The economy behind the yacht chartering (from the PoV of the yacht owner)

[MapisM]

I must say that I find including the "opportunity cost" in your boat running costs is a bit mad and illogical.

I couldn't agree more.
BTW, the way I see it, there's also a sort of "opportunity income" in NOT having unused dead money around, creating nothing but other money.

I always thought that the main problem with any boat-related economics is that one of the major components (arguably the more important) is impossible to quantify in economic terms.
I mean, we are used to say that you can't put a price on good health, but that's equally true for time spent living good moments that wouldn't exist without a boat.

Then again, I wouldn't blame anyone possibly accusing me to rely more on manmath than on my degree in economics...

 

[roa312]

I don’t follow why you guys don’t want to include opportunity costs - especially in the comparison between ownership and chartering, where the foregone return on the acquisition cost is a real factor. I wouldn’t say it’s necessarily the most important consideration, but accounting for a conservative bond yield as a baseline return seems appropriate to me?

Distributing the cost of ownership over the number of weeks the boat is used does seem to me to veer into the territory of "man maths", though. But say, for instance, you want to go boating 2–3 weeks a year and you have to choose between chartering and ownership. Isn’t it fair, when comparing total costs, to include the lost return as part of the ownership cost?

I do understand the consideration that "joy-of-ownership" also can be seen to hold some intangible value, but that seems more far fetched to me vs. foregone return from the purchase price?

 

[Tranona]

It’d be interesting to hear your take on the owning a charter boat experience?

I seem to be on the email list for sunsail and get periodic “investment opportunities” to buy a boat for them to charter out.

Whilst I can see kind of see the appeal whilst I work and only get 4 weeks cruising a year, I can’t help but think that they can get access to better finance deals than Joe Public. If the IRR was that great, they wouldn’t be looking for individuals to own the boat they operate.

There are usually two different kinds of deal. The first where you pay up front for a fixed portion of the purchase price and the operator gets all the income during the life of the contract and you get the boat at the end. The second is where you finance all or the majority of the purchase cost and get an annual income plus the boat at the end. Both types have an element of "free" weeks on either your boat or any other.

I bought my boat using the first method because it was a means to of getting our retirement boat while also having a few weeks usage each year instead of chartering. It worked for us for a number of reasons. First I borrowed the money to buy it against the house on an interest only basis at a low rate of interest. The annual interest was less than 2 weeks charter and we did a minimum of 3 weeks a year. Because our retirement plans slipped a bit we did a deal after the 6 seasons for another year on an income basis which cleared about 3000 euros on 16 weeks usage, VAT was payable then on the original purchase price After another 2 years plans changed a bit and I brought the boat back to the UK and eventually sold it for almost the same as the original purchase price plus the VAT.

So it worked for us, but you need to have a clear view of why you are doing it and in particular recognise that it is a very illiquid asset - that is it is quite difficult to bail out part way through and even at the end the market price is likely to be significantly less than you paid.

Much the same applies to the income model. The financial return is poor and the real benefit is using the "free" weeks. So again you need to think ahead the 5 or 6 years to determine whether you will be in a position to take advantage of this plus a plan for how you are going to deal with the boat at the end.

 

[jrudge]

That's very interesting. So about £50,000 - £60,000 annually to run a Squadron 58, not including, as you say, finance/lost opportunity costs? Or the cost of something expensive breaking or needing replacing (there's always something every year in my experience). So chuck in, what, £20K for the former and £20K for the latter/depreciation and we're at about £100,000 a year total running costs? Wow, so much for boats costing 10% of value to run!

I might be able to afford to buy one (I'm guessing at circa £350,000?) - I certainly can't afford (or at least justify) the cost of running one!

Should have tried harder at school!

Pretty much.

Costs roughly per the below the boat was in Mallorca and is now in Antibes.

mooring e37k (£31k) ( Mallorca )

Insurance 2.5k

Lift and foul 5k

Fuel 10k

Servicing £2500

Repairs £2000



£53k



Lots of other costs ! Just paid

Teak side decks and platform £20k

Bimini e2000

Steering ram refurb e1000

Gyro a few years ago was close to £85k

The general repairs bucket at £2000 is likely fiction.


