Charter company comission on 50 foot cat in the caribbean

[YesIsail]

I own the cat and a couple of days ago, a charter company offered me this conditions for renting my boat to them starting november, i need to know if any of you can tell me if they are good or not. The boat is a 2008 fountaine pajot salina 48 feet.

. 50 percent of the invoice would go to me, but first 20 percent of the invoice will have to be deducted and given to the agency. All extras, such as skipper and cook and diving gear, other discounts are not included in the bill.

So if a a customer is charged 6000 euro a week in peak season, if we deduct 20% for the agency, the total would be 4200, then 50% of that is 2100 which is what i would be earning.

2100 euro/week in peak season.... Isnt that very little for a cat like that?

Does anyone have any experience on that?
How about repairs?

[Vasco]

Get a copy of their agreement. If you can not understand it have it looked at by a lawyer. What is the history of the charter firm? How many weeks can you expect the boat to be chartered? Who pays for the insurance? etc., etc.

[yeloya]

Well, before you focus on how much you will earn, I strongly suggest that you check the reliability of the company, ie. how much care will be devoted on yr boat, will they be able to fully exploit the potential of yr boat, do they have fair and transparent system that you can check on line yr expenses and payments, etc..
Generally speaking, the companies that are good on all of those are not the best payers for the owner..
Having said that, the conditions offered to you are not that bad assuming that they match all critearia I mentioned above and all related expenses are covered by them. (marina fees, regular and periodical maintenance, houling/launching, antifouling,insurance etc.)
The simpliest way of calculating yr return on investment is to see in how many years you can get back the initial cost of yr boat. The second hand value of yr boat after this period will be yr interest gain.
As an example; if the cost of yr boat was 480.000 USD and you get 30 weeks of booking per year with average net earning of 2000 USD (you should take the weighted average of high and low season bookings) the payoff period would be:
480.000/2.000/30=8 years. If the second hand value of such a boat after 8 years is 240.000 USD yr yearly simple interest rate would be 3%.
Remember though that some companies are not keeping the boat that long..

Cheers

Yeloya

[nautical62]

As a comparison, I can offer that during the 5-years my boat was in the Moorings (also in the Caribbean), I received about 45% of the purchase price back in guaranteed revenue. They paid for all dockage, insurance and maintenance. In Footloose, I'm now earning 15% of charter income, plus they continue to pay insurance, dockage and maintenance.

The concern I'd have with strictly commission offer like yours is what is that dockage, insurance and maintenance could potentially be much more expensive in charter than you'd face on your own. What if they don't charter it often so you receive little revenue, but you are stuck with a high overhead?

Some questions I'd certainly want to have answered are:

Who pays for dockage and insurance and how much is this?

Maintenance - who pays and if it's you who decides what maintenance is necessary? What if they want you to buy a new mainsail, but you think it's still serviceable?

How often can you expect your boat to be chartered out? (i.e. - how often are similar boats actually chartered out in a year? I'd guess mine is chartered out about 1/3 of the time.)

How does their chartering conflict or compliment your desired use?

Are their any fees for your use of the boat - cleaning, a turn around fee, owner's fee, etc?

What bail out options do you have both contractually and logistically, if it doesn't earn what you hope?


If they are paying for dockage, maintenance and insurance, it sounds like a very good deal to me. In addition to those things, the charter company has to cover cleaning of the boat, their operations staff, their facilities, advertising, etc.

[maytrix]

The one big question to ask yourself as well (assuming your boat has never been chartered) is do you really want it in charter? Take two identical boats - one private, one charter and the charter boat will be worth less. There's going to be wear and tear that wouldn't occur if you didn't have the boat in charter. A charterer could ground it, hit a dock..etc. And they might lie and not report it, so who pays for repairs if damage is found a month later?

Chartering is a great way to ease the cost, but you need to be aware of the above and as long as you are ok with it, then I'd continue looking in to options.

40% seems fairly low from what I've heard/seen unless they cover most of the costs (dockage..etc). If they don't cover that, what would you be left with at the end of each month?

[yeloya]

[QUOTE=maytrix;983726]The one big question to ask yourself as well (assuming your boat has never been chartered) is do you really want it in charter? Take two identical boats - one private, one charter and the charter boat will be worth less. There's going to be wear and tear that wouldn't occur if you didn't have the boat in charter. A charterer could ground it, hit a dock..etc. And they might lie and not report it, so who pays for repairs if damage is found a month later?


This is not true.. There are well kept charter boats and poorly kept private boats too, so one shouldn't generalize. The boat is not like a car, wear and tear is even more on the boats that are sitting for couple of years on salt water.. It's true that the charterer can ground but so can do the owner as well..We always managed to sell the second hand boats above market value. (recently 1991 FP Fidji was sold at 100.000 USD after 21 years of continious charter)

I don't know others but we dive underneath each both during check outs. (yes, charterers do lie..) If the damage is less than the caution money that we block upfront from the charterer, we deduct from his caution and we trepair it. If it's above the caution, then the insurance pay. In any case, the owner doesn't pay anything..

