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Billionaire’s Pampered Pooch Shows Kiwi Bid for Superyachts

By Tracy Withers
June 09, 2014 1:48 AM EDT 25 Comments
Russian billionaire Andrey Melnichenko's super yacht "A".
Photographer: Ragnar Singsaas/WireImage
Russian billionaire Andrey Melnichenko's super yacht "A".

When Russian billionaire Andrey Melnichenko came to New Zealand, the government approved his superyacht as a special quarantine facility so that family dog Vala could avoid a spell away from its master.

Melnichenko’s $350 million yacht was one of 35 luxury vessels to visit in 2013, spending NZ$185 million ($157 million) on refits and repairs and NZ$95 million on tourism. Prime Minister John Key wants to double both numbers by 2018.

Facing a September election, Key is seeking to boost tourism, skilled services and manufacturing to diversify an economy reliant on dairy exports and squeezed by an elevated currency. Part of the effort is aimed at reversing a slump in boat building and fitting in the wake of the global financial crisis and luring more super rich to New Zealand’s shores.

“Their spend per person is significantly different from any other tourists,” said Murray McCaw, co-owner of the Bay of Many Coves resort in the Marlborough Sounds, whose intricate waterways, islands and secluded beaches are promoted as a boaties’ paradise. “That high-yielding tourist is a really important part of the international tourism economy for New Zealand.”

Marlborough Sounds at the top of the nation’s South Island is a popular destination for superyachts, which can anchor in its sheltered bays. Those who visit McCaw’s resort book tables at the Foredeck restaurant to dine on local scallops and kingfish, and hire spa therapists for a hot stone massage or a facial treatment on board, he said.

Luxury Spending

“While they are moored here they might also go to another lodge or a vineyard,” where they can sample award-winning sauvignon blanc wines the Marlborough region is known for, McCaw said. “They’re not just sitting there biding their time in the sunshine. These people are about the experience.”

Government tourism and trade promotion agencies have joined the boat-building industry to market New Zealand as a destination for superyachts, citing the opportunities to explore 15,000 kilometers (9,400 miles) of coast and the scope to have their vessels refitted in the nation’s shipyards. Spending in the tourism industry makes up about 8.7 percent of gross domestic product, according to government figures.

Repair and refit has become a key focus for the marine industry as orders for new boats slowed after the financial crisis. Local boat builders have a global reputation for workmanship, enhanced by a list of industry awards and the 2013 America’s Cup, when New Zealand’s contender was narrowly beaten by Larry Ellison’s Oracle, a yacht that also relied on New Zealand design and construction.

‘Double Whammy’

The “double whammy” of fewer orders and the New Zealand dollar’s 26 percent gain the past four years has made it tough, said Tony Hambrook, chief executive officer of Auckland-based Alloy Yachts, which won its category at the 2014 World Super Yacht Awards for the 128-foot motorboat CaryAli.

Rival shipyards in Europe “have sharpened their pencils dramatically and reduced their margins,” said Hambrook, who has cut his workforce to 212 from about 450 in 2011.

Alloy is being urged to do more repair and refit work by the owners of boats it has built, and is in talks to open a facility in Auckland’s harbor that has the necessary deep-water access, Hambrook said.

Melnichenko’s superyacht “A” -- named after his wife Aleksandra -- arrived in Auckland in September for maintenance before the owners and their pet flew in on March 10.

Quarantine Facility

New Zealand’s Ministry for Primary Industries approved the yacht as a transitional quarantine facility and deployed a vet to stay on board for the 10-day containment period, using its discretion to allow for special arrangements.

Melnichenko, the world’s 81st wealthiest man according to the Bloomberg Billionaires Index, met all the costs, the ministry said in a statement.

“They came for three weeks and stayed for five because they loved it so much,” said Jeanette Tobin, owner of Asia Pacific Superyachts, an Auckland-based ships’ agent that handled the Melnichenkos’ requirements.

Other luxury vessels to visit Auckland last summer included the 290-foot Nahlin, owned by British inventor James Dyson, and the Ethereal owned by Sun Microsystems co-founder Bill Joy, the New Zealand Herald reported. Alucia, owned by Ray Dalio, the billionaire founder of hedge fund Bridgewater Associates, spent four months in Auckland last year for a refit

Lodge Visits

A few years ago, boats “sat in the marina and their owners never came,” said Tobin, who handled 15 superyachts last summer and has five already confirmed for the 2014-15 season. More and more of her time is spent arranging itineraries and visits to top lodges, golf courses and restaurants for the superyacht owners, she said.

The government gave Tourism New Zealand an additional NZ$20 million in the 2013 budget to lure high-net-worth tourists. The target is to double superyacht visits to 70 a year by 2018, while increasing arrivals of large cruising yachts to 750 a year from 625.

“We are known as a beautiful country but there’s not a great deal of awareness of what we can offer,” said Justin Watson, director of trade, public relations and major events at Tourism New Zealand. “We are very much undiscovered.”

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

To contact the editors responsible for this story: Matthew Brockett at mbrockett1@bloomberg.net; Stephanie Phang at sphang@bloomberg.net Malcolm Scott

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