Click for Cheoy Lee Click for Lurssen Click for Walker Click for Burger Click for Abeking

Running Cost Efficiency

Discussion in 'General Yachting Discussion' started by NitrousOxide, May 24, 2020.

  1. NitrousOxide

    NitrousOxide New Member

    Joined:
    Aug 12, 2018
    Messages:
    9
    Location:
    Dubai
    Hello everyone,

    I was researching explorer yachts and I got to know about a new builder called 'Hawk Yachts'. They are apparently specializing in large explorer yachts and they intend to penetrate the market through half-if-not-less-than-half running costs. We're talking really big yachts here (103m and over 6000 gross tonnage).

    As I was reading an interview with the company's president, he stated that ALL luxury yachts are wasting so much money in the form of running cost as they don't adopt commercial-grade machinery; this in turn makes the running cost twice as otherwise. He gave an example of a yacht he was the captain of (Lady Moura) - stating that at the time it was designed, there were no "yacht machinery" for a yacht of that caliber, so it adopted a commercial approach instead, and that in turn made it one of the most efficient yachts in its size category (till this day, apparently).

    On a different not, I read an article a while ago (don't remember the publisher tbh) who claimed that Lurssen's Octopus costs $20 million annually just to run things smoothly; I was frankly shocked that such costs are incurred for a yacht that is in perfect condition, which means that this is normal for a yacht of this size/kind.

    My questions, therefore, are the following:

    1- Is it true that Octopus does cost that much to maintain on an annual basis?
    2- Could the implementation of 'commercial-grade' machinery drop the running cost by more than half?
    3- If 'commercial' is indeed that effective, what is the drawback? There must be a compromise because it doesn't sound logical that yacht owners will embrace such high costs when they can lower them dramatically.



    Thanks!
  2. olderboater

    olderboater Senior Member

    Joined:
    Sep 2, 2013
    Messages:
    6,034
    Location:
    Fort Lauderdale
    Interviews, philosophies, plans, future, concepts. Boats to be built in a largely commercial Turkish plant.

    I've heard the commercial superiority story many times as commercial builders decided to enter the recreational arena. Many recreational builders started commercial, even builders such as Westport. However, they ended up building yachts for the recreational industry.

    It's so easy to make claim of so much more efficiency. They use terms like "less than half running cost" but who defines running cost and let's see the measurements. Who knows what they can do as they've never done it? What is commercial equipment and how far do they go?

    As to what it costs to maintain any yacht, I don't even know what maintain means. Which expenses? Does it include owners' costs? Cruising? Fuel? Meals and Entertainment? Helicopters? I have no doubt it can all add up to $20 million if you include everything.

    Could some form of commercial equipment reduce some part of yacht costs? I have no doubt it could. However, keep in mind that many builders are commercial and yachts so surely doing what is practical.

    I have no doubt that some aspects of commercial building can be useful in recreational building, but I do not think that fact has been ignored by yacht builders to date.

    So, come back when Hawk has delivered some boats to customers and those boats have proven themselves.
  3. Capt J

    Capt J Senior Member

    Joined:
    Jul 11, 2005
    Messages:
    12,911
    Location:
    Fort Lauderdale
    IN yachts that size, the majority of running costs are the wages and compensation of the crew, which is derived by the owners wanting a level of service and wanting the yacht to look like a yacht.

    When building a yacht of that size you're mostly using commercial equipment. Pumps, generators, etc. to a degree. Of course if the exterior was paint, that was painted on by a brush and a roller, the exterior maintenance or well seriously lack of that a commercial ship sees would be much much less. Or if you want crew and owners to eat cafeteria style in one big eating area together, or the entire yacht to have formica like walls and linoleum tile floors......

    I don't see how you could build a yacht and have it be a yacht and have half the operating costs.
  4. Fishtigua

    Fishtigua Senior Member

    Joined:
    Jul 20, 2007
    Messages:
    2,698
    Location:
    Guernsey/Antigua
    I've worked on both commercial and large yachts. TBH they pretty much run the same equipment (except super high-power Kevlar type yachts).

    It's down to basics such as mooring in a nice marina rather than a stinking fish quay, a smart full-time crew fully trained or a sweaty fat guy in ketchup stained wife-beater t-shirt. Filthy, smelly bilges or greaseless white ones.

    You get what you pay for.
  5. HTMO9

    HTMO9 Senior Member

    Joined:
    Jan 13, 2009
    Messages:
    1,380
    Location:
    Europe
    I do not believe that Lady Moura is lower in operating costs than any other yacht of that size. Lady M is for sale at the moment and praising her lower operating costs seems to be part of the advertising.

