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