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    Fed Governor Waller says half-point rate hikes could be needed as 'inflation is raging'

    Christopher Waller, U.S. President Donald Trump’s nominee for governor of the Federal Reserve, speaks during a Senate Banking Committee confirmation hearing in Washington, D.C., U.S, on Thursday, Feb. 13, 2020.
    Andrew Harrer | Bloomberg | Getty Images

    Federal Reserve Governor Christopher Waller told CNBC on Friday that the central bank may need to enact one or more 50-basis-point interest rate hikes this year to tame inflation.
    Though he voted this week for just a 25-basis-point move due to uncertainty from the Russian invasion of Ukraine, Waller said he thinks the Fed may need to be more aggressive soon.

    “I really favor front-loading our rate hikes, that we need to do more withdrawal of accommodation now if we want to have an impact on inflation later this year and next year,” he told CNBC’s Steve Liesman during a live “Squawk Box” interview. “So in that sense, the way to front-load it is to pull some rate hikes forward, which would imply 50 basis points at one or multiple meetings in the near future.”
    In addition to the rate hikes, Waller said he thinks the Fed needs to start reducing its bond holdings soon.
    The central bank balance sheet has ballooned to just over $9 trillion, and officials are preparing the process to start rolling off some of their holdings. Waller said that process should start “in the next meeting or two.”
    “We’re in a different place than we were before,” he said. “We have a much bigger balance sheet, the economy’s in a much different position. Inflation is raging. So, we’re in a position where we could actually draw down a large amount of liquidity out of the system without really doing much damage.”
    Waller’s comments came less than two hours after one of his colleagues, St. Louis Fed President James Bullard, said the Fed should raise rates in total at least 300 basis points this year. A basis point is 0.01 percentage point.

    Bullard was one only policymaker this week to vote against the quarter-point increase, saying the Fed should have gone by half a point as part of a deliberate policy aimed at curbing inflation running at 40-year highs.
    Prior to the meeting, Waller also had been pushing for a 50 basis point move, but said he had a change of heart for now.
    “The data’s basically screaming at us to go 50, but the geopolitical events were telling you to go forward with caution,” he said. “So those two factors combined pushed me off of advocating for a 50-basis-point hike and supporting the 25-point hike that we enacted.”
    The full Federal Open Market Committee also pointed to rate hikes that would push the benchmark fed funds rate, which banks charge each other for overnight lending, to 1.75% by year’s end.
    Waller said he believes the Fed should shoot a little higher than that. He did not specify by how much but said he thinks the “neutral rate” that is neither stimulative nor restrictive is between 2%-2.25% and the Fed should “try to be above that by the end of the year.”
    The rate hike approved this week was the Fed’s first in more than three years.

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    St. Louis Fed's Bullard says the central bank should raise rates above 3% this year

    St. Louis Fed President James Bullard on Friday released a statement explaining his dissent from this week’s decision to raise rates by 0.25 percentage point.
    Bullard said the Fed needs to show it is serious about combating inflation and should hike rates the equivalent of 12 times this year.

    James Bullard
    David Orrell | CNBC

    St. Louis Fed President James Bullard said Friday he thinks the central bank should raise interest rates the equivalent of 12 times this year to convince the public it is serious about fighting inflation.
    As the lone dissenter at this week’s Federal Reserve meeting, Bullard said in a statement that he would like to see the central bank’s benchmark interest rate boosted above 3% from the near-0% level where it had stood.

    “This would quickly adjust the policy rate to a more appropriate level for the current circumstances,” he said.
    Following its two-day meeting, the Federal Open Market Committee on Wednesday said it would raise overnight rates for banks by 0.25 percentage point, historically the typical increment with which the FOMC moves. Accompanying economic projections indicated a path this year that would see the equivalent of seven rate hikes, or 1.75 percentage points.
    The move was the first time the Fed has raised the rate since December 2018 and came in response to a stunning increase in inflation that has seen prices rise at their fastest pace in 40 years.
    Bullard was the only FOMC member to vote against the move, stating he would have preferred a rate hike of 0.5 percentage point, or 50 basis points. He added the Fed also should have started the process of reducing the nearly $9 trillion in bond holdings it has accumulated over the past 14 years.
    In his statement Friday, Bullard said inflation is hurting people the Fed is trying to help the most, namely those on the lower rungs of the economic ladder.

