Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Earlier today,
Speaker 1: we saw shares of some luxury brands, such as Todd's,
Speaker 1: Berbery Montclair drop after China reported weaker than expected retail
Speaker 1: sales for September, even as the world's second largest economy expanded.
Speaker 1: We're really worried about that important luxury market called China. Um,
Speaker 1: We've got another check on the luxury market because in
Speaker 1: a couple of days, the Fort Lauderdale International Book Show
Speaker 1: gets underway. We've got Raphael Solo, chief executive officer of
Speaker 1: Fraser Yachts, joining us via zoom from Florida this afternoon. Raphael,
Speaker 1: how are you? Yeah? Very well, call it and Jim,
Speaker 1: very nice to be back with you today. It's good
Speaker 1: to have you back with us. It's interesting. We've been
Speaker 1: talking a lot about the pressure that the consumer is
Speaker 1: feeling price hikes, but my understanding is that, well, yacht
Speaker 1: sales have really never been better. Is that right? Look,
Speaker 1: we've been going through some tremendous years the last couple
Speaker 1: of years, despite the pandem we well being through. Was
Speaker 1: that absolutely outstanding. We've never seen a number of cells.
Speaker 1: I have to say the twenty two is a little
Speaker 1: bit slower. We are so far seeing a drop of
Speaker 1: in the cells of second end boats. But you know
Speaker 1: this is probably due to many factors. One probably the
Speaker 1: lack of inventory so many boats were sold last year
Speaker 1: and yes, but more also probably some of our potential
Speaker 1: buyers who are wanted to see what's coming next. But
Speaker 1: you know, as you rightly said that you think industry
Speaker 1: has never been so so so doing so well, So
Speaker 1: we're very fortunate, Rafael. Did you say down thirty two
Speaker 1: thirty two? That's right for the cells Segonden without in
Speaker 1: twenty one and two. Sorry, however, were still ahead of
Speaker 1: sixty nine percent on the average of the last thirteen years.
Speaker 1: So this is a very very strong industry still going
Speaker 1: for for your team, Pfael, there's yachts in their yachts
Speaker 1: and were are super Yes, a y is anything you
Speaker 1: use for pleasure? Is that true definition? But tell us
Speaker 1: we go ahead were we are We are talking about
Speaker 1: the adds over thirty feet here. You know, so the
Speaker 1: numbers have just gave you refer to the industry of
Speaker 1: what we would call the super yachts effectively. Uh, and
Speaker 1: I can ensue, yes, this is a lot of a
Speaker 1: lot of pleasure on body yacht. So tell us who
Speaker 1: is your like, what's the typical yachta cells that the
Speaker 1: majority of your sales give us an idea of what
Speaker 1: they are, how long they are, how much they go for,
Speaker 1: and who's typically buying. Well, you know this is this
Speaker 1: is a very large subject. We we sell you adds
Speaker 1: between thirty feet up two three hundred plus feet, you know,
Speaker 1: So it really depends on on what you are your
Speaker 1: customers are looking for. But the average cells today in
Speaker 1: your thing industry is about eighty to ninety feet of
Speaker 1: an average price of seven million. But obviously we also
Speaker 1: have bigger sells over you know, one hundred meter and
Speaker 1: and and a few hundred million dollars. So it really
Speaker 1: depends the wide range of products which we have available
Speaker 1: in now industry. Now when it comes to the customers
Speaker 1: there again, you know, the American market leads a charge
Speaker 1: to the ad, say, for more than fifty percent of
Speaker 1: our own serves at fraz yad we are leading with
Speaker 1: American best customers and they've always been very, very strong
Speaker 1: in the market. I have to say, we even have
Speaker 1: an additional probably ten percent in twenty two from the
Speaker 1: American market, So we are close to fifty in twenty two.
Speaker 1: And you will not only see this with the sales market,
Speaker 1: but also with the shater market. The US market is
Speaker 1: very strong and they surely like their yachts. Who is
Speaker 1: buying these yachts right now, because my understanding is you're
Speaker 1: seeing a lot of Americans by them. Yes, absolutely, and
Speaker 1: one one trend or so something which is new, if
Speaker 1: I may say, over the last couple of years, we've
Speaker 1: seen younger, younger customers coming to the market. So sorry,
Speaker 1: how do they need their money? Is it been in
Speaker 1: the past's crypto? We see where crypto is one way.
