The Euro crisis has touched off a wave of discounting in another, more rarified market – mega-yacht rentals in the Mediterranean.
A glut of yachts for rent, coupled with the slowing global economy and Euro crisis, is creating unprecedented bargains in the charter business this summer.
Yacht brokers say say there are roughly 750 mega-yachts (boats over 100-feet long) docked on the shores of the Med this summer waiting for customers – twice the number of previous years. And there simply aren’t enough rich customers to fill them.
To entice renters, yacht owners are slashing prices and offering an array of special deals and add-ons. Discounts of 10 to 30 percent are standard this summer. “There is just a flood of boats on the market this summer,” said Jonathan Beckett, CEO of Burgess, the yacht-charter and brokerage company. “When you have this kind of supply issue, there is going to be discounting. And some of it is substantial.”
Of course, chartering a mega-yacht is still reserved for the super-rich, with prices ranging from $200,000 to more than $1 million a week – not including food, fuel and beverages. (Check out what's available here).
In a normal year, yachts in the Mediterranean are usually booked solid by late Spring. This year, dozens if not hundreds of boats will have empty weeks – especially in July. Charter companies say many customers are waiting until the last minute, either because of financial uncertainty or in hopes of getting better deals.
Rory Trahair of Edmiston, the London-based yacht brokerage and charter firm, said he’s seeing discounts of up to 30 percent, especially in June or July. One of the yachts the company is managing this summer is the Lady Christina, a 204-footer with six cabins, a crew of 14 and a sea-level gymnasium.
Lady Christina normally charters for $430,000 a week. This summer, renters can get a discount of $86,000 a week (or 20 percent) if they rent the craft for 14 days or more.
Vacationers can get a 30 percent discount on Pure One, a 152-foot cruiser that can reach 30-knots and boasts a glass-edged pool. It usually charters for $226,000 a week, but is now entertaining offers of $150,000.
Beckett said many owners are offering free extra days on their boats. If someone charters a boat for seven days, for instance, they may get an extra day or two for free. Others are tacking on deals for winter charters in the Caribbean. If someone charters a yacht for two weeks in the Med this summer, for instance, they might get 50 percent off for a week in the Caribbean in January or February.
Some owners are even throwing in a free tank of gas – which sounds trivial but can add up to $40,000 or more on some yachts.
Private jets are another deal sweetener. Trahair said many yacht owners who charter their boats also own jets or fractional ownership. They are lending their Gulfstreams and Citations to to renters who want to fly to the yacht from anywhere in Europe. Those private-jet flights would normally cost a family up to $150,000.
“The yacht owners own the planes already, so it’s no skin off their nose to throw it into the deal,” Trahair said.
Beckett said that some of his clients have found the discounts hard to swallow. While some owners look forward to the added income and to offsetting the maintenance costs, they also don’t like losing face on a deal.
One owner this month was resisting a discount of around $10,000 on a charter totaling $1 million, Beckett said. The client had refused a similar deal last year and wound up without any renters.
“I told the client, ‘Remember last year. You could hold out for a few thousand dollars and lose the million dollars, or you can get the charter,'” Beckett said. “That’s the decision in this market. There are simply too many boats. So she did the deal, and she’s happy she did.”
-By CNBC's Robert Frank
Follow Robert Frank on Twitter: @robtfrank