    “The burden of excessive inflation is particularly heavy for people with modest incomes and wealth and for those with limited ability to adjust to a rising cost of living,” he said. “The combination of strong real economic performance and unexpectedly high inflation means that the Committee’s policy rate is currently far too low to prudently manage the U.S. macroeconomic situation.”
    Fed officials overall were divided on how to proceed with rates this year.
    Ten members penciled in a fed funds rate of 1.75%-2% by year’s end, but eight said it should be higher. The highest “dot” on the committee’s dot plot, presumably Bullard’s, indicated a range of 3%-3.25%.
    He pointed out that the Fed has moved that aggressively before, in 1994-95 to combat a revving economy and a gradual rise in inflation.
    “The results were excellent,” Bullard said. “The Committee achieved 2% inflation on average and the U.S. economy boomed during the second half of the 1990s. I think the Committee should try to achieve a similar outcome in the current environment.”
    On the issue of the Fed’s balance sheet, Bullard did not provide details of what he thinks the central bank should do, saying only that “a plan” at this week’s meeting would have been appropriate.
    The post-meeting statement indicated that the committee “expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting.” Fed Chairman Jerome Powell said afterward that the process could begin as soon as May.

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    Reduce speed limits and car-free Sundays: The IEA has a 10-point plan to cut oil use

    Many organizations are calling for a cut in fossil fuel use, actually achieving such an aim is a gargantuan task.
    “France and all European countries must get out of their dependence on fossil fuels,” Barbara Pompili, a French government minister, says.
    The IEA’s latest report follows on from the publication of another 10-point plan centered around reducing Europe’s dependence on Russian natural gas.

    Cyclists photographed in Lisbon, Portugal, in October 2018.
    Kamisoka | Istock Unreleased | Getty Images

    Speed limits on highways should be cut by at least 10 kilometers per hour (6.2 mph) to help lower oil demand, the International Energy Agency said Friday.
    The recommendation is part of a wider 10-point plan published by the Paris-based organization.

    “We estimate that the full implementation of these measures in advanced economies alone can cut oil demand by 2.7 million barrels a day within the next four months, relative to current levels,” the IEA’s report said.
    The 2.7 million figure equated to the oil demand of all cars in China, it added in a news release. Part or full adoption of the measures in emerging economies would amplify their effect, it also said.
    The plan comes at a time when oil markets are facing significant uncertainty and volatility following Russia’s invasion of Ukraine in February.
    Russia is a major supplier of oil and gas, but its actions in Ukraine have caused several economies to try and find ways to reduce their reliance on Russian hydrocarbons.

    Read more about clean energy from CNBC Pro

    In a news conference broadcast via Zoom on Friday morning, the IEA’s executive director, Fatih Birol, described oil markets as being in an “emergency situation.” Birol added that things “may get worse” over the next few months.

    Against this backdrop, the IEA’s other suggestions to reduce oil demand include:

    Working from home for as much as three days per week, when possible.
    Car-free Sundays for cities.
    Reducing the cost of public transport and encouraging people to walk and cycle.
    Avoiding air travel for business when other options are available.
    Traveling on high speed or night trains instead of flying when it’s practicable to do so.
    And reinforcing the uptake of electric and “more efficient” vehicles. The full list can be read here.

    “Reducing oil use must not remain a temporary measure,” the IEA’s report said. “Sustained reductions are desirable in order not only to improve energy security but also to tackle climate change and reduce air pollution.”
    It added that governments had “all the necessary tools at their disposal to put oil demand into decline in the coming years, which would support efforts to both strengthen energy security and achieve vital climate goals.”
    A number of organizations are calling for a cut in fossil fuel use, but actually achieving such an aim is a gargantuan task. The vast majority of cars on our roads, for instance, still use gasoline or diesel, while energy companies continue to discover new oil and gas fields in a variety of locations around the world.
    In a statement issued Friday, the IEA acknowledged that the majority of its proposals “would require changes in the behaviour of consumers, supported by government measures.”
    “How and if these actions are implemented is subject to each country’s own circumstances – in terms of their energy markets, transport infrastructure, social and political dynamics and other aspects,” the IEA said.

