Need help on starting a Charter Boat business...

[Capn James Brett]

Hey all, not sure if this is in the correct area, but wanted to reach out to anyone who might have some sage advice on starting a Charter boat business.
I live in the PNW and would charter out a 65 Trawler.
Part of the reason for considering this is to help us purchase the yacht and there are some Tax savings by doing so.
So if anyone can help me with some advice about the business aspect that would be great.
My thoughts are the customer charters the boat not me going as a skipper and doing it for the summer months here in Seattle area.
Hope everyone is safe and healthy in this crazy time.

Thanks everyone.

 

[Alaskan Sea-Duction]

You could make your boat available through an already charter company. I have seen this in Florida and TF folks talking about it here in the PNW.

 

[Capn James Brett]

Thanks but my boat would not be moored where I can charter through them. Thanks for the reply though.

 

[AlanT]

The type of charter you are describing is a BareBoat Charter, I think it is quite unusual for a boat of that size and age to work out as a bareboat charter. I am guessing the boat you would purchase is not new, but maybe 20+ years old.

As the owner of an experienced 53' you will be aware of the need to manage engine temperatures, generator usage and charging, battery drain etc. etc. on our more experienced boats. I would be surprised if a random charterer would have this knowledge or worse, any desire to preserve the long term integrity of your engines and systems.

I am very familiar with the Bareboat charter business in the Caribbean. Those boats are used very hard, and despite professional maintenance, they plain get worn out in a few years needing complete refits/repowering.

It only takes one operator to ignore a mains temp gauge while goosing it to get to harbor to generate a $35k repair bill. Equally someone running your house batteries down to zero overnight can be a $6k bill if it happens more than a couple of times. What support will you be able to offer in the cruising area for the inevitable breakdowns, blocked heads, stuck anchors, jammed windlass etc?

You would also have to think how you will approve potential charterers, and most importantly you would need to satisfy your insurer that your prequalification requirements meet their standards. Insurance may be quite difficult to arrange and will be considerably more expensive than your current arrangements.

If this is something that you really want to do you should either get qualified as a commercial captain, or build in sufficient profit to hire a trusted commercial captain for your charters. One consistent knowledgeable person in charge of a boat he/she knows well is IMO essential to the success of such an operation.

All just my opinion. Good luck if you decide to go ahead! ~A.

 

[Alaskan Sea-Duction]

Thanks but my boat would not be moored where I can charter through them. Thanks for the reply though.

You are welcome. Good luck. Lots of folks here on TF will have great info for you.

Welcome to TF

 

[Blissboat]

AlanT wrote, "If this is something that you really want to do you should either get qualified as a commercial captain, or build in sufficient profit to hire a trusted commercial captain for your charters. One consistent knowledgeable person in charge of a boat he/she knows well is IMO essential to the success of such an operation."

Amen to all of that. A boat such as the OP is contemplating needs to travel with a "boat husband," i.e., someone who knows its idiosyncrasies without having to have everything explained. When a bareboat charterer encounters a problem, they might remember to tell you about it when they return the boat, or they might not. If the problem limits their enjoyment of the boat, they will expect you to come out and fix it on the spot.

If the owner is unavailable to captain the boat, hire someone with a license, train and orient that person on the boat, and add their daily rate onto the price of the charter.

 

[Pete Meisinger]

Sounds like your parade is sort of getting rained on, best to know in advance what you are looking at.

Along those lines..Established charter companies have at least one back up boat available for both a quick change to get a renter back on the water if something is broken which will take a week or so to fix, also something available if the boat will be out of commission for weeks or months like for a bad engine or extensive bodywork.

I'm thinking it is something left to the 'big guys"

pete

 

[DavidM]

I agree with others that a bareboat type of charter isn't going to work for that size boat. I would try to organize the business around an excursion type charter if you can take the time as the skipper. If you can't then I don't really think I would try a bareboat charter operation.

How many berths does your boat have besides you as the skipper? If it is two or more and it almost certainly is, then try booking two or more couples or a family with two or more kids for an excursion: Desolation Sound and other interesting places for a week or more at a time.

That kind of business might have some market appeal. It really takes a couple: skipper and mate to serve this type of market. You run the ship and your mate fixes drinks and meals for the guests along with one or both of you leading shore based explorations.

But do investigate insurance first. You will need commercial insurance as well as an OUPV (6 pack) license for yourself as skipper.

David

 

[Chrisjs]

Isn't there some sort of legal limitation in putting a (presumed) non-USA manufactured vessel into charter inthe US?

 

[Capn James Brett]

Alan, thanks for all the great info. Would you mind a phone call to discuss privately? I would love to pick your brain if that's okay? Will private message you.
Thank you sir.

 

[Toki]

My boat's in charter with a charter company. I've also done some bareboat chartering myself. What everyone says above is valid, but I'll elaborate my thoughts.

What you're proposing is doable, and others have done it. But before going too far with the idea, I suggest you talk to an insurance company well versed in the charter business. I've got a great rep I work with, PM me if you're interested. The insurance company will lay out the rules for boat type/condition, qualification of the bareboat captain, cruising restrictions etc. This will tell you quickly whether the idea is even feasible.

