Neil Hornsby, co-founder of Yomira charter brokers

Not everyone wants strangers on board their pride and joy, particularly as it represents a significant investment, but there can be substantial benefits to making a yacht available for charter, particularly if an owner is only using the yacht for short periods during the year.

Key considerations, such as operating costs, tax and Flag state benefits and crew requirements are varied yet easily navigable with the right advice, but the largest decision is which company to choose to represent your asset?

From the current fleet of approximately 6,000 superyachts worldwide, roughly one third are available for charter. Charter demand has increased exponentially over the past five years, reflecting the huge popularity and demand for superyacht holidays.

Successful charter yachts can build reputation in the market: they generate positive publicity and can attract potential buyers if and when you decide to sell. A strong charter record can often help the resale value by demonstrating the yacht’s desirability and income potential.

When you are ready to take the plunge the next step is to appoint the right ‘central agent’ (CA) with a charter manager to look after your vessel; there is a myriad of choices out there, some better than others. Like any business, time taken at the start to get the right agency on board is time best spent to achieve the right results for your objectives and reduce any lag time before the bookings start.

Speak to a handful of agencies, get a good handle on what their approach is within the very competitive market that is yacht charter. Ask for a detailed charter proposal with realistic income forecasts – the highest charter fee doesn’t always attract the most charters, priced too low and it could create a negative perception. Drill them to ensure they will meet your objectives. The most successful charter yachts don’t rely on their looks alone and it’s a competitive market, particularly for the more popular cruising grounds of the Mediterranean.

Some agency models are better suited to an owner just wanting the occasional charter, others are better geared to brand building and promotion to maximise income potential. Will the company ensure your yacht is given the same, if not more, exposure as another, similar size vessel from the same yard? How will they achieve this? Would you be better suited being part of a larger fleet or a smaller bespoke agency?

Chartering can generate meaningful income to help offset ongoing expenses and a successful yacht can achieve around 15 to 20 weeks of charter a year, particularly if it does dual Med/Caribbean seasons.

The appointed charter manager should be multi-faceted with experience in the charter field, the right business sense and sales mentality by default, not only to protect the reputation of your prized asset but to secure the best deals with the minimum of fuss. You don’t want a ‘yes man’ who is unable to broker a deal, you need them to have your best interests at heart.

Having a solid reputation with the fraternity of charter brokers that generate many of the bookings is also a key consideration and having the rubber stamp of a reputable industry body behind them such as MYBA or the IYBA is essential to demonstrate credibility.

The CA will be able to advise you on the key components of running a yacht commercially for charter:

Offset operating costs
Superyachts are expensive to run: annual maintenance, crew salaries, insurance, fuel and berthing costs are often around 10 to 15 per cent of the yacht’s value. Chartering can generate meaningful income to help offset these ongoing expenses and a successful yacht can achieve around 15 to 20 weeks of charter a year, particularly if it does dual Med/Caribbean seasons.

Tax and regulatory benefits
In certain cruising areas, particularly in the EU, placing a yacht into commercial charter may offer tax advantages such as VAT deferral or exemption on the purchase, fuel or refit work. You would need to effectively charter your own yacht when you want to cruise, but the benefits can often outweigh any difficulties. Seek proper advice from a professional yacht management company before you go any further.

Crew retention and motivation
You have worked hard to hand-pick the best crew and want to keep them, but long idle periods can lead to boredom and higher crew turnover. Having a professional crew year-round is also costly. Chartering helps ensure the crew stays active and motivated so your prize team is there to there to greet you when you return. They can also get pretty good tips from happy clients, which is another incentive to stay. Your crew needs to be flexible enough to adapt to the varied demands of charter clients, a crew that’s ‘fixed in the owner’s ways’ and drilled to an owner’s precise service requirements don’t always make the best charter crew.

Key input you need during the initial stages of chartering include advice on the best set-up, particularly when it comes to entertainment and watersports as well as the production of professional marketing materials: high-end photography, videos, brochures and virtual tours. A cookie-cutter approach with marketing collateral doesn’t always build brand recognition, so depending on your objectives it’s worth challenging this from the outset.

The charter manager should also list your yacht across the top charter platforms and promote it regularly to the global network of charter brokers. Having the yacht attend some of the industry’s leading boat shows such as Monaco, San Remo and Antigua is also vital not only to showcase the yacht’s best assets but also for brokers to see the crew working as a team to gain trust, build reputation and attract publicity.

The charter manager should screen the charter inquiries and secure high-quality clients that will hopefully turn into regular repeat customers. They will negotiate charter rates and terms according to your remit, optimise the booking calendar to avoid long idle periods, manage the charter funds throughout the process and provide frequent reports on earnings, projections and recommendations on the best cruising areas to optimise income.

With the right CA on board and a clear strategy, your yacht can not only help offset its running costs, but also build a reputation that enhances its value, ensures a happy crew and keeps it in demand season after season.

This article first appeared in The Superyacht Report – Owners Focus. With our open-source policy, it is available to all by following this link, so read and download the latest issue and any of our previous issues in our library.

Profile links

Yomira

Click here to become part of The Superyacht Group community, and join us in our mission to make this industry accessible to all, and prosperous for the long-term. We are offering access to the superyacht industry’s most comprehensive and longstanding archive of business-critical information, as well as a comprehensive, real-time superyacht fleet database, for just £10 per month, because we are One Industry with One Mission. Sign up here.