    Read more about electric vehicles from CNBC Pro

    Also commenting on the IEA’s plans was Barbara Pompili, the French minister for the ecological transition.
    “France and all European countries must get out of their dependence on fossil fuels, in particular on Russian fossil fuels as soon as possible,” she said.
    “It is an absolute necessity, for the climate but also for our energy sovereignty. The plan proposed today by the IEA offers some interesting ideas, some of which are in line with our own ideas to reduce our dependence on oil.”
    The IEA’s report follows on from the publication of another 10-point plan centered around reducing Europe’s dependence on Russian natural gas. More

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    Tech companies fight low morale and attrition with more equity grants as their stocks get slammed

    Silicon Valley recruiters point to frustration among candidates that were granted options at an all-time high and are deeply underwater as stock prices plummet.
    Robinhood, Snap, Roku and Uber are among the tech firms offering more equity grants or cash compensation amid a drop in their share prices.
    “Seeing their earnings shrink on a daily basis is distracting,” says Will Hunsinger, CEO of executive recruiting firm Riviera Partners. “There’s a lot of pressure for these companies to take action.”

    Traders work on the floor of the New York Stock Exchange.
    Lucas Jackson | Reuters

    Tech companies are looking to issue new stock and cash perks as slumping share prices weigh on employees’ wallets and morale.
    Robinhood, Snap, Roku and Uber are among those offering more equity grants or cash compensation amid drops in their stock prices. Silicon Valley recruiters point to frustration among candidates, who may have been granted options near an all-time high and are deeply underwater after the sell-off. All four companies have share prices that are more than 46% off their peaks.

    “Seeing their earnings shrink on a daily basis is distracting,” said Will Hunsinger, a former start-up founder and CEO of executive search firm Riviera Partners. “There’s a lot of pressure for these companies to take action — either repricing options to reflect market conditions, or coming up with supplemental cash compensation for folks — especially when you have companies performing well but volatility and the uncertainty in the markets is depressing the stock price.”
    It’s common for tech employees to forego a higher base salary for a bigger slice of company shares. For decades, the move has allowed for a substantial payday in a successful public offering or acquisition. For start-ups, it can be a less expensive way in the near-term to attract employees.
    But that trade-off doesn’t work if share prices drop.
    High-growth tech names have been crushed by the threat of higher interest rates and the Federal Reserve’s policy pivot. The tech-heavy Nasdaq has seen taken the brunt of it and dropped into correction territory, down more than 10% from its record high in November.
    “So much capital was flowing into venture and the public markets, the valuations were astronomical,” Stanford GSB professor Robert Siegel said. “Gravity always comes back, and capital is now looking for more conservative places to go.”

    Fintech companies were some of the biggest winners during the pandemic, and are now seeing the deepest pain as investors pivot to safe haven trades. ARK Invest’s Fintech Innovation ETF is down more than 31%, while Affirm has lost more than 63% of its value since January and 79% since its peak in November.
    Robinhood shares are down roughly 70% over the past six months and are off 84% from the all-time high in its debut week in August. The brokerage start-up offered to issue employees new stock in December, at roughly $19 per share. The stock was trading near $13 as of Thursday. Robinhood declined to comment on its moves.
    Roku, down 47% this year and 75% since its peak in July, gave all employees a new restricted stock-unit grant and pay cash raises of up to 40%.
    Snap and Chewy, down 27% and 28% respectively this year, are both offering one-time restricted stock unit grants. Uber, which is down more than 21% this year and 46% from its peak last February, has matched older employees’ compensation to match the offer for new hires.
    Amazon is trying something different for employees. The tech giant announced its first stock split since the dot-com boom last week, giving investors 20 shares for each share they currently own. The latest change to its compensation is targeted at Amazon employees to offer “more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company,” a spokesperson said.
    The boom in tech valuations has been just as prolific in private markets. Tech start-ups raised a record $621 billion in venture capital funding last year, double from a year earlier, according to CB Insights. The cool-down in publicly traded tech names is likely to knock down valuations of private start-ups, although it may take longer.
    “Late-stage unicorns are going to get hit it just hasn’t materialized yet on paper,” said Jason Stomel, CEO of talent agency Cadre. “Engineers are thinking about that too, especially if they joined at an inflated market value.”

