Smooth sailing for Global Yacht chief

The yachting industry has shrugged off the global economic slowdown thus far, as the rich hit the water.

Michael Horrigan of Island Global Yachting Middle East operations.

Reclining comfortably on a dark leather couch, Michael Horrigan, the chief executive of Island Global Yachting's (IGY) Middle East operations, waved a hand towards the view of azure waters from his 40th-floor office. He was outlining his company's latest project, a 590-berth facility called Anchor Marina on Nakheel's Palm Jumeirah Island, and smiling because he felt lucky. "We're fortunate to be operating in an industry that, so far at least, is very immune from the global financial turmoil, though usually it is luxury offerings that suffer the most in times like these," he said. "Obviously the world funding capability is a problem, but the Middle East is generally less affected by it than most."

In the crux of the worst global financial crisis of the past century, Mr Horrigan and his team seem to have found a profitable loophole in the system - the billion-dollar marina development industry. He conceded that demand was so enormous for quality marina facilities that cater for so-called megayachts, particularly in the Gulf, that Island Global Yachting has actually had to restrain growth in order to maintain the high level of quality associated with the young company. "Our biggest struggle has been to keep the growth controlled because demand is so great; you'll always be remembered for the quality you deliver, so we don't want to grow any faster than we can deliver."

According to Mr Horrigan, it has been smooth sailing since the firm's chairman Ahmed Farkas designed a unique business model for marina developments six years ago, based on the customer service-oriented hospitality industry. Coming from generations of "yachties" and yacht owners, Mr Farkas noted that the marinas he frequented in western Europe and the Caribbean often had poor docking facilities that were not being renovated as the appetite for larger super-yachts became a growing trend in the marketplace.

This year, the firm has focused attention away from those crowded harbours and has successfully ventured to marina developments in Croatia, Turkey, Greece and the Middle East. IGY's partnership with Nakheel since 2005 has enabled the firm to complete all of Nakheel's marina developments, with plans for more than 20,000 berths within the next five years in Dubai alone. Based on these projections, 2,500 berths will be made available each year by the end of 2009 and 2010, of which 250 will be superyacht berths.

This is a 200 per cent increase on the current number of berths in Dubai, which will also lead to the creation of more than 1,500 jobs within the company's operations in the city. The Super Yachting Index, put together by Camper and Nicholson, a leisure marine company, stated in their annual global report that the UAE "is the biggest area in the world for marina activity, and Dubai takes centre stage".

"The Middle East has such a historic and cultural tie with the maritime industry; there's a great affinity in this area with the water," said Mr Horrigan. "There's a zealousness in this part of the world to become part of this marina-related lifestyle, which includes berths and boats, but a large part of the positive volatility in our market is from non-boat owners, too." He pointed out that in the period that his company's business has grown since establishment of a Dubai office in 2006, about 75 per cent of revenue used to come directly from the marina berths, with the remaining revenue coming from facilities around it; now, the firm is receiving as much revenue from the upland facility as it is from the marina berths.

"People are hungry for berths of this quality in a great location where parking and access is good, and you can live near the boat and point to it and say 'that's my boat down there!'" said Mr Horrigan. Island Global Yachting is collaborating with Nakheel on the development of 1,500 berths on the Palm islands, with the first 600 expected to be ready in December for the Anchor Marina project, which includes two clubhouses and 300 berths on each side of a frond.

This project is designed for small- to mid-sized boats in Dubai, which range in size from 14 to 30 metres. Along with Nakheel, IGY has worked on 19 berths for the Al Seef marina in Dubai Creek, 74 berths up to 35 metres at Dubai Festival City and a marina project designed especially for megayachts on the Palm Jumeirah that will have 80 berths. The essence of the business is in developments of marinas that provide the right services and facilities for megayachts and their owners. "Traditionally, up until now, a marina was regarded just as a place to tie up your boat; as people are progressively investing more money in their yachts, they don't expect to tie up a US$30 million (Dh110.2m) investment to something that creaks and groans," said Mr Horrigan.

"The boating experience starts with effort and drama, from when guests arrive and are escorted with electric carts to their boat, to the concierge service that can bring two steak dinners from the clubhouse right to your table on the boat." The business model mirrors one of the hospitality industry, particularly that of Starwood hotels, of which the founder is particularly fond. Mr Horrigan, who comes from a background of hospitality and urban planning, admits he doesn't own a boat himself, although his own perspective has helped define the customer service aspect of the business.

As the company develops business in eastern Europe and the Middle East, the firm is setting sail further east, where the company plans to establish a presence in China and India. Mr Horrigan, an Australian who lived in Asia for 12 years and picked up the Indonesian language, is happy to be based in Dubai for now. "It's fascinating that boats that are classified as small- to mid-sized in Dubai are considered superyachts in the Caribbean and Europe; as expected in Dubai, bigger is better," said Mr Horrigan.