Are we losing our advantage as a dominant player in the global yachting space?

Tourism and regained freedoms

Are we losing our advantage as a dominant player in the global yachting space?

by Andrew Ball

“If you want to go fast, go alone. If you want to go far, go together.”

The British Virgin Islands Marine Sector is indeed unique. To refer to us as “The Sailing Capital of the World” is probably a little too non-specific. There are a number of sailing havens globally, all of different types. To refer to us as the “Charter Capital” or “Bareboat Capital” of the world would probably be more accurate.

The yachting aspect of our Marine Sector is the main driver and it is increasingly under threat following advances in competitive behaviour in other regional and global destinations. This have been further exacerbated by the set back resulting from the 2017 hurricanes and now the COVID-19 pandemic. The BVI as a destination has every God given asset we need to succeed, once we work together and row in the same direction.

The sector has been left to run somewhat feral over the years, mainly due to the fact that only a few fully understand the interrelationship between its internal sub-sectors, inward investment, the local community, and the public sector. Ask yourself: “what truly new product has the yachting industry in the British Virgin Islands been able to produce in the last decade?” We have grown in quantity, but I would argue that we are not realising our potential in terms of quality. As a small destination, quality is critical to our survival. My intent here is really to give a bit of window into the drivers behind the yachting economy in the BVI, as well as some of the challenges and remedies in order help the sector heal and return to a sustainable longterm path of growth. I want to break down some of the walls that have grown between us.

“The industry is exclusive of local investment. None of the charter boats in the VI are owned by BVIslanders.”

Almost no charter companies own their yachts. Shocking to some, but true. Almost every yacht has an individual private owner. This no different to fractional ownership in many global resort brands. There are two main reasons that people buy yachts and put them into charter. The first is to offset the cost of personal use. This allows them to buy a bigger better boat than they could ordinarily afford. The second, increasingly popular reason is quite complicated, but in short, US owners can claim back the value of the vessel as a tax deduction. Buy a boat, or pay taxes… tough choice! One that fuels a significant part of our tourism plant.

What nearly nobody is crazy enough to do, is to buy a cruising yacht to make money. Many have tried and only a very few have succeeded. Find a friend who has a boat and they’ll tell you things like “Boat is an acronym for Bring Out Another Thousand”, or “The only better thing than owning a boat is having a friend that owns a boat”. Boat ownership is indeed a crime of passion. It’s not that the investment is exclusive, it’s that it generally doesn’t work unless someone wants to offset the usage of a yacht, which of course they could also just charter for a lot less.

There are indeed a good number of BVIslanders invested in the area of the sector that does make profit and drives the economy locally – services. Be it in maintenance, fiberglassers, painters, riggers, marinas, provisioners, taxi drivers, ferry operators, sailmakers, welders, boatyards, supermarkets, owners of marinas …the list goes on… there is a significant portion of local ownership and employment. Of course, that could always be more!

“We have lots of yachts in the BVI, so the industry must be doing well.”

This is a tough one. As mentioned previously, the real economy that this industry provides in the BVI is through services. If we have lots of boats sitting in marinas and boatyards doing nothing, we do indeed have lots of boats, but they aren’t utilising the services which contribute to the local economy. The metric we should be looking at, is how many yachts are out sailing and occupying our anchorages. Working boats mean a working yachting economy which means a vibrant tourism sector for a lot of the BVI. The yachting sector is perhaps the leading sub-sector of our economy from an income distribution standpoint. A number of our Sister Islands would have very little economic activity, without the yachting sector.

“The yachting industry pollutes our environment.”

Very few industries have a positive or completely neutral impact on the environment. The yachting industry is heavily motivated to be one, however. Most operators realise that the environment is exactly what we are really selling, and that they subsequently need to preserve it. People charter yachts in order to be in our natural environment.

Over the years, numerous advancements have been made, and implemented, in terms of renewable energy on board charter yachts (beyond their sails!), environmentally friendly antifouling paints and cleaning products, waste recycling programs for yachts and sewage management programs.

On the note of sewage, because everyone brings it up, and importantly so; The BVI would need an estimated 70 pumpout stations which were all connected to public sewerage system, capable of treating and disposing of saltwaterbased waste (unlike your house, which is freshwater-based). The logistical problems due to our landscape and facilities make this near impossible economically. There are international conventions which govern the disposal of treated waste offshore, which the industry strives to meet. Rest assured that the very people accused of dumping in anchorages are the same people who swim in those anchorages – what do you think their motivations are?

There was an effort, years ago, to create an infrastructure to collect waste, using boats and dispose of it ethically offshore. Investment was provided, but due to various regulatory issues, red tape and delays, the plan never came to fruition. This is just one of many examples where there is a substantial opportunity for local entrepreneurship and economic growth if the Government has the foresight to encourage and incentivise it.

“The industry is exclusive of local employment.”

