How did the Dream Yacht Charter adventure start? What made your success?
We created the company in 2001, with a first base in the Seychelles. We have not revolutionized anything in the rental business, but simply bet on democratization. Our objective was – and remains – to make this universe of the sea accessible to “non-sailors”. With so-called “cabin” offers or even boats provided with skippers, our customers could enjoy the joys of navigation without necessarily being able to maneuver on their own.
Consequently, our success was driven by different marketing: we were selling the destination more than the boat itself. And to succeed, we had to have as many destinations as possible. It’s a bit like Netflix: we go there because there is choice!
How is your business model structured?
Our turnover (€170M in 2019) is made up of two-thirds of the rental, and one-third of the sale of boats. Of our entire operated fleet, two-thirds of the boats therefore belong to “investor clients”, who put them in management-lease with us, and the remaining third is the property of the company.
The sale of the boat to an investor client is a way for us to finance the working tool that we are going to rent to the tenant client.
Who are these customers, exactly? Have there been any changes recently?
Buyer customers are more or less the same, they come to us for our financing offers (see below). Those who have changed are the tenants: we have clearly seen a segment of customers arrive with the Covid, often younger, for whom our product hits all the boxes: you leave where you want, or where you can, depending on the restriction. You go with whoever you want, which is also a privilege these days, and you are free. Free to go where the wind takes you, free not to disembark and stay at anchor.
In short, in these turbulent times, it is no surprise that this type of formula has attracted customers to us who had never thought of it before. As proof, the demand for rentals with skipper has literally exploded. We have experienced triple-digit growth in the Mediterranean on this formula, for example. Where the cabin cruise has logically dropped: we want to know who we are going to sail with!
On the business side, what exactly is the situation today?
We have just taken stock of our activity in August 2021. In this month alone, we have achieved +2.5% compared to August 2019. Does this mean that the crisis is behind us? I hope. Between 2019 and today, we had to adapt at all levels. At the level of the offer first of all, because you understood it, it is our driving force. So we had to close bases, where no one could go anymore, and open new bases, which we internally called “Covid bases”.
For example, we opened our own base in the Virgin Islands, to allow Americans to sail. Or in Key West, Florida, in Newport in the state of Rhode Island. And we transferred our fleets accordingly, for example 50 boats which left the Caribbean to supply our bases in the Mediterranean.
Demand has also exploded in Europe, to closer destinations: France, Italy, etc. In the end, the openings/closings balance is positive: it shows that the demand is there, and that we have new customers.
And there is a trend that in my opinion will continue post-Covid: short-distance stays. There are plenty of destinations unknown to our customers, even close to home. It’s up to us to help them discover and live up to their expectations, particularly in terms of quality.
We saw it in Florida, with the local clientele: they have an approach to boating which for them must almost correspond to a hotel service.
The Covid nevertheless seems to have redesigned your activity in the last 18 months: where did the difficulty come from? What were you forced to do?
Our so-called “forward” sale models, which represent 50% of our volume, allow a buyer to put a portion of the amount of his boat (from 35 to 55% depending on the case) at the time of signing the contract, to have weekly credits on a similar boat in our bases for the duration of the contract, and to benefit from a purchase option at the end of this contract. This means that the remaining 40-45% is financed by operating income.
This is the principle of our “Dream Eazy” offer. If we are in default on this operation, for lack of rental customers, we are the ones who assume this delta, we are the ones who bear the debt since it is we who financed the boat originally, whether by credit or LOA.
In the other models where we donate guaranteed income, it’s the same problem: you need cash, and you don’t bring it in, the operating cost quickly exceeds your income.
In phase 1 of the Covid, that is to say during the first confinement, we obtained settlement facilities from our creditors (financing organizations). And contacted our customers to whom guaranteed income was promised: we explained to them that we were shifting our contracts by 6 months.
Clearly, no settlement for a semester, an extension of the contract for 6 or 12 months, and in the meantime, the big advantage for them to be able to benefit from their week credits wherever possible. Not everyone was thrilled, but everyone played along. It’s an amazing community, and I can tell they’ve been really supportive of our situation.
In phase 2 of the Covid, we were forced to reduce the payment of guaranteed income by 50%, again by making contractual adjustments.
You have understood, we adapt, we do our best, but in the end, the financial situation is not sustainable in the long term. We therefore took stock with our shareholders to find the best solution.
Bénéteau is therefore joining forces with another investor to save you the day. How to sum up this deal?
