Chartering Your Private Yacht – Should I, or Shouldn’t I?
You have just gotten back from your first wonderful excursion on your brand new motor luxury motor yacht –a seven day fun-filled vacation cruise of the Caribbean. You return refreshed, rejuvenated, and looking forward to the next time you can take her out. But, then you realize the next time you can take that much time off could be weeks, maybe even months away. What do you do with your boat till then? Did you know that putting her in a fleet for private charters may be a great way to offset the costs of operating and owning a luxury yacht?
Not all owners will gain the same benefits of making their yachts available for charter — there are many variables, from the type and size of the yacht itself, to the personal desires of the owner. However, generally speaking, what are the Pros and Cons of chartering your yacht?
Also, for the most part, to get the “best of both worlds” out of chartering, you want to place you yacht into a local fleet, not some far off destination where you will not have access to use it when you desire.
- Offsetting expenses – Chartering your yacht should not be seen as a major generator of income, (unless you have purchased it strictly to start a charter business). But, in general, it should pay for dockage, routine maintenance and insurance. In other words, placing your boat with a good charter broker could reduce your operating expense by 30-70%, which can be significant!
- Use is good – It may seem a bit counterintuitive, but infrequently used yachts tend to have more maintenance issues. Fuel sitting in tanks and a million other things like that are bad for the boat – giving one’s yacht regular “exercise” is important. Putting a yacht into a charter program also enforces a stricter maintenance regimen which can pay dividends down the road.
- It gets your boat seen – A boat that is available and marketed for charter has a higher profile relative to one that is only available for private use. A prospective buyer of a motor yacht might be a charterer first.
- Keeps your crew sharp – Chartering enables a crew to hone their skills (after all how many weeks a year is an owner using his boat?) while also earning extra income via charter tips. After all, a happy crew is a better performing crew.
- An ego boost – There is a kind of “psychological benefit” of sharing a yacht, if only for the day or week, with other people. Most owners put tremendous thoughts and care into choosing their yacht, maybe customizing it or decorating the interior….and actually feel good that other people get an opportunity to enjoy it, particularly if the yacht is under-utilized by the owner.
- Tax advantages – This benefit is definitely one that needs to be explored by an accountant…but there maybe significant tax benefits associated with putting a boat into charter. Some tax deductions that would not otherwise be available materialize because certain costs essentially become business expenses.
- Strangers on my boat – On the other hand, rather than the “ego boost” mentioned above, if you’re the type of person who hates the idea of other people “touching your stuff,” then chartering is not for you! Charter guests are vetted, of course, but at the end of the day these are strangers, and that is just not appealing to certain people.
- Limitations on what you keep aboard – Even if you are “OK” with strangers on “your boat” you are going to have to deal with the inconvenience of not being able to keep as much of “your stuff” on board. Certain personal items, like clothing, will need to be removed during a charter.
- Insurance could cost more – There are insurance implications for putting a yacht into charter. Depending on how often the boat will be chartered…the insurance increase may be modest or quite substantial.
- Increased usage – There will be a degree of “wear and tear” (though as noted above, some of this “wear” is a good thing) both in terms of the interior and mechanically. Yes, you will be putting hours on the engines and your carpet might be worn out faster than it otherwise would…but the revenues generated by charter should far outweigh this negative. Also keep in mind that once your yacht is placed into a charter fleet, it’s an excellent way to ensure that it will receive professional maintenance, service and care, as she must be cleaned and made ready to go for the next guests, after each charter.
Do the Pros Outweigh the Cons?
A glance above, and based on volume alone, it would seem that the pros of charter do outweigh the cons, but still it is an individual decision. If you are seriously considering chartering your yacht, one way to ensure that it is a mostly positive experience is to work with a skilled and experienced charter broker.
Understanding the pluses and minuses of chartering your yacht can be complex. If you would like to benefit from our expertise in these areas, or if you have any questions or comments about this blog post, do not hesitate to contact our Charter Specialists, or call us at 954-900-9988.