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    Stocks making the biggest moves premarket: FedEx, GameStop, Moderna and more

    Check out the companies making headlines before the bell:
    FedEx (FDX) – FedEx earned an adjusted $4.59 per share for its latest quarter, missing estimates by 5 cents, though the delivery service’s revenue beat analyst forecasts. FedEx’s bottom line was impacted by worker shortages stemming from the Covid-19 omicron variant outbreak during the quarter. FedEx lost 3.1% in the premarket.

    GameStop (GME) – GameStop reported an unexpected quarterly loss, even as the videogame retailer’s revenue topped estimates. GameStop CEO Matt Furlong said the omicron variant and supply chain issues had a significant impact on results during the holiday season. GameStop slid 7.6% in the premarket.
    U.S. Steel (X) – U.S. Steel shares fell 3.6% in premarket trading after the company issued weaker-than-expected guidance for the current quarter. The company cited increasing raw materials costs, among other factors.
    Moderna (MRNA) – Moderna is seeking FDA approval for a second booster shot of its Covid-19 vaccine for adults aged 18 and older. The submission comes a day after Pfizer (PFE) and partner BioNTech (BNTX) asked the FDA to approve a second booster for people 65 years and older. Moderna gained 1% in premarket action.
    Boeing (BA) – The jet maker is in talks with Delta Air Lines (DAL) for a 737 MAX 10 jet order of up to 100 aircraft, according to people familiar with the matter who spoke to Reuters.
    Joann (JOAN) – The crafts retailer’s shares tumbled 8.3% in the premarket after it missed quarterly sales expectations and noted a $60 million increase in ocean freight costs for 2021. Joann said the freight increase was among a number of significant supply chain headwinds and disruptions.

    Wingstop (WING) – The restaurant chain’s stock slid 4.7% in premarket trading after a double downgrade by Piper Sandler to “underweight” from “overweight.” Piper said it will be more difficult for Wingstop to keep a premium valuation during a restaurant industry expansion cycle as higher expenses hit earnings.
    Rent The Runway (RENT) – The fashion rental company’s stock rallied 4.2% in premarket action after Jefferies began coverage with a “buy” rating. The firm said Rent The Runway’s extensive offerings and high barrier to entry are among the factors that will drive top-line growth of as much as 50%.
    SolarEdge Technologies (SEDG) – The solar equipment and software producer’s 2 million shares offering was priced at $295 per share, compared with Thursday’s close of $314.60. SolarEdge slid 3.4% in the premarket.

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    How this mechanic found a niche fixing Teslas and EVs

    There’s an opportunity for entrepreneurs in the electric vehicle market. Electric vehicles are sweeping the auto industry, and while all the attention is directed at flashy car unveilings and automakers’ strategic plans to compete in an electric future, one crucial piece has largely been left out of the limelight  — service. Tesla, the largest electric car maker, has famously struggled with servicing its growing fleet. And with demand for battery-electric cars skyrocketing, it may not be alone.
    One entrepreneur recognized the opportunity and moved to capitalize off the demand. Meet Carl Medlock of Medlock & Sons in Seattle. Previously a territory manager for Tesla, from 2009 to 2013, he helped the then-fledging start-up deliver and service its low-volume Roadster. After leaving Tesla, he took his knowledge of EVs and opened a repair shop that quickly became the key place in the Pacific Northwest for owners having problems booking service for their electric cars.

    “We’re one of the only places that someone can go for EVs, electric cars,” said Medlock.
    More from Invest in You:This entrepreneur started a successful start-up by putting employees firstMeet the company that lets you work remotely from anywhere in the worldA four-day workweek doesn’t mean less work. Here’s how to do it
    But running an EV-focused shop is quite a bit different from auto repair of the past.
    “There are hundreds of thousands of dollars worth of tools you need for an ICE [internal combustion engine] repair shop you don’t need here,” Medlock said. “You do need an electrical engineering background or an understanding of diagnostics.”
    Getting parts for the Roadster is one of the biggest challenges he faces. “I contact people all over the world, I find out where the wrecked ones are,” he said. “I buy stuff every day from people who have bought these cars and have a little something on their shelf and I’ll buy those parts.”