From my perspective, this couldn’t be further from the truth. The challenges of obtaining work permits, alone, are a significant motivator towards hiring a local workforce. The industry has invested heavily in assisting to design and support the Marine Professional Training Programme at HLSCC, provides internships for the work placement segment of this course, and hires a good number of the graduates from the program.

Most of the professionals I know (including myself ) found their passion at a young age, and It’s important that these opportunities are provided. A team has been working diligently towards restarting the Kids and the Sea (KATS) programme, which is very exciting. The Royal BVI Yacht Club provides a youth sailing program. Can these opportunities be better? Yes. Are we striving to make them better? YES!

My point is that the industry is still after two generations of its existence, mostly misunderstood, and that’s not hard to sympathise with. It’s incredibly complex and unique. Some of the players have historically not been the best corporate citizens that they could have been.

Regardless, we need to start listening to the people who understand, or we risk falling seriously further behind our competition. Over the years, we have seen an increasing percentage of our market share moving to other jurisdictions and have acted with arrogance and complacency. We need to take steps that have mutual benefit for the industry, the community, the environment, and the local economy. It is time for a Yachtsmen Friendly Strategy 2.0. The first was implemented and led by the late Chief Minister H.L. Stoutt in 1992.

The first step I would suggest towards getting on the right track, is a true, sincere, public-private partnership. The industry and the Government need to work together in earnest to deliver course corrections to steer us towards a quality over quantity model, which protects the environment and maintains the “Nature’s Little Secrets” exclusivity of our marine tourism industry.

This effort was indeed made by the Marine Association, in the form of a Letter of Intent presented to the Government in May 2021. It detailed an agreement towards communication and collaboration, which could be demonstrated through a prospectus of education, employment, environmental, and economic programs funded by the industry. That agreement has not been signed by Government and is still pending at the time of writing. It is important for both the industry and the community, that a stronger partnership exists to encourage both; better corporate citizenry on behalf of the industry, and better efforts to ensure a business-friendly environment on behalf of the public sector. We need to recognise our differences, address them, and move forward.

The second step is really to examine how we attract foreign investment in the BVI. This falls mostly in the public sector’s purview. As mentioned before, near 100% of our charter boats are foreign-owned, and with good reason. We need to ensure that those foreign owners continue to put their yachts in the BVI. As with many other industries, excessive red tape, inconsistent regulation, and lengthy processes are making it increasingly difficult to encourage this investment, while other jurisdictions continue to better their competing products. Much like many concepts within the Yachtsman Friendly program of the early 90s, it’s time to streamline our processes and realign ourselves with our market. Getting this right requires the aforementioned partnership. Know your audience.

Creating barriers to foreign entities operating within the BVI is not the answer. They still utilise our services and contribute to our economy. Encouraging them to consider basing here is the answer. It is about maximising the benefits to our local economy. Let’s not forget that yachts are not like buildings, they are mobile, and subsequently, the existing foreign investment in our infrastructure is and has been, very easy to relocate should investors feel that their assets may be more profitable elsewhere. We are unique, but that does not mean that other products in the space are without differing competitive advantages.

The third step that I feel is most missing, is to endeavour to provide new products and experiences. This falls mostly in the private sector’s purview. Revitalise and promote our historical sites. Promote themed charters that reach new markets (yoga/wellness, corporate retreats, weddings, you name it). Provide new and improved supporting services. Expand our existing facilities and services to support small mega yachts (in the spirit of later serving larger ones). We must innovate. If we want to be the global leader in this industry, we need to show the market how and why. We need newer and more shiny products than our competitors, and the sky is the limit. This is a perfect area for local entrepreneurs to take advantage and be creative. There are plenty of entities willing to invest given the right conditions.

The super and mega yacht market is relatively unexplored in the BVI. Yes, we have visiting super and mega yachts, but the services we can provide to them are limited. This is often linked to the lack of infrastructure to support those services and attract enough super yachts to meet a minimum demand to support a business. Here we are leaving revenue on the table. It seems that most folks are thinking only about having it all at once. There is no reason we can’t move from supporting 80’ yachts to supporting 100’ yachts and then a few years later expand to 120’ yachts, etc. This will be a gradual progression, but while we continue to dawdle, competing jurisdictions are serving this market and fortifying their grasp on it, to our disadvantage. Have a look at the facilities in St Maarten, Antigua, or St Thomas. The time is now. Let’s start to look at feasible ways to break into this market, develop our services and infrastructure, and subsequently expand the related economy before we are properly left behind with little chance of catching up. There are people with the knowledge and resources to do this, but communication and collaboration have again been our downfall, and subsequently these people have either walked away from the table or avoided approaching it in the first place.

The bottom line is that I honestly believe that we were the best in the world at this game. We are still one of the best, but is that good enough for us? We had a little stumble, but there is absolutely no reason that we can’t come back bigger, stronger, and better than we were before if we work together, so let’s get started. This is a low hanging fruit for a yachting destination with our pedigree and DNA.

“If you want to go fast, go alone. If you want to go far, go together.” | BB