Speaker 1: The tech companies obviously, you know, we see of people
Speaker 1: are coming from tech edge funds, finance would and of
Speaker 1: course from a pharmacutical world as well. So we've seen
Speaker 1: a lot of these new newcomers to Utin. I mean
Speaker 1: our company on its own, we have at fourty percent
Speaker 1: newcommers coming to you think is a big number. And
Speaker 1: all these all these people have made our average age
Speaker 1: of customers going from fifty five to sixty five to
Speaker 1: fourty five to fifty five so I mean all these
Speaker 1: numbers are extremely encouraging for you, tink number one new customers,
Speaker 1: younger customers, and a lot of American bias. So this
Speaker 1: I would say, You know, as we say in my
Speaker 1: in my country in French, you know, all lights are
Speaker 1: green for the uting industry. We're talking about Raphael so
Speaker 1: though he is the CEO of Fraser Yacht. As we mentioned,
Speaker 1: they've got seventeen officers around the world are They've been
Speaker 1: around for decades and really have a great global perspective
Speaker 1: when it comes to the yard industry. He is via
Speaker 1: zoom U in Fort Lauderdale, Florida, where the and just
Speaker 1: a couple of days the Fort Lauderdale International bo gets underway. Raphael,
Speaker 1: we ended our last segment with you talking about American consumers,
Speaker 1: but since you have such a global presence, really eager
Speaker 1: to hear what you're seeing around the world. We spent
Speaker 1: so much of our program today talking about China. What
Speaker 1: are you seeing from Chinese consumers right now and how
Speaker 1: is that different from what you've seen over the last
Speaker 1: few years. You know, do your thing industry has been
Speaker 1: trying to break through China, and we're talking again large
Speaker 1: yats and you know, it never it's never been successful
Speaker 1: for many reasons before you know, even the economics and
Speaker 1: and and the luxury goods, et cetera. One of the
Speaker 1: most reason, it's the most important reason, is the fact
Speaker 1: that this is not really in their dna to be
Speaker 1: at sea on the yat, you know, the Chinese in general,
Speaker 1: in Chinese and then all, they don't necessarily like the sun.
Speaker 1: We don't necessarily like the sea. And for them to
Speaker 1: be on the yacht for seven, six, eight days, it
Speaker 1: can get very boring very fast. So this is a
Speaker 1: market which has not been very very successful for the
Speaker 1: industry overall. You have some few exceptions obviously, you know,
Speaker 1: like you know, lots of bios can come from Hong Kong,
Speaker 1: but mainland China you have a very few customers today.
Speaker 1: I would I think that maybe the future generation a
Speaker 1: lot of a lot of Chinese are putting the children
Speaker 1: in you know, occidental school as well, say, and some
Speaker 1: of them are maybe more accustomed to the uttin you
Speaker 1: think a bits and what can provide you with So
Speaker 1: we may see a development in the Communists, but I
Speaker 1: would not bet too much money on that market so far.
Speaker 1: And as you see, also because of the regime is
Speaker 1: not necessarily very well seen to to have a yacht
Speaker 1: and have being since spending your money in in such
Speaker 1: a type of good. So the market itself in China,
Speaker 1: we've seen some few openings, mainly for in vidual based
Speaker 1: in Hong Kong, not many from mainland China. And this
Speaker 1: is not a very strong market as we speak today,
Speaker 1: um in terms of Hong Kong, though maybe not a
Speaker 1: massive market for you guys, but hasn't changed too as
Speaker 1: rule there has changed dramatically over the last year, it
Speaker 1: does not affected yet a few buios whom we have
Speaker 1: in Hong Kong. The they still are buying boats, and
Speaker 1: there's a culture of your thinking on obviously by its
Speaker 1: proximity to the sea and its magistrates albor so and
Speaker 1: the fact that they want the British regime in the past,
Speaker 1: so they have a kind of a youth team culture,
Speaker 1: if I may say so, This market remains. But again
Speaker 1: for our own market over the eight feet boats, it's
Speaker 1: it's not a big, big, big game change to day
Speaker 1: at least. What about when it comes to Russians. I mean,
Speaker 1: we know that Russian aligarchs were big buyers of yachts,
Speaker 1: we've been tracking for the last six plus months about
Speaker 1: what actually happens to those yachts and different parts of
Speaker 1: the world. What are you seeing from that market? Well,
Speaker 1: you know that what we've seen about obviously the oligards
Speaker 1: they met the airlines because most of them at the
Speaker 1: largest boasts in the world. If you if you now
Speaker 1: put things into perspective, you know, the the Russian market
Speaker 1: for the what we call the mega at the biggest
Speaker 1: yachts in the world is about seventeen. However, if you
Speaker 1: look at the U team market overall, the Russian market
Speaker 1: is done to seven eight, so of co it has
Speaker 1: been a bit of an impact on our whole industry.
Speaker 1: But from what we said earlier and the influx of
Speaker 1: new customers, mainly from America, we've been able to compensate
Speaker 1: a little bit the loss of the of the Russian
Speaker 1: market by the ole of these new customers. The biggest
Speaker 1: impact is indeed with the larger yachts, where you are
Speaker 1: obviously a man impact the bigger shipyards which were building
Speaker 1: the two hundred three feet um Now when it comes
Speaker 1: to the existing yards, but as you know, some have
Speaker 1: been frozen if you have been seized, and we really
Speaker 1: don't know what's gonna happen to these yeard's going forward.
