2010/11 Review

A perspective on the used boat market from the world’s biggest yacht broker

Introduction

Welcome to Boatshed’s first ‘Annual Review’, which looks back at 2010, looks forward to what we can expect the remainder of 2011 to bring - and it celebrates a decade of success for Boatshed, now the world’s biggest yacht and boat broker.

If anyone asks me what last year was like in terms of the boat market generally, I would say ‘tough’, despite what the manufacturers and many other broking businesses will tell you. However, I strongly believe that this toughness is underpinned by common sense: people now understand that buying a used boat makes a far more shrewd purchase than buying a new one – good for our business but less so for those who make a living from selling new vessels.

We have come a long way from our humble beginnings in Milford Haven. Whilst it has been a long journey, it rarely feels that way and I must say that it has been fun all the way. I’m often asked ‘How did you do it?’ The answer is simple: people. As with any good business, if you surround yourself with good – in our case, GREAT – people, success will follow, and I’m proud to see that happening at every level throughout our business.

So, I hope that this document gives you an insight into our business and into the used boat market generally. I look forward to meeting many of you throughout 2011 and beyond.

Neil
My Boatshed Page http://www.boatshed.com/contact-neil-chapman

The market: an overview

Against what has arguably been the toughest economic backdrop the market has faced, 2010 turned out to be a surprisingly buoyant year for used boat sales. An underlying feature of the market in 2010 was the weakness in sterling, which had the dual impact of making UK boats more attractive to overseas buyers whilst making imports more expensive. This, combined with global increases in the cost of raw materials, has helped the used boat market remain healthy – not just for the UK but for our operations around the world.

In 2010 we saw more used boats than ever go to overseas buyers – particularly those from Scandinavian countries. This will undoubtedly have a knock-on effect for 2011, where a limited supply will help keep used boat prices healthy. But there’s a further factor: the ‘stock shortage’ problem has been further compounded by the fact that demand for new boats has been in decline for the last three years.

The market: challenges

As with any other market, the market for used boats is not without its challenges. As brokers, it is our job to overcome those challenges – or, at least, turn them into opportunities for our clients (owners) and customers (buyers).

Challenge No. 1: Pricing

The first, and possibly most important, ‘critical success factor’ in the sales process is arriving at a realistic and achievable selling price. It is a fact of human nature that as boat owners, we often think our beloved vessel is worth more than it actually is. But we must be realistic. It has never been easier for buyers to research the market and, if the boat is to be sold within a reasonable period, the price must be in line with market averages.

As we have data on used boat prices going back 12 years - whether for a Sunseeker Manhattan 56 or a Bavaria 38 (and the chances are that we’ve sold a fair few of them and we probably have some on our books at any given moment) - we know what the original asking price was, what the eventual sale price was and how long the boat was on the market. And, because of out huge global network, we have up to date global data - not just figures for the UK.

One of Boatshed’s guiding principles is that we will always give a frank, professional and educated opinion on a boat’s value, however difficult that conversation may be with the owner; it is in nobody’s interest to ‘talk up’ or ‘talk down’ the price.

Challenge No. 2: What the boat manufacturers tell you about used prices

It is in manufacturers interest to ‘talk up’ used boat prices. After all, who would want to admit to such a savage depreciation curve on a new boat? It is, or course, in manufacturers’ interests to convince buyers of new boats that values will remain resilient to the ravages of inflation. And because their customers are concerned about depreciation, they want to believe it.

Challenge No. 3: Lack of formalised index for used boat prices

As there is no official index of used boat prices, the market can say what it likes and it is difficult to prove to the contrary. The closest the market will ever get to such an index is to use Boatshed’s own data, which goes back 12 years and absorbs information from 52 busy boat sales offices around the world. No flack, no sales puff – just reliable, accurate and honest data about what is really happening out there.

The ‘Boatshed year’

There is no doubt 2010 was an exciting and, in many ways, seminal year for Boatshed. Yacht broking has become a fast paced and changing sector and it is fair to say that Boatshed has always been in the position to dictate the pace and drive the change – as has certainly been the case during 2010.

