Sail Ionian - Age of fleet.

[Mark-1]

When I used to charter every Summer from Sail Ionian the boats all did three seasons before being retired so you knew you were getting a boat three years or younger. (...and it always made sense to hire a boat in its first season AFAIC.)

I'm considering going back this summer and I just noticed that policy is gone and the boats are being kept way longer (over 10 years) with no obvious retirement policy.

So what's changed in the economics of chartering? Interest rates? The work load of commissioning new boats all the time? Did they run out of 'owners' willing to take the depreciation hit?

It's not a problem, I'm just curious why the change.

 

[marlint]

I think they have a mix of ages now so you can choose a newer one or pay less for something a bit older. When we chartered an older one last year was in great condition for its age.

 

[Tranona]

Most of their boats are privately owned or managed on a shared ownership scheme. The typical management contract is 6 seasons after which the owner takes over the boat. This type of contract is common to most charter operators and has been for well over 30 years. I bought my first Bavaria in this way 25 years ago. However the changes in the market and the economy mean that there are periods when this basic structure needs flexing. Most of the private owners for SI are British as are the charters and I would guess that both the charter market is flat and crucially the number of Bits wanting to buy a boat this way now almost non existent. Does not help that new boats have almost doubled in price in the last 10 year, partly general prices and partly a move up in size. The big expansion periods when lots of new boats came onto the fleets were early 2000s and mid teens. My boat was £76k fully equipped and delivered to Corfu. In 2015 a Bav 37 was probably around £110k. Noe it would be well over £200k.

One way of coping with these conditions is to extend the life of the boats and even use new contracts with existing owners rather than selling the boats off after 6 seasons. Similar thing happened to me. I took a 1 year contract after my 6 years were up as there was still strong demand for that model. However with hard used boats they do get more expensive to run as more bits start to fail. SI have an advantage here in that their general level of maintenance is higher than most operators and no reason why a 10 year old boat of the right type should not still be a money earner.

You are right - general economic factors are the reason for a change in approach.

 

[oldbloke]

We have used Sail Ionian a couple of times. My impression was that the boats we had were a bit older , but much better maintained than the other companies'.

 

[Mark-1]

We have used Sail Ionian a couple of times. My impression was that the boats we had were a bit older , but much better maintained than the other companies'.

All the time I chartered with them there were no boats over 3 seasons old and if you were savvy you'd book a brand new one which didn't seem to cost any extra. I remember talking to them at the London Boatshow before their first season and I'm sure their first fleet wasn't all new. (I got the sense they were going to run a Charter Firm as a restful retirement hobby job. Naive, I thought. How wrong I was, instead they knew exactly what they were doing and going out to rapidly build a succesful empire.)

I've just counted on my fingers and it was actually only five holidays over 4 seasons. At this distance I recalled a lifetime of summer adventures.

 

[Mark-1]

Bits wanting to buy a boat this way now almost non existent.

Thanks, I was hoping you'd comment.

...and yeah, it never made sense, even in the glory days. Every year they'd wave a spreadsheet under my nose to try and tempt us. Every time I'd squint and try to make it make sense. It simply didn't. It seemed to be just a way to farm the depreciation off. They clearly had no shortage of takers, though. I think people from London were willing to take an 8% loss per year in exchange for being able to tell their friends they had a Yacht in the Med.

 

[Tranona]

Thanks, I was hoping you'd comment.

...and yeah, it never made sense, even in the glory days. Every year they'd wave a spreadsheet under my nose to try and tempt us. Every time I'd squint and try to make it make sense. It simply didn't. It seemed to be just a way to farm the depreciation off. They clearly had no shortage of takers, though. I think people from London were willing to take an 8% loss per year in exchange for being able to tell their friends they had a Yacht in the Med.

No you misunderstand how it works. If you pay for the whole boat typically you would receive between 100 and 112% of its value each year plus your "free" holidays. The boats ;ose about half yheir value over 6 years. So a good return on investment. You could then sell it and buy another or take it over paying VAT on the written down value and use it. Alternatively you could buy half, get no financial return during the 6 years but free holidays. At the end of the contract you get the boat. In our case we paid the VAT and the boat was part of our retirement plan. We paid £36K upfront and £11k VAT (bit complicated as we bought in DM but settled in Euros 7 years later), Sailed it back to UK and after 5 years use sold it for £44k We borrowed at 4% interest only and that bought uss a boat 7 year's free holidays and a boat that had not effectively depreciated.

Numbers are bigger now and fewer people are interested in that sort of deal particularly since Brexit because retirement wandering around the Med is no longer sttractive.