The Dark Side of Owning a Yacht in a Charter Fleet

[Otia]

I currently own a sailyacht that is under contract with one of the major yacht charter operator. I’m anxiously awaiting to retire my s/v from the charter fleet this March.
This post reports on my personal experience, YMV.

Many charter operators promote guaranteed revenue plans. Those schemes significantly limit your sailing; you will have your s/v available to you only a few weeks per year to the extent you will most likely have to sail in the off season. For a snowbird like me it does not make sense. After all, I take on the financial burden of capital costs and losses thru depreciation, and I don't get to use my s/v during the winter. I might as well charter a yacht…

I choose not to enrol on a guaranteed revenue plan with my charter operator, so I could chose to sail as much as I wanted and when I wanted, provided I reserve well ahead of time. Of course the more I use the s/v the less revenue I made, thus I might have to put my hand in my pocket to cover some of the operating expenses. That’s fine, but one would expect it would be actually less expensive than booking a charter, but It might not be so…

Not adhering to a guaranteed revenue plan has severely devious effects.
Firstly the operator is possibly more motivated to get bookings on those yachts he’s committed to with guaranteed revenue plans.
Secondly, and most annoying, the charter operator is not motivated – at all – to reduce expenses, all to the contrary:
- He makes money on services provided to you (own staff, markup on subcontractors, parts, etc)
- He wants the yacht in a “as new” condition at all times, not sparing any expense to satisfy his customers; of course, you’re the one paying for it…
- Though charter customers leave a deposit to cover damages they induce, it is against the operator’s interest to start arguing with its customers. Its easier to charge it to your account…

Hope this point of view may help you make the decision that is right for you.

[maytrix]

We have our boat in one of the major companies, although we bought it used in the program and I believe because of that we are not guaranteed. Although all other expenses are covered, so the cost of the boat is ultimately covered as is some of our use by us selling time. But yes, time is limited. We could book 3 weeks in the high season though by booking advanced.

I think in the other companies where there is no guarantee and you cover all the costs (yet also get (I think) 85% of the revenue), a lot depends on the company itself. I've seen both experiences like yours as well as other more positive experiences. I believe the key factor is in how they handle maintenance and are they over aggressive or more reasonable in the condition they keep the boats.

[speciald@ocens.]

It made sense to buy a boat for chater back when the cost of the boat could be entirely written off in seven years. Now, you get a tired and abused boat back and still owe the majoity of the purchase price. It would seeem to me that it would be better to buy a boat from the charter company after it leaves service and has been re-commisioned. At least then you will know what you are buying

[Doodles]

Originally Posted by maytrix

We have our boat in one of the major companies, although we bought it used in the program and I believe because of that we are not guaranteed. Although all other expenses are covered, so the cost of the boat is ultimately covered as is some of our use by us selling time. But yes, time is limited. We could book 3 weeks in the high season though by booking advanced.

I think in the other companies where there is no guarantee and you cover all the costs (yet also get (I think) 85% of the revenue), a lot depends on the company itself. I've seen both experiences like yours as well as other more positive experiences. I believe the key factor is in how they handle maintenance and are they over aggressive or more reasonable in the condition they keep the boats.

I would think with a charter boat you would want the company to be aggressive with the maintenance; otherwise, when YOU finally get the boat it going to be in what condition?

[S/V Alchemy]

Given the vast variety and surplus of decent, babied yachts languishing on the market, I wouldn't put my boat in charter unless I had trouble making rent. I would go down to Panama with $50K and pick up the first fully kitted out 40 footer a divorcing couple chose to leave rotting on a mooring, pump out the six inches of rainwater, and resume cruising with more spares than usual.

I am not really being facetious. This can be done. Fly in a surveyor and spend a week picking and choosing.

It is such a great time to be buying that it must be a terrible time to be selling.

[Otia]

Alchemy, if I would do it over again I would do exactly as you suggest. But you have to give credit to the charters for bringing the used yacht market down, they flood so many vessels on the market... I have a friend whom bought a superb 55 footer for a ridiculous price. The yacht, a 1998 model, had been standing on the hard for 6-years after the original owner passed away.

[tmsmith]

I often suspected this. Thanks for sharing.

[tmsmith]

Makes good sense. I use the same thinking when buying a car.

[S/V Alchemy]

Originally Posted by Otia

Alchemy, if I would do it over again I would do exactly as you suggest. But you have to give credit to the charters for bringing the used yacht market down, they flood so many vessels on the market... I have a friend whom bought a superb 55 footer for a ridiculous price. The yacht, a 1998 model, had been standing on the hard for 6-years after the original owner passed away.

I'm not sure you can credit the charter companies for flooding the market. I am sure you can credit all the pre-WWII and youngest boomers for buying in the '70s and '80s and subsequently aging or dying beyond boat ownership. Unlike cars, a good old boat is, under normal usage, pretty durable. Doesn't make it worth saving, but it does mean its very existence flattens the market.

[Otia]

Originally Posted by S/V Alchemy

I'm not sure you can credit the charter companies for flooding the market. I am sure you can credit all the pre-WWII and youngest boomers for buying in the '70s and '80s and subsequently aging or dying beyond boat ownership. Unlike cars, a good old boat is, under normal usage, pretty durable. Doesn't make it worth saving, but it does mean its very existence flattens the market.

They do flood the market, just look in the Balearic's and Croatia the quantity of boats for sale from charters...
Also, prices from the charters are low and drive the market down.
IMHO

[Wavewacker]

Originally Posted by Otia

I currently own a sailyacht that is under contract with one of the major yacht charter operator. I’m anxiously awaiting to retire my s/v from the charter fleet this March.
This post reports on my personal experience, YMV.

