Have you ever dreamed of owning a sailing boat, setting off to the sundrenched sailing grounds of the Mediterranean or further afield? Has the expense of such a venture stopped you in your tracks?
Yacht charter management may offer an elegant solution to offset the cost of your boat while still being able to enjoy it.
What is Yacht Charter Management?
Charter management is a business relationship between the charter company and the boat owner, whereby the charter company offers the boat for rent, manages the marketing and maintenance of the boat and shares the revenue with the boat owner.
Placing a yacht into charter management gives you the opportunity to reduce the investment and maintenance costs of your boat and/or provide revenue, while still being available for your use during the sailing season. Charter companies take on the risks, expenses and management of the boat, offering marketing networks and large client bases for chartering purposes.
The first thing is the purchase of the boat. Many charter management companies are also sales representatives of the big brand yachts. Often they offer a financing model if you prefer not to pay the full cost of the boat upfront. The transportation of your yacht to the sailing destination is usually included in his deal as well as any charter equipment necessary.
The next thing is to decide on is a financing model. The management company will be able to advise you on the options for financing, or you can do it yourself
Although there are different programs offered the basic idea is that you buy your boat and contract it out to the charter company who can maximize the charter potential of your boat.
Choosing the right Yacht Charter Management program
There are different types of management programs available as needed. With an outright purchase of the boat, one program is the guaranteed income program where the management company will deal exclusively with the boat, assuming all the risk and expenses and will guarantee a percentage return, usually around 9%. These programs are the most simple and allow you to make an accurate financial projection of where you will be at the end of your contract. For example, with a 250,000 euro investment in a charter boat, the profit at 9% per year is approximately 25,000 euro, net of costs.
In a performance or income sharing program, the net revenue will usually be shared 65-70 percent to the owner and 35-30 per cent to the company. In this scheme the owner is responsible for all costs. This is the highest yielding program and, perhaps, the most available program but also encompasses some risk as revenues are based on how well the charter season goes. With a 250,000 investment in a charter boat, assuming a 35/65 percentage deal; the expected costs are 8-11,000 euro and the expected profits for a 20 charter week season are 39,000 euro. The net profit, therefore, is expected to be approximately 25-28,000 euro a year which is a return of about 10-12 per cent.
There are also programs that can include the financing of your boat, where a partial installment is made and the revenues generated by chartering the boat will pay for the remainder. The programs available vary with each charter management company and should be researched beforehand.
With these schemes you can recoup the cost of your boat within approximately 5-7 years depending on the program and company you choose and when the charter contract is over, your boat will be ready for you in good condition and well maintained. You may then have the option of placing your boat in a second tier fleet, selling it or taking it.
All the programs offer ‘owner weeks’ where you may use your boat or any other boat in the charter company’s fleet at any of the destinations offered by the charter company. This is a major advantage of these contracts.
|PROGRAM 1 - FIX INCOME||PROGRAM 2 - PARTIAL INV.|
|Bavaria 46 Criuiser||Bavaria 46 Criuiser|
|~250,000 € VAT incl.||~250,000 € VAT incl.|
|profit ~9% / year||_______________________|
|~25,000 € / year||no yearly profit|
|no yearly costs||no yearly costs|
|PROGRAM 3 - OPEN MANAGEMENT|
Sun Odyssey 449
|Elan 50 Impression|
|~250,000 € VAT incl.||~275,000 € VAT incl.|
|investment 100%||investment 100%|
|profit 35% / 65%||profit 30% / 70%|
|yearly costs ~11,000 €||yearly costs ~6-8,000 €|
|20 charter weeks x ~3,000 €||22 charter weeks x ~3-6,000 €|
|= yacht profit ~60,000 €||= yacht profit ~65,000-75,000 €|
|-35% charter company||-30% charter company|
|owner profit ~39,000 €||owner profit ~45-52,000 €|
|- yearly costs ~11,000 €||- yearly costs ~6-8,000 €|
|~25-28,000€ /year||~39-44,000€ /year|
|profit ~10-12% /year||profit ~14-16% /year|
What to be wary of
You want to make sure that the yacht charter management company is experienced. As with all partnerships a good contract is the secret to a successful one, so be sure do your research, read the small print and make sure to discuss insurance, level of maintenance, loss and damage as well as the yacht phase out procedure before you sign.
Discuss all your options before choosing your program and be aware of the consequences of your decisions.
As with any partnership, there is a risk -and this is not a risk free investment. One should take into consideration the continuing popularity of boating holidays and destinations and general economic conditions.
All things considered, Yacht Charter Management could have you on the way to owning the boat of your dreams!
By Merryn Wainwright