In January, Island Spirit announced that it had reached an agreement to acquire the Austhai Marine manufacturing operations which it expects to merge into the Group Island Spirit Manufacturing operations.
Well all of us, especially those in the tourism industry have been hit hard by the COVID-19 crisis which, even at this point we are still not through. We are seeing all tourism related businesses with the cash flow going to zero, this is unheard of in the history of tourism crises, we have always had some other market to pivot to to maintain some minimum level of continuing cash flow, with the COVID crisis, there is no other market to pivot to.
What does all this mean? Well, realisti-cally speaking the longer this situation lasts the more businesses there are that are not going to survive the crisis. We are already seeing restau-rants permanently close, and families moving back to the villages after years of running suc-cessful businesses in tourist locations. Are the tourists going to flock back soon, really doubt-ful, therefore any business in these sectors really need to look long and hard at expenses as well as marketing and product offerings in the sort term to reach the maximum number of potential clients and get that cash flow flowing again.
If you are reading this article, then I would make a pretty good guess that you live in SE Asia and most likely live and work in SE Asia. With that as a premise, we all want to see our local businesses survive and thrive; no one wants to see the local economy decimated. There-fore, it is important to really think about how we all can contribute to our local economy once we can start freely traveling in Thailand. I will cover below some of the approaches we have taken as local businesses and what we will be looking at as far as moving forward once travel restrictions are lifted.
Our businesses cover a very wide variety of yachting related expertise and skill sets, but basically we have four business segments:
1) Yacht Charter
2) Sailing Education
3) Yacht Brokerage
4) Catamaran Manufacturing
In each business segment we have been faced with unique challenges and for all segments we have made the assumption that we will not start to see a pick up in orders for 3-6 months. We need to plan for operating all of the businesses during the crisis and be firmly positioned to ramp up when people can start to travel again.
In the “Yacht Charter” business we main-tain over 40 yachts under management in Phuket, Pattaya and Koh Chang. Through the first two months of the year we kept them quite busy based on normal business conditions. As we moved into March we started to see the impact of the COVID Crisis and realized that this was quite a serious event and will have a serious impact to our busi-ness. We immediately took action and developed a plan for survival of the crisis as well as a plan for how we can be the best equipped charter opera-tor crisis when it is over. These plans involved a number of areas covering cost cutting and areas of investment. The investments we are making in the charter fleets pertain to quality of the offerings as well as specific features on the yachts that will add significant competitive advantage to our fleets for when the crisis is over. We expect this will show returns in the coming 6-9 months as far as forward bookings.
In the “Sailing Education” business we saw the shut down happen much more rapidly than in the charter business, so late February we were already seeing significant effects that made it difficult if not impossible to continue to offer educational services. Several clients that attended our last sailing course in February even got stuck in Thailand for the next several months with the closure of international travel. We immediately put a plan in place similar to what we had done in the charter business, with cost cutting as well as making investments. Our investments on the edu-cational side of things focused on long-term course quality and process improvements for the delivery of an exceptional quality educational product on an ongoing basis. These improvement have now been completed and documented and are being rolled out with our instructional team with the belief that we will be able to open courses again around Mid June 2020. We have our fingers crossed…
rolled out with our instructional team with the belief that we will be able to open courses again around Mid June 2020. We have our fingers crossed… business is not yacht brokerage, it is Yacht Charter. Therefore, with clients looking to buy yachts and have them managed in a charter fleet we pass on significant discounts from the margins offered to us by the manufacturers to the buyers. This allows the clients to save tens of thousands of Euros on a new yacht purchase and in turn provide a much better return on investment with the yacht in charter service. We have agreements in place to offer this significant savings for: Lagoon catamarans, Bavar-ia Yachts, Nautitech catamarans, Fountaine Pajot catamarans, Catalina Yachts, and of course, Island Spirit Catamarans.
On the manufacturing side of things it is a very different business. In January of 2020 we reached a definitive agreement to acquire the Austhai Marine manufacturing operations, which we are merging into the Group Island Spirit. This provides us with a very wide range of recreational sailing catamarans and commercial power cata-marans. With the acquisition of Austhai we have been lucky enough to acquire a truly outstanding team and reputation with respect to catamaran building. Austhai has been in operation for over 15 years and has shipped close to 100 boats to 11 different countries and most customers own multiple boats based on their positive experiences. In this business we have been focusing on product strategy, distribution strategy and productivity enhancements based on a combined operation. We are continuing with long term product devel-opment with the development of the new Island Spirit 480 Sailing Catamarans and expanding the Austhai commercial line up to 24 meter offerings. We see these continued investments critical to our long term success and the ability to adequately meet customer needs after this crisis is over.
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