Yacht Chartering for Owners
Yacht chartering by owners often helps to offset the cost of yacht ownership. Indeed, this has been a growing practice for many years.
The owner (or potential buyer) should understand the dynamics involved to make yacht chartering by owners a viable and productive practice. This article covers yachts (both sailing and motor) over 70’ in length in a yacht chartering program with crew and outlines these principles.
What you need to know if you are thinking about Yacht Charter!
- The average amount of yacht chartering needed to ‘cover the nut’ (such as expenses of yearly ownership including: insurance, dockage, fuel, crew, maintenance and repairs; etc.) is around 12-14 weeks of charter per year for a mid-sized motor yacht (80-130’). Naturally, there are variables for ownership including capital improvements, weather concerns, etc. which may impact the net to the owner. Successful yacht chartering can often meet or exceed this goal with careful planning and combining elements of successful chartering. A charter yacht owner should know that their operation includes ‘down time’ for personal usage, scheduled/non-scheduled maintenance and repairs and transit.
- The charter yacht should be made available during the peak times which charters are in demand – which typically occurs either during summertime in temperate zones (such as in the US northern coasts and the Mediterranean) and other vacation timing in the tropical zones (such as Florida, Bahamas and Caribbean) around key holiday periods such as the Christmas/Chanukah/New Year, Easter and Spring break, Labor day and Thanksgiving for the US crowd. Often, successful charter yachts move between areas (such as the Caribbean in the winter months and the New England coast in the summer months). Thus the owner (or potential owner) of a charter yacht should minimize personal usage during these peak times in order to capitalize on availability for successful chartering.
- Almost all charter yachts are limited to 12 guests, including the charterer. Sometimes charters are limited by when and where they can pick up the guests and start the charter – especially in the Mediterranean waters – where many codes for the yacht and particular countries are in effect. This is not much of an issue in the US or Caribbean waters, however different forms of contracts are used for the chartering party whereby often the yacht and crew are contracted independently (called a demised charter agreement). Attention should be made at the time of purchase to determine which ‘flag’ or registry works best for intended chartering.
Treat your yacht charter like any business
- Presenting your yacht as something well-heeled folks will want to charter is an ongoing business and takes time to build. Start by building a nice brochure with great photography and video. Put yourself in the shoes of the person chartering the boat to realistically see and solve any issues that may cause any dissatisfaction – particularly HVAC, sewage treatment (odors or clogging), genset operation and interior ‘curb appeal’. Bad experiences have a way of getting around this small industry.
- The yacht chartering will be competing against other yachts chartering in their particular category. If a yacht buyer is considering a yacht which may be placed into charter service, the layout (the number of usable staterooms and the space available for enough crew to service the potential charters) needs to be seriously looked at. For instance, a four stateroom yacht with plenty of room for crew to live and operate the yacht successfully, will command a better market appeal than a 3 guest stateroom yacht will. Extra features such as newness, fine interior decor, an outdoor Jacuzzi, similar master/VIP staterooms, outdoor dining/relaxing areas, adequate water sports platforms such as a cockpit or easy to access euro-style transom accentuate the desirability of a charter yacht.
- The yacht is only half the equation as the crew will make (or break) successful charters. The idea is to build up a successful enterprise based on referrals. Thus happy and enjoyable times for charter guests aboard are often made possible by an energetic and professional crew. Between weather concerns, itinerary, keeping the boat running properly, preparing meals and servicing guests – the crew has their hands full with very long and often hard days. In order to keep a great crew going, the charter yacht owner should provide for their needs with adequate private living space, salary and benefits and attentiveness to the crew/yacht needs. With this in mind, a charter operation is not going to do well if you rely on part time crew.
- Extra ‘toys’ such as a towed tender (usually meaning a center console outboard style boat between 23’-38’ in length), deck carried PWC, fishing and diving gear, and inflatable water-toys for our tropical waters make a BIG difference in charterer desirability.
- A good charter broker is a necessity. The majority of charters come from interaction between charter brokers who work hard to not only run the calendar, but also fine-tune the details involved including negotiating the charters, collecting and handling the charter funds, handling issues which often occur, ensuring that the charter is operating at peak desirability and promoting the charter yacht. Remember that charter brokers are in business for successful charters and they are interested primarily in ensuring that their clients (both the charter boat owner and the charterer) are reaping the benefits of a good program.
Some owner perks!
Some of the increased benefits which a charter yacht owner can expect are the opportunities to make use of the yacht which are paid for by the charterers – as transit between chartering areas (such as the Caribbean, Bahamas and other areas) are either averaged into the chartering program or paid for directly by the charterers. A successful charter yacht will often have an added perceived benefit to buyers, thus increasing the desirability of a yacht for sale (On the other hand if the boat is not kept up well…it may be labeled as a hard-ridden charter yacht which is not so desirable). In addition, tax benefits for the yacht can also be realized (an experienced tax consultant should be engaged early in the process of buying a yacht). And not the least, it is very feasible that a properly planned program for yacht chartering will minimize the cost of yacht ownership.
COVID note: Chartering has been booming with the loss of being able to travel for recreation. As a yacht owner, it is becoming very feasible to charter short term (even day use) and restrict charters to certain areas, such as South Florida to Bahamas and enjoy multiple bookings.
AK Yachts can assist any owner or yacht buyer with not only getting the best possible advice, but assist with all aspects of implementing a successful yacht chartering for owners program.
Contact Andy Kniffin, President of Ak Yachts for more information and assistance with all your yachting needs! (954) 292-0629, firstname.lastname@example.org