    When he cannot find a part, he makes it himself.
    Since he opened his shop, Medlock says business has been booming, and it’s already outgrown the new space it moved into last year.
    His advice for the industry? “Embrace these electric cars and start tooling up for it,” he said. “If you don’t, you’re going to be behind.”
    Watch the video to learn more about how consumer demand fueled this entrepreneur’s business.
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    Porsche increases EV targets, confirms 911 hybrid sports car

    As the all-electric Porsche Taycan sedan outsells the German carmaker’s iconic 911 sports car, the company is increasing its EV sales targets. It also plans to roll out a hybrid version of the 911.
    Porsche on Friday announced it expects 80% of its global sales to be all-electric vehicles by 2030.
    The Taycan is Porsche’s first and only all-electric car so far. It represented about 14% of the company’s 301,915 vehicles sold in 2021.

    The all-electric Porsche Taycan Turbo.
    Source: Porsche AG

    DETROIT – As the all-electric Porsche Taycan sedan outsells the German carmaker’s iconic 911 sports car, the company is increasing its EV sales targets. It also plans to roll out a hybrid version of the 911.
    Porsche on Friday announced it expects 80% of its global sales to be all-electric vehicles by 2030. That compares with previous plans for that amount of sales to be a mix of all-electric and plug-in hybrid electric vehicles, which include internal combustion engines with battery technologies.

    “The future of Porsche is electric,” Porsche CEO Oliver Blume told media during a roundtable.
    Blume declined to predict the breakdown of the non-all-electric vehicles, citing a “flexible engine strategy” that could include internal combustion engines, hybrids and plug-in hybrids.
    The Taycan is Porsche’s first and only all-electric car so far. It represented about 14% of the company’s 301,915 vehicles sold in 2021. Taycan sales were 41,296, topping record sales of the 911 at 38,464 units.
    The company’s next two EVs are expected to be the Macan SUV in 2023, followed by the 718 sports car by 2025. Blume also confirmed a hybrid version of its 911 sports car is coming, but he did not disclose a timeframe for its release.

    Porsche reports nearly 40% of Porsche vehicles sold in Europe were all-electric or plug-in hybrids vehicles, or PHEVs. Porsche currently offers two PHEVs, which are viewed by many as a short-term, transitional technology before all-electric vehicles.

    Porsche’s plans are unique among global carmakers in the fact that it doesn’t plan to completely give up on vehicles with traditional internal combustion engines. Specifically, for its 911 sports car, which is considered among the best “driver’s cars” in the world.
    Porsche announced a roughly $24 million investment in the development of “e-fuels,” which officials say is a climate-neutral fuel to replace gasoline in nonelectric vehicles.

    Read more about electric vehicles from CNBC Pro

    Blume described e-fuels as “an ideal complement” to EVs.
    The new EV plans were announced in connection to Porsche, which announced a preliminary agreement last month to be spun off from VW into a public company, announcing its 2021 financial results.
    Porsche reported new records in both sales revenue and operating profit. Sales in 2021 were 33.1 billion euros ($36.7 billion), up 4.4 billion euros ($4.9 billion) from 2020. Porsche’s operating profit last year increased by 27% to 5.3 billion euros ($5.9 billion) compared to 2020.

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    The 4 types of vacations that may be hard to book in 2022

    CNBC Travel

    After two years of living with Covid-19, travelers are making big vacation plans again.
    But not every type of trip may be available this year, travel professionals said.

    That’s because many people postponed more ambitious vacations during the pandemic — in some cases two years in a row — leaving little room for new bookings this year.
    Nearly half of those who had vacations canceled in 2020 and 2021 plan to take them this year, according to a survey by travel insurance firm Berkshire Hathaway Travel Protection. Only 5.5% are pushing these plans to next year, and less than 4% plan to cancel altogether, according to the survey of more than 1,500 travelers.
    In addition, people are taking longer trips and booking them further in advance. Some fall and winter holidays are already beginning to sell out, said Lee Thompson, co-founder of adventure travel company, Flash Pack.
    But some trips may be fully booked long before then, like these four types of vacations that travel insiders say are filling fast for the summer.

    African safaris

    Booking an African safari 12 to 18 months in advance could be the new norm, said Shannon Kircher, founder of the U.S.-based boutique travel firm Compass & Vine.

    Many travelers dream about going on a safari, but don’t pull the trigger because of the amount of planning and money that goes into it, said Kircher.

