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APRIL 26, 2004
Boats As Big As The Ritz Thanks to a resurgent stock market, mega-yachts are enjoying buoyant orders -- and custom shipyards are humming. Imagine your $50 million, custom-built 165-foot "waterfront retirement property" about to drop anchor in a sun-bleached Mediterranean bay. You are sitting on the aft sun deck, three stories up, sipping champagne and watching a stream of small boats following your wake like pilot fish. Tonight, your chef is preparing one of your favorite meals matched with the most exquisite wines, all served by a white-gloved waiter. Later, you can catch a movie on your flat-panel plasma TV screen that folds down from the ceiling, or retire to your wood-paneled study to make a few business calls. What about a spin on your 20-foot speed skiff or an expedition to hunt for fresh squid? That's life on a luxury yacht. Few can afford it. But those who can are keeping big-yacht builders busier than ever, especially in the U.S., where a weak dollar means American shipyards can undercut European rivals by 20%. Thanks to a resurgent stock market and the imminent retirement of many prosperous baby boomers, orders for luxury yachts of more than 80 feet are up 6% worldwide since last year. The 507 nautical behemoths now on order or under construction in shipyards around the world represent the industry's "all-time high-water mark," according to ShowBoats International, a Fort Lauderdale trade magazine. Acquiring one of these floating mansions isn't as simple as plucking a Mercedes from the car lot. Depending on the size of the yacht and your preferences for what goes inside, you might wait two to three years before you can set your first electronic course for the Virgin Islands. Buying a custom luxury model is as complex as any mergers-and-acquisitions deal -- and it's an emotional process as well. "It's the most challenging project I've ever undertaken," says Duane Hagadone, 71, owner of the 205-foot Lady Lola that was built in Rotterdam and cost an estimated $50 million. The semiretired Idaho newspaper publisher and real estate developer says he always wanted to own a big boat. But rather than rushing into having one built, "about seven years ago, I bought a used 147-foot [Italian-made] Benetti," he says. "I wanted to test the water, and my wife [Lola] and I fell in love with boating. We decided to build our own." That's the path most first-time luxury-yacht owners take, says Jack Jones, co-owner of Delta Marine Industries in Seattle, one of the largest U.S. builders of mega-yachts. Since 1990, it has delivered 22 custom yachts of more than 100 feet. Delta is constructing the biggest yacht to be built in the U.S. since the 1930s -- a 238-footer for an East Coast customer. Jones says certain rules must be followed to make such projects go smoothly, such as "hire a good project manager and a very knowledgeable captain." Other incontrovertible truths of the mega-yacht business: You need to find a reputable yacht broker -- word of mouth through boat owners is the best way -- who can match your interests with a dependable, financially solvent builder. About 40 top luxury-yacht builders are scattered around the world, led by the Italians, the Dutch, and the Americans. In the past three years, five shipyards, including such marquee names as Palmer Johnson, have filed for bankruptcy protection or closed. "Checking the boatyard's financial situation is huge," says Joe Foggia, president of Christensen Shipyards in Vancouver, Wash. "The shipyards that go out of business just don't know their costs." Christensen controls expenses by building 157-foot boats that use similar hull designs, engines, electronic systems, and cabin layouts. "Typically, the boat is at 80%-completion stage when a customer buys it," says Foggia, who sells the yachts for a relatively reasonable $22 million -- because there's less customization. SUBMARINE ON BOARD For customers who get more involved in the design from Day One, it starts with a concept that a naval architect turns into a specifications package. "It's not uncommon to produce 30 to 40 different designs before an owner is pleased with one," says Jim Gilbert, editor-in-chief of ShowBoats International. When the initial plans are completed, they are taken to various shipyards for bidding. Once the owner finds a shipyard and a project manager, the actual building commences. "Yacht construction is an arena of ideas, an arena of highly skilled artisans and technical people," Gilbert says. "It's a massive undertaking." The boat is essentially a mini-floating city stuffed with navigation, telecommunications, power, sewer, and water systems designed to support upwards of 30 people. That includes the crew, which, depending on the yacht, can run from 10 to 20. As a rule, annual operating costs run about 10% of the purchase price, or $5 million for a $50 million boat. Beyond that, shipbuilders must accommodate specific design requests that give mega-yachts their well-earned reputation for extravagance. Some of the more interesting items include a covered helicopter garage. Once the helicopter is tied down, the deck lifts up and tilts down and slides under an overhang, completely covering the chopper. Another yacht carries a submarine on board. A 274-footer stows an 80-foot sailboat on one side and a 60-foot motor boat on the other for local excursions. Other yachts are known to have a full health club and spa, a marble Turkish bath for 12 people, and a decompression chamber for diving. Hagadone's Lady Lola features a forward-facing apartment typically reserved for the wheelhouse, giving a rare 280-degree view of the sea. The wheelhouse is below the apartment. The yacht carries a swimming pool with a waterfall that can turn into a Jacuzzi. The most unusual feature of the Lady Lola, however, is her 18-hole golf course. That's right. With the push of a button, a section of the teak aft sun deck retracts and is replaced with an artificial grass surface replete with automatic golf tees that pop up 500 floating golf balls. With floating flag sticks, the crew sets the course in the water and uses laser range-finders to determine the winner. "We'll be sitting on the sun deck, and I'll say to my guests, 'Do you want to play golf?' They'll look at me strangely, figuring we'll go to shore and find a course," Hagadone says. "I hit the button, and you should see the look on their faces. It's the only one in the world. It's pretty neat."' Ah, we should all live like this.  By Stanley Holmes
BW MALL
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