Recently, the owner of a bareboat charter yacht was lamenting that through the sheer ignorance and incompetence of the hirer, there would be absolutely no chance of making any profit that month.. again. So is owning a charter yacht worth it?
It is, at face value, a fair comment and one that has given rise to many responses from the community of people in similar situations.
I can totally understand the owners frustration. After all, it shouldn’t be that difficult to operate a yacht the way it was designed.
People with little experience or common sense shouldn’t hire these expensive vessels in the first place. If I can look after my boat, why can’t they?
We have all been taught to respect people’s property as if it was our own. I am sure almost every hirer has the best intentions when they set out for their charter. No one wants to look like a fool.
But the reality is that once people realize that they are actually not as good at sailing as they thought they were, that once the weather or conditions become more challenging than their comfort zone allows, common sense goes overboard.
Spatial awareness reduces to a fraction of it original, confidence reduces further and people do things that make you wonder how they got there in the first place. Add a couple of drinks and things quickly fall apart.
Where does this leave us as owners of charter yachts? Is ‘charter to own’ a flawed business concept? Why be in the business if you don’t make money?
Jay Pennington from CYOA Yacht Charters in the Virgin Islands was one of the original respondents to the above mentioned post and when I asked him, he shared his extended thoughts for this post:
If you are considering Charter Yacht Ownership you do need to know whom you are dealing with at any particular base. You also need to understand financially what you are getting yourself into.
Long after the ‘carnival atmosphere’ of the boat show is over, you are going to own your yacht. For better or for worse as they say.
A few things you should be aware of:
I have spent the last eleven seasons managing charter boats. When we talk to prospective new owners, these subjects comes up on a regular basis:
Wear and tear. The possibility of accidents. How your boat is maintained, who is allowed to rent it. What is the checkout process and who pays for damage when it occurs.
Any operator that does not talk the above before you sign up is selling snake oil.
All of these issues are just as important as revenue projections. They directly effect your net bottom line in sixty months when the boat leaves.
If you keep it and don’t have to repair or replace a bunch of broken bits, that is a net gain to you. If you sell it and it is in better shape than other boats of similar vintage and usage, that is a net to you as well.
The year before last we took hull number 2 of the Helia “Wide Ranger” to the Annapolis Boat Show and parked it in between brand new boats. She was a three year old charter boat at that point. We did it to prove that very point.
This is clearly not a financial benefits analysis. It’s just a reminder to enter any deal with your eyes wide open and the ability of proper expectation management. After all, it’s still those clients who end up paying off a substantial part of your yacht for you and you get to sail a lot, for free, in the meantime! Clearly, there are gains to be made for all involved, as long as one works together as a team. So, is owning a charter yacht worth it? For me it is!
There is no such thing as a free ride… you can only hope for a smooth one.
The whole bare boat business is a bit of a racket. It’s great if you have disposable income and trying to shelter money. But in the end, the renters treat it like they stole it, and the charter managers spend all their time putting band-aids and bubble gum repairs to them to keep the revenue flowing. IMO, the all inclusive is the better model that allows for the best of all worlds. Owner-operator all-inclusive is probably the best model overall for revenue and keeping the boat together.
Hi Tim, thanks for your comment. Any more experiences in that area you could share with us?
Right on!
I agree with everything Jay said in this article…buy the boat because you want a boat, not to make money. As a charter boat owner, there are many many frustrating moments. The charter management and the boat owner should be a team, both trying to make money off the boat. Unfortunately there are charter companies out there who seem to make an abundance of money off the boat owners, sucking up all the would be profits. Be diligent and choose your charter company very carefully.
Ricciardi, I have seen it in many other industries that if you work together with your clients, there will always be a better outcome for all involved. Communication is the key. Please feel free to share some more of your experiences as an owner if you could.
Nils, after the IRS refunds, we still paid around $25-30k out of pocket, but only had 12 Charters, one of which ran our boat aground for $40k repairs, of which we paid $8300 out of pocket. My plan is three rules (1) find a boat you love, and buy it only if you can afford it WITHOUT putting it in charter, (2) find a cruising ground you love that is EASY to get to often, so you can enjoy the boat, and (3) IF YOU DON’T MIND WEAR AND TEAR on your baby, then put it in charter to defray the cost.
We put it in the Abacos since it’s a 1:20 flight from Atlanta, and lightly used. That said, I think we may look at other cruising grounds, or just owning it outright.
The problem is the paradigm shift from people (in the past) that bought boats to reduce vacation costs in a location or through a charter company, to today’s owners, who is buying a retirement dream. The boats are more elegant, and the owners more involved than in the past. Just my theory, based on observation and my experience.
Skipper Joe,
Thank you for taking the time to reply. I definitely agree with you that people are far more involved these days. This permeates throughout most industries. People have more information at hand…and as you said, there might be a trend for more ‘retirement investments’ out there. Did you try to run your own bareboat charter outfit and used a booking agent?
The biggest bonus of buying and putting boat in charter was it “forced” me to schedule time off work and make it down to Sea Tiger in the BVI. Generally about 8 weeks a year. I would not have chartered near as much and hope to take even more time off next year.
The maintenance varies by company. In the “at risk” model, I pay for every repair and therefore it is not a financial dis-incentive for the base to keep my boat pristine… they make money. Fortunately, they seem to do a very good job of screening the captain’s resumes.
I will know more when boat exits the program in another 3 years or so.
I like how you mention that when it comes to looking for a yacht to rent, wear and tear is one of the things to consider–how long has the boat been in service, has it been consistently repaired? Another thing to consider is the operator–when they are upright and willing to answer questions about how they handle a charter, then you know you’ve found a good service to rent out. While I haven’t experienced sailing on a charter boat yet, at least I know what to be on the lookout for when planning a vacation like this.
Hi Adrian,
I am glad you found my posts helpful. Yes, the right operator certainly makes a big difference. Keep following, there will be much more to come over the next few years regarding all aspects of bare boat chartering , quality of various operators and their equipment.
I appreciate your advice about buying a boat because you want it. My wife thinks I don’t need a boat. I can’t make money from it but it will be fun.
Chris, as we know, not everything is about money 😉. And yes, it is fun (once we get this COVID stuff out of the way, the path to success will be clear)
I am glad there are a ton of reasons to do a charter. I would like to get a charter for my first time on a boat. Maybe there is a place near me that has charters.