    The confirmed numbers of operating costs for Octopus, I have personally seen, were app. 400.000 $ per week. This is pretty close to 20 Mio $ per year. And this figure did not include any travelling. Octopus uses 50 tons of diesel fuel per day, cruising at 12 to 15 Kts including average hotel load.

    Her complete machinery is commercially rated and in perfect state. What makes her so expensive, is her explorer equipment and her special rated and qualified crew. High voltage diesel electric setup (needs special engineers), submarine and helo operation and last but not least nitrox qualified deep divers. Those highly qualified personel (62 souls) needs to be payed accordingly.

    Commercial lower speed diesel engines may have lower specific fuel consumption but same output means same fuel consumption. There is no free lunch. But the may be higher efficient low RPM, high volume commercial diesel engine require more effort in vibration dumping and noise insulation. Worst example in this filed is be the classic (replica) yacht Nero with its commercial MAK / Cat 9 cylinder diesel engines. You can hear those engines everywhere on board and the vibrations can always be felt. The most misconstructed large yacht I have been on during cruise.

    Octopus is completely silent in the guest / owner quarters and vibration free. The only problem of Octopus are her undersized retractable stabilizers for her height above the waterline. That is the reason, she has a storm cabin for her owner a few decks below the owner deck. A problem that could easily be solved.

    I have two MTU 16V 4000 M05 rated engines on my boat. They run max 1.600 RPM and at 14 Kts cruise they use 750 liters per hour together and this includes the gear driven alternators of 350 KWe each. Means, during cruise no diesel generator is running. These are the best economics You will get out of a 210 ft full displacement boat but I still have to feed a crew of 14. And if You want to keep them on long term, You better pay them well and treat them even better.

    I have found the rule of thumb for the operating costs of a larger power yacht to be around 10% of its original sales price to be fairly close. For a large sailing yacht it is around 6 to 7 %, unless You attend races regulary. Eating up those expensive carbon laminate sails every season is really a pain in the neck.

    just my 2 (Euro) cents
  6. NitrousOxide

    NitrousOxide New Member

    Joined:
    Aug 12, 2018
    Messages:
    9
    Location:
    Dubai
    Thank you very much for your reply and especially for the fascinating remarks on Octopus. I have been truly intrigued by this yacht for a couple of years and I never seemed to find public information that quenches my thirst.

    I don't know much about the technical (really technical) side of yachts, but I do have a couple of questions regarding Octopus:

    1- Why does she have a steel superstructure? I can't understand why such a genuine explorer yacht (one that should prioritize low center of gravity) is built fully using steel? And not only that, but the superstructure is really humungous, it feels unstable to the naked eye.

    2- If the retractable stabilizers are smaller that what the yacht requires, why hasn't the owner upgrade it during any service/refit? Wouldn't you suspect it may be more complicated than that?

    3- The yacht is currently listed for sale for $330m, which to me sounds utterly crazy. I respect the yacht and the shipyard behind it tremendously, but at the price point, wouldn't you say it would cost the same, today, to build a sister yacht with identical size/capabilities and may be better? And from the same shipyard too?

    4- Regarding the rule of thumb on running cost, a 100 meter yacht from northern europe costs 50% more than a similarly sized one from Italy; does that mean 10% for Italian but 6.5% northern Europe given that the higher price is based on the higher quality standard rather than increased size/equipment?


    Finally, Thank you in advance :)
  7. NitrousOxide

    NitrousOxide New Member

    Joined:
    Aug 12, 2018
    Messages:
    9
    Location:
    Dubai
    hahaha! That was fun to read. Thank you sir!
  8. NitrousOxide

    NitrousOxide New Member

    Joined:
    Aug 12, 2018
    Messages:
    9
    Location:
    Dubai
    Thank you very much for the thorough explanation. As for the questions you posed, I don't know haha!

    I see! thank you sir!
  9. HTMO9

    HTMO9 Senior Member

    Joined:
    Jan 13, 2009
    Messages:
    1,380
    Location:
    Europe
    1. Steel superstructure: It was pure owners choice for having a sturdy explorer yacht and better in the rear part for the helo hangar (fire resistance) and the heavy weight pool. But Alloy superstructure above the hangar deck would have been possible. But the blue funnel assembly is GRP :).

