We recently caught up with Gerhard Chemelli, the CEO of the leading yacht co-ownership company in the Mediterranean – SmartYacht.
He told us more about his company’s concept and why yacht fractional ownership, a concept that has been a hit with yacht owners in the USA, is now rapidly gaining popularity in Europe.
When was SmartYacht founded? Is there an interesting story there?
The idea of SmartYacht was born in 2008 when I studied for one semester in Sydney, Australia. I was invited by a yacht builder to visit the Sydney Yacht Show, where he showed me one of his 30m motor yachts.
While I was deciding if this yacht was the right choice for me in the Med, an idea of sharing it with two or three of my friends sprung to mind. Yet, I knew that although it is a great idea, many would eventually bail out of it.
Once we start deciding who is doing all the tasks involved, like organising a berth, insurance, regular maintenance, proper cleaning, repairs and accurate accounting, everybody would withdraw from the idea of sharing, because nobody would have the time to do it. On top of it, I knew several cases of private yacht sharing with friends, which ended in resentment and worse still, the end of friendship.
As I was thinking about it, the idea of establishing a professional service for yacht co-ownership hit me. I realised that yacht sharing was quite possible, one only had to take all the negative tasks of yacht ownership out of the hands of the shareholders and put those tasks into the care of a professional independent management. That way no shareholder had to be involved in any of the tedious tasks and, instead, could simply enjoy the yacht without any unnecessary hassles.
I also knew that shared yacht ownership already existed in various forms in Australia, England, and the US, but was not yet so common in the Mediterranean. Indeed, there were a few yacht sharing companies that were in operation in the Med, but most of them had failed.
This, however, did not stop me from pursuing the idea of establishing a yacht co-ownership company. Instead, I decided to take a different approach to yacht share management. I wanted to prove that it could be an amazing business opportunity for all involved parties when done in a professional way.
I believe that the positive feedback from yacht owners that worked or are currently working with SmartYacht and a constantly growing number of new clients are the best indications of my idea reaching that goal.
What is fractional ownership?
Well, we prefer not to use the term “fractional ownership,” because that sounds a little bit misleading. We prefer the term “yacht co-ownership,” because it better represents the concept.
Yacht co-ownership is a model of yacht ownership, where a certain number of people own a share of the same yacht. Unlike timeshare, yacht co-ownership entitles you to proper ownership rights, but of a share rather than of a whole vessel. Just like a solo yacht owner, you can choose to sell your yacht share whenever you want. Therefore, it is a proper investment.
A major difference here from a traditional ownership model is that you are saving a large amount of money. Very often yacht owners do not use their vessels throughout the entire year, but rather just for a few weeks during each season. This is why yacht co-ownership makes so much sense – it lets you own a luxury yacht at a significantly reduced price and use it only when you actually need it. Additionally, you do not have to worry about the yacht maintenance as this is taken care of by the yacht management company.
In view of such obvious advantages, the concept started rapidly gaining the popularity in Europe, although it is still a niche market.
What makes SmartYacht different from its competitors? What makes it unique?
Our model differs in the fact that we allow a maximum of four owners for one yacht and never more than that.
We discovered that this is the perfect number of owners per boat in order to guarantee both long-term slot reservation for holiday planning in the preferred holiday season as well as spontaneous availability of the boat for short trips, such as a weekend yachting getaways. It also gives us time to deal with any unexpected issues.
Also, we do not pair random yacht owners together. First, we carry out a series of interviews to make sure that co-owners will get along well with each other. Another thing that we do is we personalise the yacht entirely before each owner arrives. The idea behind is to let co-owners use the boats in the same capacity as single owners would.
Additionally, we offer our co-owners exclusive supplementary leisure and entertainment services, which are not so readily available to independent owners.
What is the most common concern for those considering yacht fractional ownership?
There are three main concerns for potential clients considering yacht co-ownership:
Firstly, they fear that the boat will not be available when they want to use it. They typically assume that everyone would like to use it at the same time.
Secondly, they have concerns about the security of the boat and fear that they would have to pay for damage repairs caused by other co-owners.
Last but not least, they are concerned that they would not be able to get rid of the share if they would want to sell it or leave the syndicate.
Various yacht co-ownership companies tackle those concerns differently. In our case, we have established a big second hand market where every owner can sell his or her share and leave the syndicate within reasonable time constraints.
In reality, there are only a few second hand yacht shares on the market. So, if ever the opportunity arises, we encourage potential buyers to seize upon such a rare occasion.
We have also developed a system of timeslot allocation that allows each yacht owner to use the yacht during all four seasons. Also, we make sure that yacht share owners do not have to cover the costs of the damage done (if such ever occurs) by another yacht owner.
When is a good time to buy a yacht share?
The best time to buy a yacht share would be the season before the buyer wants to have the boat available. The reason is that it usually takes from four to six months to find the perfect boat. This includes doing a survey of co-owners, registering the boat, bringing it into operation and matching all the potential clients.
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