Many charter operators promote guaranteed revenue plans. Those schemes significantly limit your sailing; you will have your s/v available to you only a few weeks per year to the extent you will most likely have to sail in the off season. For a snowbird like me it does not make sense. After all, I take on the financial burden of capital costs and losses thru depreciation, and I don't get to use my s/v during the winter. I might as well charter a yacht…

I choose not to enrol on a guaranteed revenue plan with my charter operator, so I could chose to sail as much as I wanted and when I wanted, provided I reserve well ahead of time. Of course the more I use the s/v the less revenue I made, thus I might have to put my hand in my pocket to cover some of the operating expenses. That’s fine, but one would expect it would be actually less expensive than booking a charter, but It might not be so…

Not adhering to a guaranteed revenue plan has severely devious effects.
Firstly the operator is possibly more motivated to get bookings on those yachts he’s committed to with guaranteed revenue plans.
Secondly, and most annoying, the charter operator is not motivated – at all – to reduce expenses, all to the contrary:
- He makes money on services provided to you (own staff, markup on subcontractors, parts, etc)
- He wants the yacht in a “as new” condition at all times, not sparing any expense to satisfy his customers; of course, you’re the one paying for it…
- Though charter customers leave a deposit to cover damages they induce, it is against the operator’s interest to start arguing with its customers. Its easier to charge it to your account…

Hope this point of view may help you make the decision that is right for you.

LMAO! I think you're a pretty sharp guy! While such arrangements may be working for some owners, keep in mind, it ain't over yet. This is the same scam...Ooops, business arrangement for vacation condos and real estate rentals. Watch out when the agent has owned units. And watch out for exclusive agencies, should you want to sell, you'll be listing with them and you could have other issues, especially when they have "owned units" for sale.

I think you were right again, if you can't afford the expenses that go with any asset, you can't afford it, go rent it as needed and you'll be dollars ahead.

[Kettlewell]

If you have ever sailed where there are large numbers of charter boats you might be very reluctant to either invest in one or purchase a used one. Charterers do not treat the vessels well, mainly out of ignorance, and things like severe hard groundings are common. Plus, the maintenance is often done by low-wage locals who don't work up to yacht quality. When I have been in such areas I often end up fixing various things on boats that are under charter just to help out the hapless renters who don't know what to do and the charter company is not always a big help.

[Wavewacker]

Originally Posted by tmsmith

Makes good sense. I use the same thinking when buying a car.

Yep, it applies there as well! My GF couldn't get all her errand stuff in my Miata, so I agreed to trade it off. (bad decission) Anyway, I got a roomy little Chevy HHR. Couple years later I decide I wanted a Subaru. The local Chevy dealer purchase over a THOUSAND HHRs over the next year from rental companies, or they came back to them....anyway, I was now in a market where the Chevy dealer had low milage HHRs for $9,999! Mine was worth about 13/14K but had to sell it about 300 miles away to get FMV.

The dealer swamped the local market killing the values of their past local customer sales, in one week, there were over 300 HHRs for sale in this town! Don't buy a car that is popular with Avis, Hertz or other Lease Companies!!

SoI guess a boat that is popular with cruise operators falls in the same category....sorta.

[boatman61]

Charter companies don't cause prices to come down anymore than car leasing company's devalue cars...
If you look at the Market there's a clear difference between the Beneteau Charter and the Beneteau privately owned...
Why... coz charter boats are usually trashed...
In 2006 I bought a 2001 Oceanis 331 for $60K from Moorings BVI... crap maintainance and repair work... but a good deal when I'd laid out another $10K for a SS Solar/Wind/Dinghy arch, dinghy and o/board, wind generator and 130W solar panel.
Same boat private owned was $100K or more...
Fact is... the boat markets gone the same way as the car industry... back when I was a lad... you bought a car and it lasted years... today its a keep up with the Jone's world... its no longer what you've got but how many...
Check out some Avatars.... 2 boats 4 boats etc....
Its what the world needs according to so many.... GROWTH...
So build more boats... who cares.... ITS GROWTH...
Jeez.... humanity is so sad...
But don't fret... it'll go the way of the car industry sooner or later and crash with massive surplus's standing in their thousands....

[Palarran]

Originally Posted by Kettlewell

If you have ever sailed where there are large numbers of charter boats you might be very reluctant to either invest in one or purchase a used one. Charterers do not treat the vessels well, mainly out of ignorance, and things like severe hard groundings are common. Plus, the maintenance is often done by low-wage locals who don't work up to yacht quality. When I have been in such areas I often end up fixing various things on boats that are under charter just to help out the hapless renters who don't know what to do and the charter company is not always a big help.

This is very true but I'd like to point out that the work done is typically up to the quality of the yacht. I mean, we aren't talking about Swan's or Amel's here. I like to hire the charter guys to work on Palarran. The charter company pays them $8 per hour. I pay $10. They do a very good job for what I have them do and it is really affordable. And, I like the guys

In my case, I pay a good man $100 per week to clean and care for my boat. When I show up he has everything perfect for me. He walks around and shows me little things he has cleaned or repaired. There literaly isn't one speck of dirt on the boat.

As far as charter boats go though, wow - I have seen them abused many times. There have also been great sailors who returned them in as good a condition as when they went out. They simply get used a lot. It is surprising that anyone would think purchasing a charter boat is a good investment though. It's probably as stupid as purchasing one for personal pleasure instead of chartering whenever you want to go sailing.