    2. The retractable SKF (former Blohm & Voss) Z600-595-13 stabilizers are well sized with their 16.5 squre meter wing area for cruising but their zero speed performance (when on the hook) is not as good as it could be. There are newer versions available now, that would fit in that stabilizer well. It is not only center of gravity up there on deck 7 (owner deck) it is also the lever arm. When the boat starts rolling around the CWL, the owner deck moves a few meters from port to starboard. We are talking Gs. It is understandable that Mr. A used his private lift down to the storm cabin during higher winds and troubled water.

    3. The 330 mio $ or 295 Mio Euros are rediculous. That is almost more than Mr. A paid for that boat in 2003. Even given the fact that Octopus is an iconic yacht and the best maintained yacht of that age but without a substancial price reduction, Octopus will never sell. She sits in Marsailles for month now and several tender and pieces of art from her interior have been sold to pay for her costs. And there is even a pretty long exclusion list of onboard items not included in the sale. IMHO, I am afraid Octopus is fading away.

    4. No, its 10 % even for a northern European yacht like my boat. My costs a always even higher, as I have to pay VAT for everything, as my boat is non commercial without charter and Maltese Cross flagged.

    Sorry but I am not allowed to go into any more details about Octopus, as I am under NA agreement but I have to say she is one of my favorite large yachts and I really like her exterior and her interior design. Her layout is pretty perfect for its purpose. Also she is a 60 Hertz boat, I would not have to change very much on her (may be except this crazy recording studio on the bridge deck).
  10. NitrousOxide

    NitrousOxide New Member

    Joined:
    Aug 12, 2018
    Messages:
    9
    Location:
    Dubai
    Thank you very very much!! I appreciate all the thorough answers! :)
  11. AMG

    AMG YF Moderator

    Joined:
    Jul 26, 2004
    Messages:
    5,256
    Location:
    Sweden
    Octopus is a big boat, here in Antibes in 2005...

    Octopus.jpg
  12. German Yachting

    German Yachting Senior Member

    Joined:
    Jul 26, 2010
    Messages:
    1,762
    Location:
    West Coast
    While the price is high compared to build price, the replacement cost of a new build would be much more now.
  13. NitrousOxide

    NitrousOxide New Member

    Joined:
    Aug 12, 2018
    Messages:
    9
    Location:
    Dubai
    How much do you guess it would cost to build a similar yacht today?
  14. HTMO9

    HTMO9 Senior Member

    Joined:
    Jan 13, 2009
    Messages:
    1,380
    Location:
    Europe
    Around 350 Mio Euros. This no guess, I have asked :). But this without any tenders and loose furniture.
  15. NitrousOxide

    NitrousOxide New Member

    Joined:
    Aug 12, 2018
    Messages:
    9
    Location:
    Dubai
    How much last last price? haha! You seem to have all the knowledge one could need about this yacht. If only you didn't sign the **** NA! :p
  16. NitrousOxide

    NitrousOxide New Member

    Joined:
    Aug 12, 2018
    Messages:
    9
    Location:
    Dubai
    The blocked word is just 'd a m n' nothing too explicit lol! :)
  17. HTMO9

    HTMO9 Senior Member

    Joined:
    Jan 13, 2009
    Messages:
    1,380
    Location:
    Europe
    I have been following Octopus since she was build at Blohm & Voss in Hamburg in 2003. My office was just on the other side of the Elbe river. I could see her out of my office window, when the shed was open. We were regular customers with our cargo vessels at B&V and I had my first tour on her already prior to her launch. The last time I was on board Octopus, was in 2019 during her last refit at Blohm & Voss, there I was told already, that she would come on the market. And I was invited on board once by her owner, when she was moored in Palma next to my boat. Paul Allens parties onboard Octopus were legendary. I really have seen almost every room and compartement of her, from the emergency generator room on the top deck down to the under water observation room on the tank deck. There are only two things on her I personally do not like, one of it is her present sale price and the other I will not tell. But the second thing will go away, when the price tag gets lowered noticeable :p.

    One of the most iconic yachts ever built.

    HTMO
  18. NitrousOxide

    NitrousOxide New Member

    Joined:
    Aug 12, 2018
    Messages:
    9
    Location:
    Dubai

    hahaha! I completely agree with you, especially on that second point which I wish I could know!
  19. jsschieff

    jsschieff Senior Member

    Joined:
    Apr 3, 2010
    Messages:
    116
    Location:
    Middletown RI/Stuart FL
    Although I have never seen Octopus, much less been aboard, I have read that unlike many huge yachts, Octopus was used and cruised under Mr. Allen''s ownership. So many big yachts seem to sit in marinas, it is nice to hear about one that was appreciated and went all over the globe.