Technology

•New look website: in the middle part of last year, we launched our new look website, with increased functionality and an updated look and feel, making it easier for our customers to search for and find the boat they are looking for. As part of this major upgrade, we have developed the market’s most comprehensive database of boat brands and models. Now re-developed from the ground up, the Boatshed system has become the most advanced, comprehensive, simple to use and innovative yacht brokerage management system in the world.
•Photography: we have always been market leaders in the way we photograph boats; we take and display more boat photographs than any other broker and, last year, introduced much larger photos on our websites. This makes it even easier for buyers to get the ‘true picture’ of a boat before making an appointment to view.
•White label: again, Boatshed leads the way, developing a unique product that enables us to work with complementary marine businesses. This service was designed to add value to an existing marine business, offering a turnkey yacht brokerage website, seamlessly hosted by Boatshed, but maintaining the participating partner’s brand and name. The customer gets the same high level of service and the same Boatshed benefits and he or she would if they were to come to us directly; the only difference is how the business is branded – the label. Quite simply, we borrowed the ‘white label’ concept from the supermarket industry and applied it to our successful yacht brokerage system and database. This pioneering solution has been successfully rolled out in a number of locations and we anticipate significant growth in 2011 and beyond.

Location, location, location

We grew significantly in 2010, adding some great teams in great new locations to our growing list of worldwide bases . . .

For a full list of Boatshed offices and contacts, http://www.boatshed.com/contact.php

A year in numbers

In 2010 . . .

-Boats sold: 1,241 boats worldwide
-Average number of viewings per boat sale: 2.2
-Average value of boats sold: £49,268 (interestingly, up from £36,521 in 2009)
-New customer registrations: 54,313 (taking our total to over 380,000)
-We listed 2085 boats for sale
-Our servers dealt with over 1 million photos per day
-70% of boat sales were ‘distance sales’
-Over 15,000 glasses of fizz were served
-We trained 23 new brokers
-Our brokers accompanied 2,730 viewings with prospective purchasers
-Our servers loaded over 300,000,000 photos

2011: what next?

The market

In such turbulent economic times, it is difficult to make predictions for more than a few months ahead. One major factor, however, will continue to be currency fluctuations. Whilst sterling seems to be strengthening (at the time of writing, at least), it is unlikely to return to the heady levels of 2007-08. It is therefore fairly safe to predict that UK boats will continue to be attractive to overseas buyers.

Most businesses are now faced with rapidly accelerating costs and, in this ‘age of austerity’, there is a constant need to maintain or even raise prices in order to make a profit. It will be in manufacturers’ best interests to control supply in order to maintain or even raise their prices. This combination of restricted supply and higher prices can only be good for the used boat market; we will see greater choice in 2011, along with steady prices - we are not predicting great price swings in 2011.

Then there’s the VAT issue: with VAT now at 20 per cent, who wants to pay a fifth more for their boat? Buying a used boat in 2010 made good economic sense – in 2011 it will make even better sense.

Buying Patterns

Certain trends are already starting to emerge and, from these, we can make some interesting predictions . . .

-The liveaboard market will boom. As it becomes increasingly difficult to get onto the property ladder, more people will consider the liveaboard lifestyle. We have already started to experience this: for our colleagues in Boatshed London, for example, liveaboards make up around 50 per cent of their listings – and we are seeing similar trends in other parts of the business such as Boatshed Grand Union.
-Demand for British boats will continue to grow. Overseas buyers like British-owned boats. As well as offering good value for money, they are perceived as being well maintained and with high levels of specification and equipment.
-The new boat market will gradually improve. Again, it comes down to supply and demand; if fewer boats are being produced, prices will be driven up and eventually manufacturers will need to ‘turn the taps back on’ and the market will find its new, more prosperous, level. The big question is whenwill this happen? We do not expect to see any major movements until perhaps the last quarter.