Speaker 1: M hm, that is interesting. Um okay, so what are
Speaker 1: kind of some of the interesting big trends when it
Speaker 1: comes to yarding? And I think about one helicopter path
Speaker 1: or being greener, being greener and sorry but I'm just laughing, Yeah,
Speaker 1: bio Diesel to put in that, Yeah, right, well, you know,
Speaker 1: I mean there's also a trend which we see developing
Speaker 1: and that is really I think very true after COVID
Speaker 1: where people see the pursas of a yat as being like,
Speaker 1: you know, a second or third home. So you see
Speaker 1: a little changer as well, you know, because of the
Speaker 1: technology and people realize and it also not so difficult
Speaker 1: to work remotely, so some of our customers, you know,
Speaker 1: they are not trying to go away for six months
Speaker 1: on their yat and walk from there yet. So we
Speaker 1: have we have seen that shift as well, which I
Speaker 1: think played a big role into the your booms which
Speaker 1: we've experience the last couple of us. Now, going back
Speaker 1: to your question about green, you know, I'm not I'm
Speaker 1: not a liar, and I think it would take us
Speaker 1: for you think to be super green obviously that's so
Speaker 1: much she can do with a yacht. However, our industry
Speaker 1: is really at the forefront of trying to find new
Speaker 1: technology and new west to make you think greener than
Speaker 1: it is today. So the shipyard as are spending a
Speaker 1: lot of money together with the owners. You know, we
Speaker 1: have our owners building new boats who are actually very
Speaker 1: very keen to make a difference. So they are coming
Speaker 1: up we with new ideas and plans and new technology.
Speaker 1: So today you have a you have several yards which
Speaker 1: are so called hybrid, so like their name states, you know,
Speaker 1: they are both which can remain without without proportion for
Speaker 1: about eight to nine hours, and that makes a huge difference.
Speaker 1: You know, eight to nine hours without burning fuel is
Speaker 1: already eight and nine hours. And not only it allows
Speaker 1: you to have agree in the yard, but also it
Speaker 1: allows you to really enjoy you in your different manner,
Speaker 1: no more nos normal vibration. So I have to say,
Speaker 1: you know, there's so much we can do, but we
Speaker 1: can see that the industry and its wall is making
Speaker 1: a huge effort and spend a lot of monetorying to
Speaker 1: make you think more green, no normalise today, hey, Raphael.
Speaker 1: Our producer Paul Brandon that shared on our Planning car
Speaker 1: that there is a six year waitlist at shipyards for yacht.
Speaker 1: Is that that's really the case that you know today
Speaker 1: go ahead, Yes, today you can go up to almost
Speaker 1: almost five years, that's right. Is that typical or is
Speaker 1: that historically high? No, it's historically why we're in that
Speaker 1: villays for the very simple reason that the last two years,
Speaker 1: especially twenty one, have been just incredible, meaning that we
Speaker 1: have had so many others, so all the ship yards
Speaker 1: are just fool. There are no more space to build
Speaker 1: a new boats. So whenever you want to come in
Speaker 1: some certain shipyards, you've gotta have to wait, yes, four
Speaker 1: to five years to get your boat delivered. And that's
Speaker 1: the reason why. Also the second end market has been
Speaker 1: so strong because a lot of people don't want to
Speaker 1: wait five six years. You know, you have that Carpim
Speaker 1: factor after COVID, so they decided, okay, you're gonna take
Speaker 1: me four to five years to build a new boat.
Speaker 1: I'm gonna buy a second end boat for now. And
Speaker 1: this is where we've seen that that that boom in
Speaker 1: the s Woland market. Now you have some yards which
Speaker 1: have been smart enough to build on speculation. As we said,
Speaker 1: so you can find a few a few boats which
Speaker 1: will be available in twenty three summer and in twenty four.
Speaker 1: But in some other yards, if you want to build
Speaker 1: a new boat, yes you have to wait four years.
Speaker 1: It's a very long time to get a new yard.
Speaker 1: But if you, you know, make it big enough off,
Speaker 1: can you cut the line? No? Oay, come on, I
Speaker 1: mean you hear right, like if you're waiting for an airliner.
Speaker 1: I don't know. You know why because you signed a
Speaker 1: contract with a customer, and the customer has been obviously
Speaker 1: very good to get his boats. So now you obviously
Speaker 1: have a few exceptions in the customer said, okay, maybe
Speaker 1: I'm gonna flip my boat, and I'm autament and I
Speaker 1: did value on the resell of my new build. In
Speaker 1: that instance, you may get lucky, but you pay more
Speaker 1: money than you will have bet then. So that's that's
Speaker 1: a chow's and a decision. But I can't tell you
Speaker 1: you owners. We're dealing with a building the new book.
Speaker 1: They are so eager to get their boots and I'm
Speaker 1: not ready to sell it. Ah, that is funny. Um. Listen,
Speaker 1: great to check in with you. Good luck at the
Speaker 1: international yacht coming up in for Australia. Yeah, let's go,
Speaker 1: let's go now, Rafael So, the chief executive officer Frazier Yachts,
Speaker 1: thank you so much. This has been perk business Week