveness of Phuket Island. And that is the difficulty in estimating the economic benefits boating brings to just one area Phuket Island.
And while Thailand increasingly grows to become a boating center of Asia, with Super Yacht making more visits, boat building activity in Thailand has also increased.
Not just boating itself, poses difficult economic and business questions, boating is also an industry that can create jobs and exports. And how much do boat and yacht building contribute to Thailand’s economy?
For example, about 60% of speedboats sales in Thailand involve locally produced models. The country has more than 300 speedboat suppliers.
How much do these 1,000s of speedboats in Thailand, contribute to the economy, for example and attractiveness of beach tourism area?
And Thailand’s exports of yachts soared from 15.61 million baht in 2004 to 137.9 million baht in 2009, based on Ministry of Commerce statistics.
Strong support from various government agencies is vital to the boating industry’s sustainable development. But strong government support is crucial, to more than just boat building, but the activity itself.
Yacht industry projects receive generous incentives from the Board of Investment (BOI), which added shipbuilding and shipyard operation to its list of promoted activities to stimulate development.
The fundamentals are there for Thailand to excel in this area. Thailand attracts yacht enthusiasts and builders with its expansive blue waters, substantial manufacturing capability and reliable government support. Perhaps the biggest competitive advantage, however, is the fact that high quality comes at low cost.
According to Thailand’s Board of Investments, leaders in the Thai yacht industry include Concordia, Serenity, Sunsail, Elite, Kata Marine, Yachting Siam, SeaDream, Asia Marine, Phuket Boat Lagoon, Dream Yacht, Yacht Solutions, Ecoyachts and Nong Mine Phuket.
More international suppliers of marine components such as sails and spars are also locating in Thailand, expanding the industry’s capability. Among these is Rolly Tasker, award-winning Australian sail manufacturer who has established the world’s largest custom-built sail loft in Phuket.
In Thailand’s yacht building industry the overall construction cost is 11-22 million baht for a 36-foot yacht and 24-47 million baht for a 46-foot yacht, according to 2010 figures from the International Maritime College of Kasetsart University.
For many years now, there have been successive governments in Thailand that is focusing on expanding boating activity and industry in Thailand.
However, the activity is often linked to luxurious lifestyle, and thus often this support is weak.
For example, Asia Pacific Superyachts reports regulations and rules with regards to the actual Thailand’s superyacht charter license were still being hammered out on August 10, 2015.
A number of related issues remain as hurdles for superyacht owners, explained Somchai Sumanuskajonkul, deputy director-general for the Thailand Marine Department. “The two major remaining issues deal directly with immigration law and value-added tax [VAT],”
Various problems slowing development of Thailand boating is recognized. For example, Prince of Songkla University has launched a project to establish a data center that would promote the yachting industry in Phuket. Marinas in Phuket currently service about 1,300 vessels of 30 to 100 feet in size. The goal is for the increased information flow from the data center to boost service to 5,000 yachts.
In the meantime, as issues relating to boating in Thailand, such as with the promotion of superyacht is slow to being resolved, the Board of Investments (BOI) is promoting yacht building in Thailand.
According to the BOI From a production standpoint, the labor cost savings in Thailand are substantial, even as top quality is emphasized. This is a tremendous attraction for builders, as labor makes up 40% of the expenditure in manufacturing a yacht, excluding the engine. Industry estimates put Thailand’s yacht labor costs at half of those in the United States and Australia.
For example, according to BOI whereas the wages of a Thai skilled fiberglass worker and marine engineer are from 7,000-15,000 baht and 12,000-24,000 baht per month, respectively, the corresponding rates in other countries are much higher.
The BOI says: “Skillful craftsmen and engineers are the pride of the Thai yacht building industry. The country has a large and experienced force of welders, carpenters, electronics specialists, upholsterers, cabinetmakers and decorators, all available at highly competitive costs. Local engineers are capable in everything from hulls to rigging.”
Thailand’s boating enthusiasts have long noted that the industry suffers from being seen as a luxurious endeavor and thus successive governments have placed boating as a lesser important issue to address.
However, they have pointed out, again and again, that the boating industry, is important, not just for tourism, at places such as Phuket Islands, but boating also plays a major role in economic development.
The problem, is gaining supporting from the government, according to many of Thailand’s boating expert, is the difficulty in indicating to the government, boating activity benefits to the overall economy and business environment of Thailand.