Boatshed

Our business will continue grow organically. We will announce further expansion, both in the UK and internationally and are actively seeking to open bases in Palma, the Canary Islands, the USA (Eastern Seaboard), Australia, New Zealand, France and Greece – amongst others. Some economies, such as Spain, have had a rough ride but will undoubtedly pick up. There will be some great opportunities and we need to be fleet of foot, ready for the bounce back.

We will announce more ‘white label’ initiatives – owners’ associations, boatyards, marinas, chandleries and other players in the marine industry will take advantage of our unique system and offer a Boatshed brokerage service.

Broker training – we already provide the most thorough professional training in the market and we will continue to develop this in order to maintain our ‘best in the business’ position. We will make further commitments to CPD (continuing professional development) and we are currently working with the BMF and training agencies to further develop our training capability. After all, our people are our greatest asset.

We will track buyers’ behaviour even more rigorously. We will continue to evolve ways to track and understand our customers’ buying patterns – to the advantage of both buyer and seller. No other broker can do this, and it is another great example of the ‘Boatshed difference’.

Boatshed: a decade of success
From Portsmouth to Phuket, Suffolk to Seattle . . .

Like all good ideas, the idea for Boatshed.com was borne out of necessity. Neil and Mandy Chapman, Boatshed’s founders, realised that they could not return to their old jobs after a 10-month sabbatical sailing aboard their 41-foot sailing yacht. And who could blame them?

Once back on dry land, they quickly realised their old life was not for them and started contemplating a new venture which would indulge their passion for boats. They sought out the advice, help and support of friends and relations, recruiting several along the way to create a dedicated, hard working and close knit team with which to start Boatshed.com. Many of those original team members are still with the company, maintaining the original ethos of honest, open professionalism.

Boatshed had always set out to be different and to challenge the norm. We wanted to shake things up, believing that the broking industry had become a bit stale and was ripe for change.

Being passionate about customer service, we decided that it was absolutely essential for our brokers to personally visit every boat on our books and photograph her up to 80 times with a prescribed set of shots which are uploaded onto our easy-to-use website. Each broker would become intimately acquainted with the boats on his or her books; this means that the research process for buying a boat starts from the buyer’s computer rather than on endless trips to marinas, yards and yacht clubs. We also decided to sell only USED boats which means we should not be trying to sell you anything other than the boat you are interested in. EveryBoatshed office is local but has the backing of a global company with all the expertise, market knowledge and experience that brings.

The technology behind Boatshed has been constantly developed and improved over the years and today our website ranks amongst the most visited yachting sites in the world. Our customers love the clear photographs of all parts of the interior and exterior of each boat and the full honest descriptions, along with variable search options to locate just what they are looking for, means that visitors return again and again.

The ‘engine room’ of Boatshed – ‘HQ’ - is still run by founders, Neil and Mandy Chapman. Each Boatshed office is an individual business with its own name and operates in its local area, under licence from Boatshed.com. All our partners rigorously follow standard working practices, standard procedures and standard agreements and contracts, ensuring that every office maintains the high standards of customer service and professionalism which Neil and Mandy started when Boatshed was formed.

Many Boatshed offices have brokers and agents to assist with buying and selling used boats within their territory. All the Boatshed agents and brokers have undergone our thorough in-house training, helping to ensure that our customers always receive consistently high quality service across the global network.

Company Structure

We are lucky enough to have a fantastic team of dedicated Boatshed HQ people, who have the passion and enthusiasm to keep the business professional and enjoyable. Our headquarters is based at the ‘Engine House’ at Royal Clarence Marina in Gosport. The Engine House was the old fire station for Nelson’s Navy which used to service the Naval victualling yard. After much renovation the interior now houses training suites, boardroom tables, meeting rooms and conference facilities.

Everyone who works within Boatshed - from HQ through to local agents on the ground across the world - shares the same ethos and has been trained in the sameway and has one central mission: to make your experience with Boatshed an enjoyable one.