Check out sanjuansailboatcharters.com. This guy is doing something similar to what you're proposing. He owns 4 older sailboats and charters them out. I've chartered with him a couple times. Somehow he's figured out the whole insurance/bareboat thing so it can be done.

Good luck!

 

[denverd0n]

Well, I hope things work out for you, but your question made me think of a variation on an old saying...


How can you make a small fortune in the charter boat business? Start out with a large fortune.


Good luck anyway!

 

[RonR]

I know nothing about any of this but,,, What about just selling time shares of the boat and the boat running as its own company? I have heard stories of larger sail boats doing this with up to 5 time share owners, each paying a different level for weekend/prime time. The true owner gets to pick first and down the line it goes, also keeps some $$ in the pot for upgrades are repairs.

 

[boatpoker]

or ...... https://www.boatel.ca/

As long as they never leave the dock with customers they are legit in Canada

 

[Captain Max]

Well, I hope things work out for you, but your question made me think of a variation on an old saying...


How can you make a small fortune in the charter boat business? Start out with a large fortune.


Good luck anyway!

What he said. We run a rather popular 118’ sexy Italian Yacht, towing a new 35’ center console in the Bahamas. We have first mates, stews, and a chef. It’s a first class operation, and we stay booked with repeat clients booked by a professional high end charter company. Where do YOU plan to find customers?
That said, our income doesn’t even come close to reimbursing the most recent refit to maintain class and insurance. Why the owner does it is a mystery to us, but we thank him for it. Start out with a large fortune indeed.

 

[AlanT]

That said, our income doesn’t even come close to reimbursing the most recent refit to maintain class and insurance. Why the owner does it is a mystery to us, but we thank him for it. Start out with a large fortune indeed.

Just a guess...

I am guessing he does it (and more credit to him) to keep a high class crew engaged and available for his presumably infrequent use. There's no point in having a boat like that and only getting to use it with crappy short-term crew (check out BelowDecks for example ) I think most owners of large yachts appreciate that above all. I am sitting on a deck at the top of Pic Paradis (a mountain in St Martin), overlooking Marigot bay. O'Mega (270') is out there , anchored in the same spot for the last 3 weeks, only moved once - to the fuel dock and back to anchorage. She keeps a crew of 30+ and all they have done for the last 3 weeks is polish and clean.

 

[Pau Hana]

My boat's in charter with a charter company. I've also done some bareboat chartering myself. What everyone says above is valid, but I'll elaborate my thoughts.

What you're proposing is doable, and others have done it. But before going too far with the idea, I suggest you talk to an insurance company well versed in the charter business. I've got a great rep I work with, PM me if you're interested. The insurance company will lay out the rules for boat type/condition, qualification of the bareboat captain, cruising restrictions etc. This will tell you quickly whether the idea is even feasible.

Check out sanjuansailboatcharters.com. This guy is doing something similar to what you're proposing. He owns 4 older sailboats and charters them out. I've chartered with him a couple times. Somehow he's figured out the whole insurance/bareboat thing so it can be done.

Good luck!

If I may chime in

I oversaw the charter and commercial insurance programs for GEICO Marine for the past 5 years, and recently came back to the agency side of the business. I also hold my USCG 100T near coastal license.

Alan hit the nail right on the head- chartering your vessel under the banner of a bareboat chartering company is rarely profitable, and oftentimes results in ongoing damage to the chartered boat. Looking at this route as a way to offset vessel costs is, in my opinion, not wise.

The bareboat company's program to 'vet' the potential chartering party is often just a resume of experience, and a quick spin for general familiarization of the vessel. Since the chartering party has no vested financial interest in the vessel, they can run the boat hard (perhaps even damage it), return it, and really have no liability.

Claims ratios on these types of charters are astronomical...and the claims go against your personal policy, for there are precious few fleet policies that any chartering company are offering.

For skippered charters, your maximum allowable passenger count will be 6 fare paying passengers. Who the skipper is is your decision.

In either case, the vessel must first obtain a MARAD waiver, as it needs an exception due to being of foreign construction.

Multiple owner vessels are generally insurance nightmares.

Love to chat with you further if you have any questions.

 

[mvweebles]

You never know what pops out of an offer like this. Years ago, I had a dream to offer a trawler experience similar to John and Manda Neal of Mahina.com who sell learning/experience berths on passages aboard their Halberg Rassey 46 sailboat. My idea was to do week long teaching cruises between Alaska and Panama, perhaps into the Atlantic. Challenge was the boat - an arrangement such as this would have been perfect. And the boat would be well cared for.

To the OP - good on you for putting it out there. You never know what comes of it.

Peter

 

[bshillam]

I would reach out to Northwest Exploration up in Bellingham. They charter out and have some larger yachts in their fleet. They might be able to give you an idea of cost/return/etc. Top notch company that takes very good care of their fleet.

 

[Captain Max]

Just a guess...

