The hidden costs of owning a superyacht

(CNN) — When the Covid-19 pandemic hit, many people were forced to make big decisions when it came to their upcoming travel plans.

However, lockdowns and travel restrictions ultimately meant that many of those choices were made for us for the most part.

But it seems a significant number of those with very deep pockets chose to splash out on a superyacht.

Sales have shot up over the last few months as the super rich go all out to escape the chaos and uncertainty brought about by coronavirus.

But if you’re lucky enough to be in the very small percentage of people who can actually afford to purchase one of these magnificent vessels, be prepared to dig even deeper.

Not only is the actual boat likely to set you back millions, the cost of running one is nothing short of eye watering.

Costly business

Superyacht Azzam, which measures 180 meters, is likely to cost its owners around $60 million per year to run.

Andy Ginns/Alamy Stock Photo

This means Azzam, (pictured above) one of the largest superyachts ever built and rumored to have cost around $605 million, might set its owner back over $60 million in maintenance and operating costs each year.

He estimates that a 150-foot superyacht will cost around $2 million a year or roughly $200,000 a week to run.

So where is all the money going? Well, there are obvious costs to consider such as fuel, dockage, boat insurance and maintenance.

However, these should be expenses that yacht owners will have taken into account beforehand.

On board supplies, such as water toys, furniture, art, medical supplies and gym equipment can also rack up to a large amount, which is something those who are used to chartering fully stocked boats may not necessarily have taken into account.

“It’s almost the same as buying an absolutely new and empty house,” explains Skoptsova. “And when you’re preparing it for living conditions, you might be surprised with the cost.”

Connor estimates that crew costs account for about 42% to 48% of the annual expenses for most yachts, with salaries, food insurance and uniform all incorporated, as well as training courses on everything from wine knowledge to fishing.

According to Connor, the reality of just how much they must provide for an onboard crew member is difficult for those who are used to dealing with employees who work a specified number of hours a week to comprehend.

But in his experience, attempting to cut costs when it comes to staff is rarely a good move, and can end up causing unnecessary headaches.

Delivering value

The Port of Saint Tropez is one of the most expensive marinas in Europe.

VALERY HACHE/AFP via Getty Images

“The people who get the most out of yachting are the ones who find a good team that can deliver value,” he explains. “But often that value is not at the lowest cost.”

“I’d say 99% of all problems on a yacht start with a crew member. The jury’s out on the final 1%.

“Without a good captain, no boat will run well. It doesn’t matter who the person sitting behind the desk claiming to be the manager is, you have to have a good captain.”

Of course, this doesn’t come cheap. An experience captain of a vessel measuring 150 feet could earn up to $192,000 a year, while a deckhand might be on a salary of $34,500.

The price of annual inspections also needs to be taken into account, with more detailed surveys required every 2.5 and five years.

“Some of these surveys can run into the hundreds of thousands to complete,” says Connor. “And that’s just the cost to inspect. If they find a problem the repairs can be a multiplier on that.”

Onboard communications can also set owners back a pretty penny. Think boat-to-shore communications, Very high frequency radio, inter-crew communications, satellite TV, and of course, high speed broadband.

Skoptsova suggests that communication costs for a 164 foot yacht would fall just under €55,000 ($67,000) per year.

Moving across borders is costly due to all of the paper work involved, while mooring costs are also pretty significant.

Customers who frequently return to same berth can sometimes opt to pay an annual fee, which comes at a slightly lower day rate.

Of course, superyachts are only at sea for a few months of the year. They spend the rest of the time docked at ports, which comes at a cost. Towergate Insurance estimates that docking fees for larger boats can run up to $350,000.

Growing demand

More than a billion dollars has already been spent on superyachts in 2021.

VALERY HACHE/AFP via Getty Images

It’s worth acknowledging that while owners will ultimately spend a huge amount for the privilege of having their very own superyacht, they’re able to recoup some of these costs by chartering them out.

Connor estimates that around 12 weeks of charter represents the annual operating cost of most yachts, which means owners can break even if they hire their boats out for the same length of time they use them during the year.

“For every week that you’re using it as a private owner, you’re hoping to charter it out for one week per month to be able to break even,” he explains.

“That’s sort of the yachting Nirvana, but that doesn’t cover depreciation of fixed assets, and things like that.”

Judging by the rate at which superyacht sales have increased, operational costs do not seem to be dissuading the super rich from owning them.

In fact, demand is such that asking prices for superyachts have risen significantly this year.

This is partly due to the fact that there are simply not enough yachts available to charter, as many of those who booked trips last summer were given the option to transfer to 2021 due to the chaos caused by the Covid-19 pandemic.

As a result, the vast majority of yacht chartering companies are already booked up, which is pushing those who’ve toyed with the idea of buying a yacht in the past to finally bite the bullet.

“But the events of 2020 made many people realize the right day to buy a boat is today.”

While the pandemic may have played a part in generating more superyacht owners, there’s no doubt that they’ve been rising in popularity for many, many years.

For Connor, their appeal is simple. A holiday onboard a superyacht provides an experience you simply can’t get anywhere else.

“They [the super rich] are looking for the ultimate vacation, and yachts are unique,” he says.

“We’re able to get away with it being a fairly expensive vacation because we’re delivering something they can’t get elsewhere.”

“Most of these people also have two or three fabulous homes around the world. But they choose to also own a yacht, or two, or three.”

Skoptsova shares this sentiment, stressing that the high running costs are more than worth it “for the opportunity to enjoy your life on board” one of these incredible vessels.

She also points out that jumbo jets and helicopters are far more expensive to run.

“After considering the operational cost for a jet or a helicopter flying hour, yachting expenses seem to be fair,” Skoptsova tells CNN Travel.

“Jet owners have told me many times that the yacht expenses are cheap.”