Though the IYC as we know it was formed just three years ago, the company is one of the most well-known and well-respected brokerage firms in the world. Capitalising on the success of two individual firms - Cape4 Yachting and the International Yacht Collection - the merger of the two brands in 2015 allowed a total rebranding and consolidation of global operations. The result? An all-new IYC (The International Yacht Company), with new partners, new management and a new vision that was pointing directly toward the future. Now with 15 offices around the world - including five in the Eastern United States alone - and three years into operations, we catch up with CEO, Stefanos Macrymichalos, to learn more about the ongoing consolidation and what the future looks like in the world of brokerage.
You’ve previously noted that the alignment of European and US operations in the new IYC was a sticking point that needed work. How is the alignment between the two operations today?
We’re very happy with the progress of the alignment, and we’ve taken big steps in the right direction. For an international company of our size, it’s very important to be able to capitalise upon economies of scale. You have to be able to combine your resources and cannot operate as a solely local operation. You need to think globally because there is tremendous potential in global collaborations between our offices. All of our partners at IYC see the value in consolidating our operations, and we’re confident that we will have completed that process by the end of this year - maybe even sooner.
What are the key differences between the European and US markets which makes it a complex task to align?
Yachting is an international business, but you have to take the significance of different cultures, languages and experiences into consideration. I wouldn’t say that there are fundamental differences between US and European markets, though. Our American clients interact just as well with our European brokers and vice versa, but you also need to respect the local trends and provide client support from people that the clients themselves are willing and enthusiastic to work with. We could easily run global operations from the US, equally from one of our European bases, and we would benefit financially from doing so. But you also benefit tremendously by having your operation span over a very broad territory. So the complexity lies in finding the balance between global and local markets.
Is this one of the contributing factors to the reopening of the IYC office in Palm Beach?
Yes, the necessity of local expertise is why we made the decision in 2017 to re-open our office in Palm Beach, which has been immensely successful. We brought in some top people, like Michael Rafferty, James Wallace, Katie McPherson, Brandon Rooney, Bob O’Brien and Cindy Ross, who have all been extremely successful just a few months down the line. We would not be hesitant in opening similar offices in other locations which target that particular market, and it makes good business sense to do so.
Are you also looking to open offices in regions such as the Middle East and Asia?
It’s a matter of finding the right people. We are always looking for the next opportunity, but our business is driven by the people on the ground. We’re looking for such talent, and if we find those people we would not hesitate to go in this direction. There is great opportunity in Asia though - and I’m sure you’ve been following Australia and the rise of the market there. We can see the charter business picking up in areas like Indonesia, too.
Taking it back to the US, with President Trump in office for over a year now, how is the current political landscape of the US affecting the superyacht market?
Definitely positively. There is no question that the stock market is strong. There will be fluctuations, but there is a lot of confidence in the US economy right now. Economy-wise, there is nothing discouraging which would affect the buyer's decision to purchase a yacht. We feel that the state of the economy is driving the decision-making process of buying a yacht.
You’ve previously mentioned that IYC is very much looking for the next smart acquisition or merger. Do you have any merger prospects on the horizon?
We are looking into this quite carefully. I think there are a number of good companies that are very compatible with IYC’s vision, but right now we are putting our focus into the consolidation of IYC across all of our current offices around the globe. That takes precedence. But industry-wide consolidation is definitely necessary for the future - and I’m not alone in thinking that!
Indeed, many key players in the business share the view that we need fewer players, but smarter players. How do you envision this consolidation taking place?
I think we’ll first see some acquisitions taking place. Clients are actually demanding a lot more from companies nowadays, it’s not just about being good at selling boats. What else can you offer? When the deal progresses, the client will start asking questions about yacht management, insurance, charter management. So, if the brokers’ company is not in the position to offer or to cover those requirements, then that broker and that company are exposed to the competition. Those companies that are specialists in management or insurance, they will start being acquired by companies that lack those divisions. What will drive the consolidation is the location of those companies, and what those companies offer their clients.
In that vein, Cape4 Yachting offered just that. Charter management, yacht management and insurance were the key income generators, with yacht sales revenue largely serving as profit. Is it the same with IYC?
