Got a few million lying around?
The yacht industry has long been thought of as the exclusive province of the extremely wealthy, closed to even nouveau riche millennials and crypto millionaires.
Yet, the yacht industry is declining. Today, the superyacht industry caters primarily to the extremely wealthy, yet with the almost exclusive growth in supply of mega-yachts (yachts over 134 feet in length), traditional charter agents are leaving an increasing untapped market of 84 to 125-foot super yachts, and their affluent/high-net-worth potential customers, behind. The consequence of this is that the average number of charter weeks per yacht has declined over the last decade. Quite simply, these yachts are sitting idle for 60-80% of the year: supply is increasing, but demand is stagnating.
One reason for this is that traditional charter brokers have long encouraged the perception among customer segments within the affluent/high-net-worth market that superyacht vacations are not affordable and the process of chartering a yacht can be arduous, time consuming and confusing.
Current business practices and inefficiencies in the industry result in magnanimous price points for even week-long luxury yacht vacations—price points whose metrics are usually inaccessible and opaque.
Worse yet, a chief problem surrounding this entire industry is currency conversion, bank charges and delays within the multiple payment streams in the international banking system for all stakeholders, which include yacht owners, yacht managers, captains, crew, marinas and yacht suppliers.
The reason all of this is especially problematic is that demographic and lifestyle changes in the last twenty years show a trend towards experiences as opposed to asset ownership in the hospitality and leisure sectors. The factors fueling this shift include:
a. New global economic powers and emerging economies like China and India developing fast-growing and wealthy middle classes
b. Inherently experience-focused social media proliferating across the internet
c. The rise of the sharing economy (from Uber to AirBnB), based on shifting economic priorities
These three factors have caused experiential travel to gain more demand over the last two decades. Despite this, while disruption is less than imminent, technology companies in these sectors are working to solve these problems to widen the market for more customer segments to enter, signaling a change in sentiment about the value of luxury vacations.
One use case out now comes from a company called OceanScape Yachts. They are using blockchain technology to streamline the process chartering a yacht, which opens up a lot more avenues for both the high net worth and affluent customer segments. Blockchain is a distributed ledger in which every node (or party) keeps a record of the ledger, which updates all nodes when a transaction or smart contract executes on the ledger. OceanScape Yachts has released OceanScape Coin, a stablecoin which is made up of two parts.
The first part is an ERC20 token (or, utility token) called OSY, pegged to the US dollar, which allows users to purchase and charter yachts uniformly on their platform using cryptocurrency, regardless of what currency their country uses. The second part is the OSCA Coin, a companion ERC20 token functioning as a digital asset. OSCA can be converted to OSY and fiat through a holding fund, financed over time with transaction fees from sellers. While the former is currency and the latter is an alternative asset, they both function on top of the Ethereum blockchain, and the purpose of the bipartite OceanScape Coin is to streamline transactions and save users money.
With OceanScape Coin, the company incentivizes users to sign up for Premium Membership, letting them use the coin to save an average of 15% on yacht vacations, amounting to an average of >$8,000 for up to a 40-meter class yacht. This opens the market to a wider field of customer subsegments within the high-net-worth and affluent customer segments already patronizing the space.
Another use case where blockchain seems poised to improve the yachting market is a company called Boatsters. The company’s technology uses Proof-of-Market algorithms on their proprietary blockchain, along with their own custom wallet-to-wallet solution, to allow anyone to charter a yacht with any of 55 different cryptocurrencies (including DogeCoin, which is probably like chartering a yacht for free). Boatsters contrasts their technology from Coinbase, BitPay and Mollie because of the transaction security flaw inherent in their transaction service providers’ ability to halt transaction execution at any time for any reason.
All three exchanges also have their own exchange rates, which can sometimes result in totals received differing from totals expected. Boatsters also boasts lower abandonment rates and fewer trust issues because their payment solution excludes fees. The company has a portfolio of 12,000 rental boats spread out globally and according to the site, the demand from boats has exceeded supply.
Though there are fewer data points demonstrating blockchain technology’s full market disruption potential, the few there are offer a window into a possible future of luxury travel. Such a future–one conducted over the internet and through cryptocurrency exchanges, rather than in person and sometimes in a foreign country–will see an influx of people from a wider variety of backgrounds than is typical of this consumer market. All in all, blockchain seems poised to bring more money into the market, which can only be a good thing.
How do you feel about the opening of the opening of the yacht market? Do you want to see a wider selection of society or are you content with your specific kind of person? Write in the comments and let us know below!