Cheers

Yeloya

[Oliver L.]

Yes,

first check your math and things will immediately look better

6000 - 20% = 4800 /2 = 2400

And no, I would never do it, but I bought my boat to sail it myself.

Oliver

[Vasco]

Originally Posted by yeloya

This is not true.. There are well kept charter boats and poorly kept private boats too, so one shouldn't generalize. The boat is not like a car, wear and tear is even more on the boats that are sitting for couple of years on salt water.. It's true that the charterer can ground but so can do the owner as well..We always managed to sell the second hand boats above market value. (recently 1991 FP Fidji was sold at 100.000 USD after 21 years of continious charter)

I don't know others but we dive underneath each both during check outs. (yes, charterers do lie..) If the damage is less than the caution money that we block upfront from the charterer, we deduct from his caution and we trepair it. If it's above the caution, then the insurance pay. In any case, the owner doesn't pay anything..

Cheers

Yeloya

Many charter companies will charter to unqualified or barely qualified persons. Damage is more likely to occur to a charter boat rather than an owner sailed boat due to many factors such as lack of experience, sailing a larger, unfamiliar boat, no knowledge of local conditions and generally unqualified crew (fellow partyers).

It is commendable that you dive your boats at check out. Most companies don't do this unless they have a report of a grounding or that damage is readily apparent. I have never seen it routinely done in my many years chartering in the Caribbean.

Picture is of a charter boat in the Bahamas, aground on a bar that should be obvious to a competent sailor. He was pulled off after 20 minutes of tugging. Doubt if it was reported to the charter company.

[David M]

The charter company must think you are stupid pulling some funky math like that to make you think you are getting more than you are. Receiving only forty percent of the charter fee seems like a rip off.

[nautical62]

Concerning wear and tear:

So assume (which I don't think is true), that my charter boat depreciated 20% more than a non-charter boat. Given almost 50% back so far in income, plus zero spent on dockage, insurance and maintenance, I'm still way, way ahead. Even if I gave my boat away, I'd be financially no worse off.

In addition to my charter boat, I own a Hunter which I purchased for about 25% of the cost of my charter boat, but I have no doubt that my charter boat will ending up costing me far less per year overall for a much nicer boat.

While my charter boat gets more wear and tear, it also gets properly maintained. When I was looking for boats for sale by owner, I was amazed at how most were in horribly maintained condition compared to the charter boats I've been on.

[maytrix]

In regards to wear and tear, if we look at individual boats, we'll find the exceptions in both cases. There are very well maintained charter boats and very poorly maintained private boats. My comment was more generalized.

If there's any doubt, just take a look at Exclusive In-House Brokerage Offices. Compare the boats there to private sales of the same boats. Yes, private boats can be treated poorly, but I think generally speaking, a well maintained private boat will command a higher price than a well maintained charter boat.

I'm not saying that this should be a reason for anyone not to charter - I own a boat in Moorings myself, but it is something anyone thinking of putting a boat in charter should be aware of. If the boat is in charter long enough (for example, the 5 years the moorings program offers), then the use you get factored in with no expenses and having a substantial portion of the boat paid for can offset the depreciation.

Speaking to the original question though, we still need more details from the OP. 40% would be great if all costs are covered by the charter company. Not so great if they charge you for maintenance, dock fees..etc

[Jeannius]

Originally Posted by YesIsail

I own the cat and a couple of days ago, a charter company offered me this conditions for renting my boat to them starting november, i need to know if any of you can tell me if they are good or not. The boat is a 2008 fountaine pajot salina 48 feet.

. 50 percent of the invoice would go to me, but first 20 percent of the invoice will have to be deducted and given to the agency. All extras, such as skipper and cook and diving gear, other discounts are not included in the bill.

So if a a customer is charged 6000 euro a week in peak season, if we deduct 20% for the agency, the total would be 4200, then 50% of that is 2100 which is what i would be earning.

2100 euro/week in peak season.... Isnt that very little for a cat like that?

Does anyone have any experience on that?
How about repairs?

Good deal if that includes the charter company doing maintenance. Very poor deal if it doesn't.

I've used two companies in the BVI over the last 9 years. Usual deal is headline 70-75% to owner and the other 25-30% goes to the charter company/booking agent. If the charter company takes the booking they get all the 25-30%, if a 3rd party agent takes the booking then the agent gets 15-20% and the charter company gets the rest. You pay the maintenance out of your 70-75% and it will be, believe me, way more than you can ever imagine it would be!

It worked for me as I put the boat in charter from new and had no emotional attachment to the boat. Again, you will not believe how much minor damage will happen to the boat in a very short space of time. Only put your boat in charter if you have no alternative. The day it becomes a charter boat it loses a whole chunk of its value