Yacht Charter Business

Ability to take advantage of small business tax to offset operating costs, not just charter revenues.

Does the investment in Yacht Charter prove worthwhile?

Are yacht charters lucrative and/or is it a good business to get into? or can the investment in yacht charter be lucrative? But in the yacht business, responding to these issues means something other than "It depends..." that we go into more detail. We must at least look at the particularities of the yacht charter sizes you have chosen, the geographical area and the business models you want to use.

The yacht charter rate seems to be very high for most individuals as an weekly value, but is it high enough when you consider the total assets (the yacht(s)) and its operating overhead? This can have a very wide variation in floating charges according to how and where the ship is administered and can make a significant distinction.

In the end, it is the purchase cost (the ship's price) that is decisive, but the fixed and floating cost is the one that can decide whether the business (your yacht charter business) is viable or not. When you want to create a business planning to charter boats and get into business, this item will be useful, but you may want to get in touch with us for more ad hoc assistance.

Viewed from outside the yacht business are charter ratings like those of M/Y Serene (see our prior articles) which have been charters by Bill Gates for over 2 years. $5M$ per annum, may seem like an extravagant cost, but let's look at it differently than just compare the charter fee with the yacht's supposed value at $300 million.

In fact, if you consider a roughly 10% estimation of the [alleged] sales price (or $30 million) paid each year to operate the yacht, and the number of prospective customers who can afford such prices for a week's charter, the monthly installment suddenly doesn't seem that high anymore.

However, the above relationship between sales prices, charter instalments and operating expenses cannot be used for all yacht investment in the charter world. Yacht specialists are conscious that at least a large part of the Turkey yacht industry's prosperity is not only due to its excellent geographical location and the balance of labor of qualified yacht constructors.

Turkey's popularity can also be attributed to the country's tradition as a gullet, often referred to as the "boat for money". In fact, the latter has often made the luck of charter firms and proprietors who can hire it well, even if they turn to clients who would not be able to charter a similar sized (65 feet+) ship constructed, for example, in Holland or Italy.

Returning to our initial question: Is the yacht charter project viable? The search for the "right" vessel is critical, because the "right" vessel will determine the kind of customers interested in hiring it, pricing ability and service cost. It' s not unusual to make the frequent error of thinking that the right vessel is the one you want to buy, because like automobiles, boots are an asset of great pleasure, so they are subjected to your own sense of what is beautiful, which may not be the same as your destination or your future charterer.

Not so long ago, for example, I came across a rather uncommon quick sailing yacht constructed in Britain, the McGregor 65. It is a yacht of acceptable dimensions, but not too difficult to manage, even with only one or two experienced persons on it. It was for a price of just under GBP 100,000 and was in very good shape, but most of all it was constructed with the aim of doing as little servicing as possible.

McGregor 65 was designed to go quickly against the wind so that unlike a similar sized conventional Turk icegulet, its maximum bar is not as large, but needs much less servicing than the latter and certainly not as spacious. Certainly the benefits of such a ship selection for a charter would be: a charter ship would be the best choice:

Lower service charges, little or no staff to employ, low acquisition/purchase charges, slow write-offs and easy crossings of the ocean to prolong the seasons and sells more week or even day charter seasons aimed at a more sail orientated customer alcove. Drawbacks: fewer staterooms, smaller berths and a less comfortable overall charter yacht that is less suited to the casual charterer.

The McGregor 65ft could also be hired for races for customers interested in yachting rather than holidays, which is a good way to keep the ship busy through not very bright seasons or sites. Check out our guidelines to buy your first yacht.

It is probably equally interesting to note that such a large ship can pass the Atlantic Ocean readily, so it can be hired during the peak period of the year when the ship is low in the middle of the sea. Motors and drive systems play a major part in the servicing of a ship. These costs certainly have an impact on the appeal of the yacht for the end customer.

Velocity and power are relatively secondary unless we are looking at a smaller 25-45ft foot range where charter can be a full days long or even less. Ironically, in the above powerboat scenarios, the classical bagliettos are underrated vessels in respect of place, provision and low initial costs (less than 200,000), but they are not so attractive to the younger masses looking for more contemporary craft and power.

Fisherboats and fisherboat charter are very much in demand in the powerboat sector, especially in areas such as South Florida, and a variety of interesting second-hand yachts are available. It would be expected that the charter of fishermen' vessels is usually less and is often carried out by the owner or professional captain.

A large number of charter operators (and the largest ones) who specialise in large boats (superyachts) do not own the ships or own a very small proportion of the ships chartered, and are mainly agents or sometimes run the ship on account of the owners (depending on size).

In addition, there are incumbent brand names such as Moorings or Sunsail that have developed Managing Property Programmes where shareholders are bound by a contract of lease that allows charter operators to lease the ship so that the shareholder can have a remunerated property manager to cover operating expenses for most of the year.

In general we could say that the yacht's owners' mean usage of a yacht in the Mediterranean seldom surpasses 2-3 weekly periods per year, so a yacht under management is a good trade-off to managing your own yacht if your yacht investments are not really profit-oriented and you as a future yacht owners think you are mainly covering costs and write-offs.

Instead, if you have chosen to operate yacht charter as a serious business and make a profit at the end of the year, you should get in touch with us (or use the online channel to book your advice) and set your numbers correctly. You need your marque and your charter service to be well organised and distinguishable from the rest.

Given the information we have given above, I sincerely believe that it is clear that those who are in business for profits (owner(s) of the vessel(s)) will have a difficult period against those who basically cover the operating costs and therefore operate at a sacrifice. Therefore, it is of paramount importance to design your yacht charter equipment and to provide a thorough and up-to-date position with the latest information on yacht charter prices (see example of older dates in the following slide).

Bringing the latest technology to the market and taking up the latest trend such as the new kind of platform BoardaBoat.com in the UK and Cruzin.com now combined with BoatSetter.com in the US can certainly help make yacht charter a winning and rewarding business. However, if you are serious about your charter services or your ships, we certainly suggest that you do not neglect the value of a well optimized (SEO-friendly) and appealing website.

Merchandising to promote the boating yacht charter expertise, as TheYachtWeek.com has successfully done, and not just temporarily using the assets can be a good concept, according to what your intended destination is. Saying what new technology-based charterers are saying: Recently, when we got together with Frank Sykes from BoardaBoat.com to get more information about this new groundbreaking site, we began our encounter with an open ended issue to get his perspective on the business case.

In our view, the YES response is yes, yacht chartering can still be a viable business to enter into. If you are a yacht owners, we recommend that you merge with or even try to acquire investments in upyacht. com or BoatBookings. com and manage your own yacht, which would put you in a strategically placed investment vehicle.