This year there has been radical changes of lifestyle for many people around the world. The required isolation has been generating an extreme desire to enjoy the outdoors. This has lead to an expansion of what type of businesses individuals are interested in. In this article we are going to be talking about Yacht Charters as a business.
One classic lifestyle business, and choice (a great lifestyle we say) is yachting. Despite popular belief, yachting is not a lifestyle only billionaires or multi-millionaire can afford.
Could the yacht charter business be a profitable business ?
Whilst researching the yacht charter business on Google, we asked ourselves, could yacht charter be a profitable business in 2021? We found some interesting material together with an economic and market analysis on the subject matter at RodriquezConsulting.com, specifically reading https://rodriquezconsulting.com/is-investing-yacht-charter-profitable/ .
Some Iconic Yachts for Charter:
Rodriquez is a family owned company from Italy that has been in the marine and yachting industry since 1887 (yes 1887 not 1987 ). Not only have they built countless vessels under the famous brands Baglietto, Morgan and Rodriquez Cantieri Navali and for other brands like the iconic Wally Power 118 (see Image) (featured in the movie
The Island with Ewan McGregor) and Ocean Emerald (See Image), designed by Lord Norman Foster and featured in the movie Point Break 2 they were also the first privately owned shipyard to ever file an IPO in history.
We purchased the Yacht Charter Business plan with a consultation and got on video with Mr Leopoldo Rodriquez, to ask all of our questions about starting a Yacht Charter Company.
We learned that most yacht owners simply charter their yachts to cover its costs. Mr Leopoldo Rodriquez; MD and founder of the website, however pointed out that it is fully possible to turn a profit owning and chartering vessels. The profits are mainly dependent on how the operators/business owners manage their vessels. Not less though on what is being spent in order to acquire one or more vessels.
Interview with Leopoldo Rodriquez on the YACHT CHARTER BUSINESS
q1: What is the primary reason for people to buy yachts to charter ?
a1:The primary reason is probably not business. Yachting is more often a lifestyle choice, and a great one I should add. You see, I don’t believe that money is the only return on investment we get from our businesses. Otherwise very wealthy people like Warren Buffet and Bill Gates would be sitting at home doing nothing, instead they love what they do and keep doing it.
q2: What would you say is the secondary reason for people to buy yachts to charter ?
a2: The secondary reason is that yachting brings also some incredible benefits to business owners people, yachting is a community and people that buy yachts don’t usually do it with the “last coins in their piggy bank”. In other words, business owners mingle and rub shoulders with other business owners, decision makers, policy makers, investors, etc.. by doing so they grow their business and find countless opportunities to grow their social and business network.
Classic Yachts ?
q3: So you are saying the boat owners regardless of their size do have a chance to meet and socialize ?
a3: To a certain extent yes, especially in the Sailing and Classic Yacht community. The owner of a 30 feet classic sailing yacht will easily be able to meet and socialize with owners of 100+ feet yachts during for example the Rolex Giraglia regatta or the famous Les Voile de St Tropez Classic regatta.
q4: So let get to the point here: Can buying and chartering a Yacht be a profitable business?
a4: Yes absolutely! You surely won’t have the returns of tech investments but if you compare it with real estate, yes, you can make a good return on investment. Even if a yacht is fundamentally a depreciating asset.
q5 : So how can I make money buying a boat and chartering/renting it out to clients?
The Yacht Charter Business Recipe
a5: As you know, I wrote a very extensive analysis and article on this subject matter. Please include the link in this article (LINK HERE). Essentially, the ‘recipe’ is:
- Buy a yacht that is what charterers and holiday makers can enjoy (based on the area where you operate). For example in the Mediterranean outside space is key especially for short charters.
- Buy a yacht that is a very good deal to start with. This usually means that the vessel is either in troubled financial waters with the current owner, or it is the type of yacht that is difficult to sell. Oftentimes a lot of value for money are for example (again for the Mediterranean) Turkey-built gulets or Older Classic Steel yachts. These type of vessels have relatively low operating cost, they are slow and they are cheap to buy.
- If you go for big yachts make sure it has space for water toys. Holiday makers/charter clients have great fun with water toys. This is a large portion of the decision making process when choosing a yacht to rent.
- If you want to extend the charter season to the whole year; than go for a sailing yacht or a motorsailer. These vessels are often capable of crossing the Atlantic Ocean and be ‘On Duty” for the Mediterranean Season and for the Caribbean Season (during the winter time).
- Manage the yacht/s like a business [including choosing a great crew]. It’s too easy to overspend on yachts. This is the reason why my team and I oftentimes manage the vessel for clients. Even with our management fees on top, our clients still end up saving 22-34% on their costs through our management.
Mr Rodriquez today focuses the bulk of his firm work on distressed assets of vessels that can be acquired. This includes vessels that are not completed or that require work. By doing so, him and his team are able to deliver charter-ready vessels for a fraction of the cost of a new yacht to owners and owner/operators.
If you are looking for funds to start or grow a new business have a look at our previous article: Loans Available for Small and Medium Sized Businesses!