    Tourists photographing a lion at the Kruger National Park in South Africa.
    Martin Harvey | The Image Bank | Getty Images

    However, the pandemic has “challenged our ideas of pushing off meaningful trips,” she said. Plus, more people have the time and money to travel now, because of canceled trips from the past two years, she said.
    For travelers easing back into the idea of international travel during the pandemic, the privacy and open-air nature of safaris are appealing, she said.
    “Safaris are inherently socially distanced — you’re around more animals than humans generally,” she said.
    Travelers are choosing to visit East Africa from June through October as the period coincides with the great wildebeest migration, Kircher said, with many extending their trip to squeeze in a gorilla trekking experience or a post-safari beach escape.

    Hawaii vacation home rentals

    Multiple locations in Hawaii are at risk of being without vacancies this summer, said Zander Buteux of home rental company VacationRenter.
    “If you wait until June to book for June travel, you will have slim pickings,” he said. “This is especially true for the key cities on each island such as Honolulu, Lahaina and Kihei.”
    Two areas that still have a good amount of availability are O’ahu and Hanalei, said Buteux, though he doesn’t expect things to stay this way.

    VacationRenter’s Zander Buteux said the average trip to Hawaii in June is seven days, and the average nightly rate for properties that month is $442, an increase of 16% from last year.
    Allan Baxter | The Image Bank | Getty Images

    Travel to Hawaii has been on the rise for the past eight months, said Buteux. Business is expected to pick up even more — along with prices — once the state lifts many of its pandemic travel restrictions this month, he said. Starting March 26, visitors from the continental United States will no longer be required to show their Covid-19 vaccination status or a negative pre-travel Covid-19 test to enter.
    Summer isn’t the only time of year that’s being booked up fast, said Phil Jones, CEO of the luxury vacation home Pure Kauai. Easter and Christmas periods are also filling up, he said.  
    Like Buteux, he said: Once “quarantine restrictions have been lifted, we predict a surge in bookings.”

    Luxury dude ranches

    Americans who are still hesitant about international travel are booking luxurious off-the-grid vacation spots in the country, said Kircher.
    Some well-known ranches are booked more than a year in advance, she said.
    The Ranch at Rock Creek in Montana is mostly booked until February 2023, and almost all weekend slots at Wyoming’s Brush Creek Ranch are full, according to their online reservation systems.

    Horseback riders embarking on a trail in West Yellowstone, Montana.
    Urbancow | E+ | Getty Images

    “For most people, the privacy and disconnected nature of dude ranches are appealing,” Kircher said. Activities such as horseback riding, fly fishing and white water rafting are outdoors and naturally socially distanced.
    Plus, visitors also get many of their needs taken care of as “most of the high-end lodges are really all-inclusive, meaning food, drinks, and luxury amenities are included,” she said.

    Private yacht charters

    Booking last-minute summer yacht charters is a thing of the past, said Tim Geisler, founder of Grenada-based sailing company, Nautilus Sailing.
    Many destinations, especially in the Mediterranean, are selling out well ahead of time, he said.
    Greece, Spain and the French island of Corsica are the most popular charter destinations in the Mediterranean now, he said.
    “We are noticing that things are starting to return to almost pre-pandemic levels,” said Geisler, adding that “80% of our charters are already booked out in Spain.”

    Minorca, one of Spain’s Balearic Islands in the Mediterranean Sea.
    Gonzalo Azumendi | Stone | Getty Images

    Summer yachting trips to the Mediterranean are popular among Americans because they tend to avoid the Caribbean during this time, as it coincides with the area’s hurricane season, he said.
    The company is seeing an increase in bookings and inquiries from travelers who want to book trips nine to 12 months ahead of time, which limits inventory down the line, he said.
    “The later you make a reservation, the less choice you will have when it comes to yacht size, configuration and location, therefore it’s best to book [at least] six months in advance,” he said.
    The company recently started operating in Croatia, said Geisler, adding that there is yacht availability there for the summer, but likely not for long.
    The global yacht charter market, which was valued at $16.9 billion in 2021, is projected to reach $26.5 billion by 2027, with Europe being the top go-to destination in the summer months, according to the market research firm Mordor Intelligence.
    — CNBC’s Monica Pitrelli contributed to this report. More