That was the business model of Cape4 and the reason behind the company's success. Even during the recession of 2008 we continued our investment program without interruption. IYC, on the other hand, was mainly relying on sales. The viability of the company mostly depended on yacht sales and charter, with yacht management and charter management contributing little to the company’s bottom line.
Our core business will always be yacht sales and charter but we are also focused on increasing our revenues from Yacht Management, Charter Management and Insurance to offset our operating expenses. I would say that we’re not there yet, but the numbers are improving and we are confident that we will meet our target in the next 12 months.
You see a lot of brokerage companies focusing on the new build market. Will you also shift focus there?
Absolutely. Our business is driven by client demand, and we are here to provide our clients with solutions. We expect to see more orders for new builds. One of the reasons is that quality inventory of second-hand boats is diminishing. There are still some excellent boats on the market which I expect will sell shortly - we had two of such high-quality yachts at the Miami Yacht Show this year: Silver Cloud, the 41-metre twin hull Abeking & Rasmussen, and Silver Lining. Silver Lining is a Christensen built in 2017 and one of the newest yachts, in her size, on the market today. We expect to have a deal on both yachts very soon.
IYC has made a point of hiring more talent and investing in the digital sphere. How does this translate to real life?
You can’t run a successful yachting operation unless you are digital savvy. We have invested and continue to invest in the development our proprietary software, that runs our commercial operations. We have developed an in-house application which we named BLUE. BLUE supports our management charter management and insurance departments. We are also in the final beta testing of our sales support digital platform named DAVINCI, which is actually Michel’s [Chryssicopoulos] brainchild. That application is a sales tool for our sales and charter consultants, which was developed in-house and will go live at the end of February.
In regards to social media and digital marketing, should the industry as a whole up their game?
I wouldn’t call myself a marketing expert, but I know what I would be looking for if I was a client. I would be utilising the internet to find as much information as possible on the product that I want to purchase, and social media would play a big role in helping me form an opinion on a product, service or company. I do, however, see a lot of companies in our industry just using social media simply because they think they have to, just for the sake of having a social media presence. I do not think that any of us are using social media effectively. In other words, it is not generating sales - when it should be.
How could proper utilisation of social media generate sales?
By creating the right content. That is where companies need to invest more. We need to become the producers of quality, exciting content which we can then use on our social media and other marketing platforms to get the attention of our customers.
IYC’s marketing team has been working on this for over a year, and we’re in the process of finalising the format of such content. It will be pushed in the form of campaigns on social media, website and various publications, and interlinked with our advertising, in order to communicate our message to our clients and those who could become IYC clients in the future.
How do you envision the further rise of digital platforms affecting the role of a broker?
Perhaps it’s not something we will see in the next two or three years, but long term, the role of the broker will be changed because of the internet. All the information that a buyer or charter could possibly need to make a decision is on the internet. But it is not yet organised in a manner that is user-friendly. It is a matter of a couple of years till a digital company will process the information in an intelligent manner and offer it to the public. The effects will be disruptive to the existing yacht sales and charters model and companies will have to embrace change or risk becoming obsolete.
What are some of the key areas of improvement vital to ensure the future of the superyacht industry?
I would like to see more regulation in the market. The market - sales and charter - is unregulated. Anywhere in the world, you are not required to have any form of license to be a sales broker. In Europe, if you are in the charter business, you are considered in the same industry as a travel agent, so it is slightly more regulated, but in reality, anyone with a mobile phone and access to the internet can be a broker. That means a lot of brokers are providing advice to clients that hurts the industry. New clients who trust the broker and it turns out that the broker hasn’t done his job properly, those clients end up disappointed and wanting to leave the yachting business immediately.
There are companies such as IYC, who have made a substantial investment in yachting, that want the market to move forward and grow in a healthy, sustainable manner. We want clients to have only great experience so they will want to stay in yachting for numerous years. Regulation is required to protect the industry and the consumers. If there were more regulation in the industry, then the industry would be healthier, with fewer unqualified brokers.
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