I am guessing he does it (and more credit to him) to keep a high class crew engaged and available for his presumably infrequent use. There's no point in having a boat like that and only getting to use it with crappy short-term crew (check out BelowDecks for example ) I think most owners of large yachts appreciate that above all. I am sitting on a deck at the top of Pic Paradis (a mountain in St Martin), overlooking Marigot bay. O'Mega (270') is out there , anchored in the same spot for the last 3 weeks, only moved once - to the fuel dock and back to anchorage. She keeps a crew of 30+ and all they have done for the last 3 weeks is polish and clean.

I had to look that yacht up. WOW. Talk about a yacht with a “heavy hitter” owner! Politics and the Civil Service paid off for him big time. I imagine the cuisine and level of service is out of this world. He passed away in September 2019, I wonder what happens now? Could that be why she’s sitting? Thanks for the education.

 

[Mako]

Years ago I ran charters on my 65ft Burger, relying on local brokers. I ran from Newport Beach and the Huntington Harbor area.

There were mostly day and short term charters. However I made better money renting out the vessel from various guest docks, overnight but with no cruising. This was before Air-B-N-B existed. It actually worked out well and I never suffered any losses or theft.

I never found the tax deductions to be anything significant, plus deducting a yacht is a big red flag to the IRS.

However in the end, for me, it was supplemental income. Tough work also when out on a cruise.

Perhaps running charters up the Inside Passage or in Alaskan waters could keep you well-booked, as would Antarctic cruises, but you have a short season.

Sounds like the OP’s business model is to hire only one crew to tend the boat, then guests take care of their own needs. “Bareboat with skipper.” Okay that is sound. The cost of that skipper who is skilled and who has good hospitality skills will be significant though.

Not exactly easy money [emoji383]

Does your proposed vessel have four staterooms and three baths?

 

[ALAN54]

Have you ever thought of putting your boat in a nice slip somewhere or at anchor and just renting it out as a hotel room type of deal. The boat boat does not leave the dock and the renters get a on water experience. Air BnB and several other company's will list your boat on their web site. I have done this in Alaska rather than just staying at the usual hotel. room!

 

[foreverunderway]

We had a very successful charter business in the Caribbean until the C-19 imposed travel restrictions world wide. Obviously, this season died in February and we cannot foresee any business next season as most of our prospective customers will probably take a pretty big financial hit because of this pandemic.
I would advise you scrap any plans for chartering until at least a year from now, or when a vaccine is available to all, unless you are looking to charter to the very rich (minimum $50,000.00+ a day), who will still have disposable income as soon as the borders open up again.
When and if you actually get into the business, remember that the food is by far the biggest selling point and good old fashioned "home cooked" meals just won't do. Unless your partner is a professional cook, be prepared to hire one, though a chef would be better, for at least the first season to get your reputation going. That's going to take a big bite out of your income.
Assuming you would like to be running your vessel as a couple, if your partner is a capable chef, remind her that she will also be the maid and house keeper. Making beds, vacuuming daily and making sure all windows and mirrors are spotless is a necessity. You, on the other hand will be the helmsman of the yacht, the ferry driver of the dinghy, the engineer and outside maid, cleaning and polishing every bit as much as the inside maid, every day.

No matter how unpleasant your guests are (it does happen from time to time), even though you are on your own boat, in your own home, you just have to smile and bear it.

But by far the most important thing you will have to throw out the window, if you are chartering, is the idea that you can sit in some comfortable bay, harbor or marina waiting out bad weather. There are no weather windows on a charter boat!!! You have a schedule to keep, no ands, ifs or buts; when you've got to go, you've got to go. Now and then, or even more often, depending what the weather is like where you charter, you are going to be beating the hell out of your boat. Therefore, more things are going to break and maintenance costs will rise. If you can do this work yourself, then you may actually make a decent living chartering. If not, and you have to hire professionals, you probably won't.
There's nothing better than getting paid to do what you love to do, but it isn't all all roses and sunshine. With the internet today, a hard earned reputation can be destroyed by just one unhappy charter guest. I'm not trying to turn you off, but only trying to give you a realistic picture of what chartering one's own boat is like.

Good luck.

 

[Lare]

If it hasn't been said before, there are lots of charter companies in your (our) area. I work as a Captain for a few of them. Some are better than others. Contact me if you decide to go with one of them and I can give you my impressions. Cheers!

 

[captfrog]

Yes, a boat that size will need to be documented and must NOT be foreign built!

 

[Moon]

Peter (Pau Hana) is correct on this one. He knows insurance and that is key to everything. Without it you have to deal with maritime attorneys and, likely, foot the bill yourself. One point I want to make is that as owner you cannot dictate who the captain will be on a bareboat charter unless you offer the charterer a list of captains to choose from. That is the difference between a barefoot charter where you deliver the vessel to the charterer and a time charter where you provide a crewed vessel to the charterer. Get a 6 pack license and a waiver. That may enable you to recoup some of your operating expenses. You may be able to depreciate the vessel and write off some expenses. Speak to an attorney and an accountant AFTER you speak with a good insurance agent.