The 188-foot Excellence III owned by Herb Chambers of Old Lyme, Conn. The weekly charter rate for the yacht is $385,000.
his weekend, at the Fort Lauderdale International Boat Show in Florida, sailors and yacht lovers from around the world are comparing the industry”s latest and greatest goods. More than 1,400 boats, from 18 feet to 208 feet long, are to be offered for sale or charter, said Andrew Doole, vice president of Show Management, which runs the show. He expects that nearly a half-billion dollars will change hands at the event.IT is said that owning a boat is like throwing money into the sea. For many owners of $20 million or $30 million yachts, economizing may not be top of mind. But some owners of these luxurious superyachts – boats more than 100 feet long – are increasingly inviting other wealthy vacationers to help pay the bills. Yacht owners can recover most or all of the money they spend on boat maintenance and operations by renting their floating resorts to celebrities and others. These clients may pay as much as $300,000 or $400,000 a week for an exclusive luxury cruise.
Industry specialists say the market is booming for yachts 150 feet or longer, with demand far exceeding availability. While owners and brokers do not readily disclose sales figures, Robert Moran, president of Moran Yacht and Ship, a yacht broker in Fort Lauderdale, estimates the worldwide market at $3 billion a year for new construction
of such yachts. Mr. Doole says the number of big boats displayed at the Fort Lauderdale show has quadrupled in 10 years.
Operating costs for a 150-foot custom yacht can range from $1.2 million to $1.6 million a year, Mr. Moran said. To help cover such expenses, as many as 500 owners of superyachts rent their boats to others.
Many owners with successful charter businesses are able to deduct chartering expenses from other income sources at tax time. But these advantages may apply only if the owner demonstrates intent to operate a profitable business and limits his personal use of the boat.
Longer boats, in the 400-foot range, may rent for up to $700,000 a week. They may offer accommodations for up to 60 people and come with extras like a swimming pool, bowling alley, discotheque, helipad, beauty salon and children”s playroom. For the renters, the accommodations can certainly be luxurious. A superyacht renting for about $150,000 a week may include four staterooms with marble bathrooms and a spacious master stateroom, with his-and-hers dressing rooms, a Jacuzzi, a sitting area and a study. Many yachts offer a gym, a movie theater and bars. Guests can use the yacht”s gear to go kayaking, scuba diving or to ride a motorized water scooter. Or, by using the speedboat that comes with most yachts, they can go fishing or water-skiing.
Charter rates have increased by a third in the last four years because of high demand, said Mr. Moran, who spent 15 years as a captain of a variety of yachts before he began his company, which manages sales, charters and new yacht construction projects for clients around the world. “The rich are getting richer, and the number of quality yachts is limited,” he said. “I”ve never seen business as strong as it is today.”
Herb Chambers of Old Lyme, Conn. is a veteran boat owner. He owns the formidable 188-foot Excellence III. The weekly charter rate is $385,000. He is able to rent it for about 10 weeks a year, which covers his $3 million to $3.5 million in annual operating costs plus the 15 percent broker”s fee. Mr. Chambers says his costs are greater than those of a typical 150-foot boat because his boat is bigger, of higher quality and better maintained.
Mr. Chambers, 63, who owns a network of car dealerships, is now having a 257-foot boat built at Abeking & Rasmussen, a German shipbuilder, and hopes to launch it in 2008.
In 25 years of renting his yachts, he said he had experienced no accidents or damage. “There is no downside,” he said.“You”re not making money chartering, but you can cover most or all of your operating costs and keep the crew busy,” he said. “The real profit opportunity, though, comes when you sell the boat,” he said, adding that the value of the Excellence III has risen 50 percent since he bought it four years ago.
Others, however, consider scheduling a major difficulty, because owners must plan their own travel around the charter operation. Holidays like Christmas and New Year”s Day are predictably popular. Mr. Chambers, who says his schedule is “flexible,” explains that charters of his yacht bring in $770,000 in those two holiday weeks. “I call that a great payday,” he said.
He visits the boat a few times a year, always checking on the quality of the food and service when he does, “just as you would in a hotel.”
Guests on the Excellence III are greeted on arrival with a bottle of Cristal Champagne. Later, perhaps, they climb to the top deck to soak in a Jacuzzi where rose petals dance on the water”s surface. “We try to give people a great experience,” Mr. Chambers said. “The crew has to be positive, bright-eyed and able to anticipate all the guests” desires. And you need an over-the-moon chef.“
Crew can make or break a charter experience. “A fabulous crew can overcome many of a boat”s shortcomings and can entice clients to become repeat customers,” he added.
Not surprisingly, a great crew doesn”t come cheap. On a 150-foot boat, the captain would earn up to $175,000 a year, Mr. Moran said. The largest line item in a yacht”s budget is salaries and health benefits, which run about $535,000 annually for the typical crew of 10 on a 150-foot boat, he said.
When a boat is not on a charter cruise, an owner must pay for his own fuel and docking fees. Jim Vincent, who owns a 158-foot Italian-built CRN, says his costs change, based on fuel prices and international currency rates. Mr. Vincent, the retired chairman and chief executive of Biogen, the biotech company that is now Biogen Idec, lives in Weston, Mass., and charters his boat, the Kanoloa, for $195,000 a week. Filling up the Kanoloa”s diesel fuel tanks – which hold 32,000 gallons – would have cost about $65,000 last month. His boat is used for charters in the Caribbean in the winter and the Mediterranean in the summer.
“I don”t run into too many boat owners who don”t care about the expenses,” Mr. Vincent said. “If you”re not able to use it much, I don”t know why you wouldn”t charter, unless you just want to throw money in the wind.” Or the sea.