Paul Roger has over 9 years of successful dealings with his charter management company, his Lagoon 421 is still in great shape and he made some money. Why it's worth the effort!
On my most recent trip to the Whitsundays, I finished next to yet another well maintained Lagoon 421, but this one was ‘flagged’ by a different charter company. Perfect opportunity to find out how clients and boats from another operator are looked after.
After a little research, I was on the phone to Paul, getting the inside information from an owner’s perspective on how this partnership has worked out for him over the last 9 years. Here is how the conversation went:
Which company did you choose to charter your boat out with and why?
‘Whitsunday Escape. After meeting with a number of the Airlie Beach Charter companies at a boat show in Jan 2011, I followed this up with a vessel test (Seawind 1260) in the Whitsundays. This allowed me an opportunity to inspect and talk to the Charter companies on their home turf.’
How long have you been in contract with them? How long is the contract for (original minimum)?
‘I signed up with them in April 2011. The contract was originally for 5 years, followed by a five year extension.’
What made you buy a yacht for charter?
‘I wanted to get back into sailing but was to busy with business to get involved full time. The tax benefit at the time was attractive and only having one or two weeks a year free to use so it made sense to charter it out.’
What yacht did you end up placing in charter?
‘A new Lagoon 421, built in France in late 2010′
Why this particular boat?
‘Two reasons (1) Lagoon are the largest catamaran builder in the world (2) At the time it was the largest, newest catamaran to go into the Whitsunday Escape Fleet. It was already in Australia with a broker who had been left with it after a sale feel through. The deal that was offered to me at the time was just very attractive.’
Did you consider other options apart from bare boat?
‘Not at the time.’
What programme are you in (did you buy the yacht outright and get a % of the returns or did the company you are dealing with help finance the yacht)?
‘I purchased the yacht outright myself, then contracted Whitsunday Escape to operate it for me. They charge 35% to manage the vessel. Then there is a turnaround fee each time the vessel is chartered, and all maintenance is at cost, with all original invoices to me.’
How satisfied are you with your charter operator. Do you feel like you can trust them?
‘I am very happy with the operator. I do not blindly trust everything I am told, but I see the charter business as a partnership between the owner and the charter company. Just as I would not go into business with somebody I do not trust, likewise that is how I feel about the management company. ‘
Is all the maintenance carried out as required and is the process transparent?
‘Yes’
How has the boat aged over the years in your opinion?
‘The boat has been constantly chartered for approx. 220 days per year, every year for the past 9 years. In that time the boat has required updates to electrical, mechanical and rigging equipment as time, UV and wear have taken their toll. Overall, I have been very happy with the condition of the boat in use for its intended purpose.’
Do you intend to take over the boat at the end of the contract or sell it?
‘Sell if there are any buyers after Covid 19, else I am a catamaran owner again I guess.’
Will you enter into another contract with this company or another? If so, will it be the same type of arrangement?
‘No. But that is a function of my age and retirement from the workforce.’
Do you get the amount of ‘owners-week’ you are after? Will they be on your yacht only or any of their yachts?
‘I could book my vessel for my own use whenever I wished as long as they had not taken a prior booking on it.’
Are the reciprocal deals with other charter operators?
‘No’
Any other comments you have that you might like to share?
‘My situation changed in 2013 due to health, so I retired to live full time on a Lagoon 450 up until Jan 2019. The question I am always asked is: Is it worth while to own a charter boat.
If you just look at the money, probably not.
The following figures are for 8 full financial years from 2011 to 2019 GST not included.
Purchase price of vessel:
$625,000
Income:
$1,072,582.00
Management:
$376,408.00
Expenses, repairs and Maintenance:
$387,412.00
Nett profit:
$308,762.00
Current value of vessel is a bit up in the air due to Covid19. Estimate:
$425K-$475K
The estimates put to me at the time of Charter contract were: 35% Management, 35% Expenses and 30% return to owner. As can be seen my figures, this worked out to be pretty accurate.
If it made purely finical sense then companies would not need punters to invest in boats, the companies would own them themselves.
As a charter boat owner, it is the add-on’s that make it a sensible option e.g.: Owners use of the boat. To a lesser degree, the tax write offs.
In my case I only used the boat 5 times in 3 years but in that time, setting the boat up and operating it gave me a head start, when time and money became available to jump into 5 years of full time cruising on my own boat.
Hope that is of some help to others.’
Thanks for your time and insights Paul.
Just up in the Whitsundays again seeing her getting ready for another trip, still looking good…. A year on.
From start to finish, everything about dealing with them was incredibly smooth and professional, making it one of the most successful charter experiences I’ve ever had.