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Last Updated: Sunday, 18 November 2007, 17:22 GMT
Mega-yacht maker pushes out the boat
By Jorn Madslien
Business reporter, BBC News, Viareggio, Italy

After years of running his own business, Paolo Vitelli has decided to commission his own yacht.

The market is growing fast, but we are growing faster than the market.

"I want to create my own monument," the 60-year-old Italian entrepreneur says as he gazes across the sprawling ship building yard, where a massive crane is getting ready to lower yet another multi-storey motor yacht into the harbour's choppy waters.

Mr Vitelli has chosen a relatively modest yacht; a 103 feet long Azimut sports yacht, with a list price of 7m euros ($10m 5m).

Modest, that is, compared with some of the other yachts sold by Azimut-Benetti Group.

As one of the world's biggest players in the fast-growing market for hyper-luxurious motor yachts, its multi-storey crafts can cost as much as $50m (25m) and stretch from 24 metres to 85 metres in length.

And yes, they are metres - the world's wealthy all know that feet will not do when describing seriously large yachts.

But Mr Vitelli has not merely become one of Azimut-Benetti's customers. He is also the group's chairman, having founded the Azimut business while still a student.

Winning formula

Yacht in Viareggio
The yachts feel like multi-storey palaces on water

Reading economics by day at the ancient University of Turin, Mr Vitelli spent much of the swinging sixties in a nightclub in the city's old town.

Indeed, it was here as much as in the lecture theatres, where the foundations for his future fortune were laid.

"I started from practically zero," Mr Vitelli declares proudly, explaining how he and a group of his friends built up the nightclub from scratch.

"We rented a cellar and with hard work we decorated it with our own hands," he grins. "The music system was the last valve system made, which we got third or fifth hand for very little money."

With the money he had made from the nightclub, Mr Vitelli started a boat charter business.

"Within three months, I realised there'd be better money in brokerage," he says, and so he continued to fine-tune his business until, five years later, he started producing Azimut luxury yachts by combining British interior design with Italian artisans' craftsmanship.

Growing market

Local craftsmen
Viareggio is home to naval carpenters and other specialist firms

The noisy streets around the Azimut-Benetti yard in Viareggio are lined with workshops where specialist carpenters and brass craftsmen are busy producing made-to-measure maritime equipment and furniture.

Nearby, in an enormous covered yard, multi-storey yachts are built and fitted with the handmade luxurious interiors.

The place resembles a building site, complete with scaffoldings and workmen milling around like ants.

Some of the world's wealthiest people will travel here to commission their own life monuments, and despite their eye-watering prices, demand for mega-yachts is soaring, not least from customers in the Middle East, China, Russia and India.

In the year to September, the group built 800m-euros worth of yachts for the world's super-rich.

And with an order book worth more than 1.5bn euros, at a time when the global yacht market is growing steadily at some 10-15% per year, Azimut-Benetti's future is bright.

"The market is growing fast, but we are growing faster than the market," says Mr Vitelli, before explaining how the company is planning to invest 220m euros over the next three years as it prepares to expand its production facilities by 30% and introduce 25 new models.

Risking it all

The situation was very different in the mid 1980s, when Mr Vitelli first came to Viareggio, determined to shop.

At the time, the small Italian coastal town was in danger of losing one of its main employers, the historic yacht builder Fratelli Benetti.

Paolo Vitelli
When all the things happen without my presence, I'm proud
Paolo Vitelli

The company was in deep financial trouble, so Mr Vitelli offered to buy it and merge it with his own company.

"Benetti was practically the founder of the mega-yacht," Mr Vitelli says, so it was well worth the risk. And yet, he says, "it was an enormous step".

"I put everything on the table," he recalls. "It was all my money."

His overtures worked.

"We had the support of the management," Mr Vitelli says. "We became friends of the family."

Demanding clients

Acquiring Benetti helped Mr Vitelli to speed up the company's growth, though first he had to make changes to the way business was done.

"We were still selling boats with a handshake," he recalls.

Life onboard a luxury yacht
Many of the world's wealthy dream of the glamour yachting can offer

These days, Azimut-Benetti employs a small army of lawyers to work on every sale, and customers often turn up "with their own architects, sometimes the ones that designed their homes", Mr Vitelli says.

"They want the satisfaction of inserting their soul into the yachts, to innovate and personalise. We aim to give them a feeling that they've created something," he explains, warning, however, that "if you give them too much freedom the result can be a bad boat".

"The customers have to be made to feel they work with the expert," he insists. "The idea must be theirs, but the materialisation must be ours."

And that materialisation must go well beyond the actual creation of crafts that are merely seaworthy and luxurious.

The world's super-wealthy demand plenty of attention, not only before they buy a yacht and during the construction period, but afterwards as well, Mr Vitelli explains.

"Owning a yacht without the headache is a strong factor," he says, which is why Azimut-Benetti is developing four managed marinas, including a 150-berth marina on the Moskva river, 15 minutes from Red Square in Moscow.

Marketing efforts

In order to get the super-rich's attention, Azimut-Benetti's well-heeled customers are also occasionally invited to lavish events, such as this summer's yachting gala, complete with concerts and live shows.

"We don't charge," Mr Vitelli says, though the company tends to get its money's worth. "Generally, they leave a cheque for a new boat," grins Mr Vitelli, pointing out that some 60-80% of its customers have bought a yacht from them before.

Mr Vitelli still attends some of the company's events, but the days when he was socialising with his clients are over.

In recent years, he has taken a step back to enjoy his hobbies - classic cars and alpine hotel restoration - so these days he meets with just a handful of clients per year.

"I accept a certain level of contact," he says, though "when all the things happen without my presence, I'm proud".

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