As regulations in Thailand pen in the local growth of the high-end yachting industry, Thai yacht distributor and service provider Boat Lagoon Yachting looks to neighbouring countries to fuel its expected 20% turnover growth.
The Thai yachting industry has been growing steadily in recent years, fuelled by strong tourism. However, a relatively low income per person and less than favourable taxes and regulations that bar boat owners from chartering their own boats have restricted growth in the sector.
Vrit: Seeking local advantages
The government is reviewing various rules to attract more charters and superyachts to the region, including simplifying licences and visas.
There are 1,200-1,500 yachts in the country, many of them coming from Australia, England and Japan. As the country’s per person income tops US$10,000 (313,866 baht), the number of yacht buyers will start to soar, said Vrit Yongsakul, founder and managing director of Boat Lagoon Yachting.
“In the next three years we hope to add 100-200 yachts, which will generate $200-400 million in direct and indirect revenue,” he said.
The company, founded in 1995, has steadily expanded through Southeast Asia. The company first ventured to Singapore and Malaysia in 2012; Jakarta followed in 2013, and the Maldives two years after that.
The company has been growing 10-15% in the last few years, largely thanks to its foreign expansion. This year the company forecasts a 15-20% increase on $45 million revenue.
Boat Lagoon Yachting derives 65% of its revenue (75% of which is boat sales, and 25% of which is after-sales services) from foreign markets.
Singapore and Malaysia are the most promising markets in the region, aided by favourable governmental regulations, including Malaysia’s world-class marina development programme, as well as by their status as tax havens.
“There are no large tax benefits in terms of boat servicing in these countries,” said Mr Vrit. “However, favourable tax policies tend to attract high net worth individuals, and by extension, yacht buyers.”
“There are continued regulatory and infrastructure improvements in Thailand, Malaysia and Singapore, but a market we are equally excited about is Indonesia,” he said.
The archipelago is prime cruising grounds, Bali in particular, but travelling there is still challenging, said the executive.
Another promising location is Myanmar, which is “quite feasible” for the company at the moment.
“I wouldn’t say going into Myanmar is easy today, but it is much better than it was 10 years ago. Things are heading in the right direction, and we have taken guests and owners to join us there,” he said.
Yacht customers generally travel across regions, but surprisingly, yacht sales and services are still largely a local and regional industry. There are no global corporations that provide both sales and after-sales services, he said.
Most companies with locations across the world focus on superyachts, which is still a very niche market in Southeast Asia, and function as brokers rather than brand representatives.
Even so, these companies mainly operate around Europe, New York, Hong Kong and Dubai.
Boat Lagoon Yachting is the exclusive distributor of four major yacht brands (Princess, Jeanneau, Prestige, and Wider) across Thailand, Singapore, Malaysia, Indonesia, and the Maldives. Integrating services and further expanding across the region, will allow it to capture a large percentage of warranty repairs.
Mr Vrit expects after-sales services to represent a higher proportion of the company’s turnover in the next few years.
“As the official distributor of these brands, we can perform the boat’s warranty repairs. Moreover, our staff, many of whom trained at Princess and the other firms we work with, have a deeper knowledge of these boat’s parts than a general service provider would. Lastly, we can customise minor features for customers, something brokers generally cannot do.”
Unlike boat servicing, boat selling does not require international offices, since a lot of the initial contact with clients happens at boat shows (the company recently took a fleet of its boats to the Cannes festival in France).
It is, however, a large advantage. “When making a large purchase like this, customers frequently still come to our office to meet us and our service staff,” he said.
Expanding abroad, however, is not an easy decision in the yachting industry, which is largely driven by infrastructure availability and government regulations.
“We tend to develop relatively slowly. We are not rushing into a market we are not sure about. The company, for example, rarely ventures where there is no existing infrastructure,” he said.
There is stiff competition from local Singaporean and Malaysian firms, which are vying for a small pool of potential clients. There are some clients that prefer to deal with their local counterparts, but the company has gone some way to break the culture barriers that were present when it first stepped into these markets, Mr Vrit said.