FOCUS | Erwin Bamps, Gulf Craft’s CEO, about ultra-wealthy Millennials

[dropcap]T[/dropcap]he world’s superyacht manufacturers are sailing towards a major disruption of their traditional business model, with the CEO of Emirates-based shipyard Gulf Craft predicting the rise of an Uber-like pattern of shared ownership and complex charters among the world’s ultra-wealthy.

Erwin-Bamps-Chief-Executive-Officer-of-Gulf-Craft-1Erwin Bamps believes the next generation of UHNWIs (ultra high net worth individuals) will increasingly prioritize experience over possession. They will still want the use of superyachts, but will be far less interested in owning the asset. In fact, they will see ownership as a restriction.

“We are going to see a time when traditional idea of a yacht ownership starts to follow the same path as car sharing services – more convenient than a traditional taxi, and a real alternative to owning a car,” says Bamps. “The same principle will easily apply to luxury yachts. Imagine a global, technology driven service that delivers the yacht you want, at the location you want, at the time you want, and can arrange a private jet to fly you there.”

Bamps notes that this will no longer be a question of how much wealth customers have, which has traditionally been a defining difference between those who charter a yacht and those who own one, but rather about how millennials will choose to spend their wealth as they become a significant presence among the UHNWIs.

“This generation will have grown up placing much more emphasis on experience, and much less on owning a physical product,” he explains. “These are people who have never owned a record collection – or even a CD collection – music and movies are something they download or stream online. Where they step beyond that, it is because they want something extra, so while CD and DVD sales have fallen, live music and cinemas continue to thrive as a premium experience. It’s the experience that matters, not the physical item that creates the experience.”

A closer comparison for yacht builders is the motor industry. The rise of Uber and other ride-sharing platforms is prompting carmakers looking to establish their own car-sharing programs, as an addition to their traditional sales channels. While there are parallels with older shared services, such as taxis, a combination of advanced technology and shifting customer habits is rewriting the rulebook.

“Technology is going to drive this change,” said Bamps. “We are going to see some very complex charter networks evolve to cater for this market, making sure customers get exactly what they want. From the business side, there will need to be some very complex mathematics in the background, analyzing charter patterns in terms of yacht design, preferred destinations, which toys people want and so on, and then constantly moving the craft around the world based on predictions of demand.”

Bamps says some of the technology that builds into this is already appearing within the industry. Charter companies are using sensors to monitor their boats, both for safety reasons and to gather real-time data on usage patterns so they can make better use of the asset. Computerized booking systems are already a must-have, of course, but they will need to be more integrated and much smarter.

“One piece of technology that is currently creating a lot of excitement for yacht sales is virtual reality, and how we can use that to offer immersive, 3D tours of yachts,” added Bamps. “We can expect that will become a common feature of this sharing technology, with customers using a virtual reality tour of their options before they make a decision.”

For companies such as Gulf Craft, this transformation could have a significant impact on the way they design and build their exclusive superyachts, as ‘yacht share’ data analytics flow back into the shipyard. The ‘shared’ superyacht design will most likely need to optimize this analysis of customer utilization in considerable detail, focusing on a more generic and comprehensive yacht design, rather than an eccentric one.

“There are huge challenges ahead, but also huge opportunities for those companies that find the right balance in the evolving market,” said Bamps. “However, business as usual will definitely not be good enough.”