This is a capital increase that will be carried out on September 30. It will see Bénéteau coexist with PPF, a group investing in different sectors such as tourism and the media, in the capital of the Belgian holding company. They will jointly hold 87%.
There is also NextStage, which had already entered alongside Fountaine Pajot in 2017, but in smaller proportions. The Vendée shipyard did not wish to “follow”, as they say. It will therefore be greatly diluted by this operation.
About Fountaine Pajot, one can imagine that when they entered the capital in 2017, there was a commercial agreement on the sidelines of the entry into the capital, and that Bénéteau also has this type of practice in mind?
Fountaine Pajot did indeed have a contract involving the purchase of catamarans, but it was never activated: demand was so strong on the market in general that they could not have honored it! Let’s say that this contract was a kind of “life insurance” as they say, in the event that the private market would have turned around: they could have rested on the professional market.
You know the reality: the opposite happened, and most shipyards were able to maintain sustained activity with private individuals. That being said, Fountaine Pajot retains this contract and our commercial agreement incorporating predefined discounts, even with the arrival of Bénéteau in the capital. Bénéteau currently has the same production problem, so the purchasing policy remains very open: we buy from several shipyards, depending on our needs and demand, and, like everyone else, we have to wait to be delivered.
I have just finalized the purchase of 265 boats, which should be delivered in 2023. Tomorrow, I am starting to prepare for 2024!
Our objective is to return to our 2019 fleet (1050 boats) which we had reduced by 12% during the crisis, and then to exceed it.
What will the fresh money raised by this capital increase be used for? Did you have other options?
The 60 million euros in question become equity. They are used to guarantee negotiations with our financial creditors, to restructure our debt.
It was the only way to do it under acceptable conditions. And logical to turn to an industrialist in the sector, who knows our environment, and also has a strategy to develop services. PPF had the same vision, they got along well with Jérôme de Metz, and our historical shareholders were rather relieved to see them arrive.
Among our other options was a “pool” of so-called “reversal” English funds – the word speaks for itself: we cascade inflows of funds that mainly enrich investors, and rarely the companies themselves. The current deal is much healthier, and promising for the future.
Speaking of the future, what development do you envisage?
We will use our funds to consolidate our bases opened during the Covid. It’s really the sinews of war for us. We now also have the means to make new acquisitions if necessary.
On the other hand, we have stopped certain ongoing projects, such as the Dream Boat Club: in the midst of Covid, it was easy to resell these small boats. And since boat clubs are part of another strategic activity in which Beneteau and PPF have invested, that’s fine.
Do you see a future for the development of the engine offer?
Historically, the engine has always been marginal with us. So, yes, of course, with the announcement made by Jeanneau, of the Bénéteau group, which will be launching Prestige catamarans, your question is legitimate.
Personally, I find it paradoxical to talk about sustainable development on the one hand and to push driving products in our offer.
If we could switch directly to electric, we would save time! Or at least, having a “hybrid” offer would already be quite good.
How will the offer evolve elsewhere?
Clearly, by an increase in the cost of the rental. You have to understand that roughly speaking, it’s the only variable that hasn’t really changed in ten years. While at the same time, we have just lost the tax advantage of 10% VAT on the LOA, the average price of boats is constantly increasing, the level of equipment and options is also higher, the cost of maintenance therefore follows mechanically, and finally, the land, that is to say the marinas, explodes.
All rental professionals are unanimous: public prices will have to increase, and considering that we are now reaching new customers who do not yet have benchmarks in this area, this is the right time to do so.
What personal assessment do you draw from this adventure?
I would be lying to you if I told you that it was a cakewalk. The word that immediately comes to mind is: exhausting. But it’s also something unique in the life of an entrepreneur: you have no choice, it falls on you, everything changes overnight.
We fight, we score points, we also have some phases of intense excitement in certain moments when we progress, but it’s generally difficult, especially because we don’t know when it will end.
Our customers have been fantastic, our teams have been extremely mobilized, and you see, in the end, we’re doing quite well.
Personally, I have a two-year contract, renewable for three years. I can then sell or keep my shares. On the asset side, obviously, my situation is necessarily less enviable than before the crisis!
For the moment I tell myself that I showed my ability to develop this company before the crisis, that I knew how to manage it during the crisis, it now remains for me to show that I manage to manage this exit from the crisis, this rebound, thanks to the support of solid industrial and financial partners, with a real vision.
The end number?
-18%: this is how we should end the year, compared to 2019. Not so bad, then. I would never have bet on this score at 1er January of this year!