However I am now in Antibes and the mooring is £17k so the total is £39k plus the repairs etc

If you charter the fuel cost comes out ( punter pays ) crew costs go in and you will likely have more repairs - but boats do thrive on use so maybe not. However you will likely be forced to pay top dollar as you need the part and the fix TODAY given guests tomorrow etc.

You also have to keep to cost in code with jackets / rafts / flares etc etc etc.

Depreciation on a new boat is likely material. In an older one less so.

Finance cost is up to you if you include it or not but if running a business they you need to consider it.

So all in given the charter customers will take the best weeks it is not really a winning proposition!

 

[markc]

A couple of thoughts... firstly, as we have discussed here many times, it's clearly a supreme challenge to make money out of boats, whether you're building them, selling them or chartering them. We're the lucky ones, we just get to enjoy them!

Which also made me think of the manmaths that motivates some people to buy boats they can't afford; the promise of a charter income to make the purchase 'viable' can only suck all the joy out of ownership. A bit like someone who buys a Rolls Royce but has to depend on chauffeuring people round to weddings every weekend to afford it

 

[henryf]

The UK charter model is somewhat different to the Med in that the vast majority of work is for single day charters rather than weekly charters. We sell lower value charters to more customers rather than chasing a few customers who buy a week at a time.

Mooring costs for us are much lower than many of the Med locations.

In our case buying the right boat at the right price was a significant factor in being able to operate at a profit. We also learned over a period of 10 years what works and what doesn’t and have built up a body of returning clients who form a framework on which to build.

Henry

 

[roa312]

A couple of thoughts... firstly, as we have discussed here many times, it's clearly a supreme challenge to make money out of boats, whether you're building them, selling them or chartering them. We're the lucky ones, we just get to enjoy them!

I completely agree with your sentiment, especially when it comes to private individuals chartering their own boats to make ownership affordable. However, where this thread maybe focused primarily on high-end yachts in the Med, I think it’s worth noting that there are other types of long standing charter operations as well, as highlighted by Henryf above. For instance, there are the sailboat charter fleets in Croatia, and the vast numbers of center console boats and sport fishers (sometimes huge boats!) in Florida and the Keys. There are probably even more charter areas I'm not aware of.

 

[henryf]

We had a 50ft flybridge on charter for 10 years and then in 2023 brought a brand new Princess F55 flybridge to the market. For the UK market its large enough to provide generous accommodation whilst still being able to access all areas.

My dream charter boat would be a Princess X80 but cost of purchase and ability to get in everywhere would be a concern.

With the F55 being a very new boat has the advantage of unique placement within the charter market and it also means we offer more relative space per foot of length. We also have some features like gyro stabilisation which aren’t very common here.

Of course the disadvantage is we will never be the cheapest option but that’s fine, you can’t be all things to all people and we have good relations with other charter operators. Everyone has their segment in the market.

 

[ari]

I must say that I find including the "opportunity cost" in your boat running costs is a bit mad and illogical. I never do it. Each to their own of course.

(I'm referring to the interest that you would have received on your cash if you had not spent it on a boat)

Alas, some of us have to allow for the fact that if we take £500,000 out of investments, we're £30,000 a year worse off than if we hadn't and it's relevant.

It's just how life is on the wrong side of the tracks, but fair play to you if you don't need to.

 

[prinex]

mooring e37k (£31k) ( Mallorca )

Insurance 2.5k

Lift and foul 5k

Fuel 10k

Servicing £2500

Repairs £2000



£53k

Thats quite interesting, here are the costs for the AZ55 (which is in Greece in Preveza) - UKP

mooring 9k (Preveza)
Insurance 2k (Generali)
Lift / Foul would be around 2k
Servicing 2.5k
Repairs etc (new oven, tender steering etc) maybe 2k
Fuel 2k

So im more in the camp 20k a year (excluding all the dramas like engine explosions and the like).

From Preveza we dont travel very far, mostly 3-4 days cruises around corfu or down towards Kefalonia, so 60-70 miles roundtrips. And we travel slow most of the time, you dont want to spill coffe over the deck...

We had a major polishing / gfk scratches repair / compete reservicing of engines + genset action as we where not sure what the previous owner did which added another 4k non-recurring.

And of course I do all what I can myself - black water tank Im looking at you ! dont do that ever again !