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Charter Boat Ownership - Eastern Med.


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Is charter boat owner ship a good idea? Is it a good investment?  

How does one proceed? I know there are companies who can take care of your investment by looking after your boat and chartering it.

Anybody has any experience in eastern Med? Turkey and Greece. 

Any reputable companies who deal with that? What to watch for? What are the biggest pitfalls?

What is the norm for payback period, return on equity etc, etc?

 

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Would you buy a rental car and give it to rental car company to rent out, so you could use it a few times a year and make some money on the side?

I'm always amazed by people who absorb all the depreciation of a charter boat for it's useful charterlife (~5 years)  for somebody else AND have to deal with a worn out boat 5 years later.

If it was such a great deal, why don't the charter companies just buy the boats themselves? Some have said they don't have the capital. If it was such a good deal and they were limited by capital, they could have a mixed fleet; some owned by others, some by the company. But they seldom do.
 

I was curious about the financials of the charter company. Like do they really have so no money? Travelopedia the parent company had sales of about 500M a few years ago.

Moorings, Sunset, Leopard Catamarans and host of other travel companies are owned by Travelopia. 

Travelopia is owned by Tim Topco and KKR & Co Ltd. 

KKR is a big private equity firm.

Tim Topco Ltd is a Cayman Islands company. With a PO Box.

 

 

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1 hour ago, Zonker said:

Would you buy a rental car and give it to rental car company to rent out, so you could use it a few times a year and make some money on the side?

I'm always amazed by people who absorb all the depreciation of a charter boat for it's useful charterlife (~5 years)  for somebody else AND have to deal with a worn out boat 5 years later.

If it was such a great deal, why don't the charter companies just buy the boats themselves? Some have said they don't have the capital. If it was such a good deal and they were limited by capital, they could have a mixed fleet; some owned by others, some by the company. But they seldom do.
 

I was curious about the financials of the charter company. Like do they really have so no money? Travelopedia the parent company had sales of about 500M a few years ago.

Moorings, Sunset, Leopard Catamarans and host of other travel companies are owned by Travelopia. 

Travelopia is owned by Tim Topco and KKR & Co Ltd. 

KKR is a big private equity firm.

Tim Topco Ltd is a Cayman Islands company. With a PO Box.

 

 

The irony is the boat companies you mentioned and 5 years in the same sentence...
They are built for purpose and after 5 years have no purpose..lol

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Buy a fragile, depreciating asset, which is designed and built to have a short usable life, and allow it to be used by people with no relevant skills..  Why would anyone think that's a good idea?

Note that the are rental market is a whole different game. Cars are simpler to use, and in most countries the driver licensing system sets a standard of competence high enough to exclude complete idiots.  Cars are simpler to inspect for damage, which can be charged to the customer.  And above, in the markets I know, the rental cars are owned by financiers who buy at a huge discount off retail price from manufacturers who need extra sales volume to keep the production line run closer to full capacity.  They can often sell the cars at about 12,000 miles for more they paid ... and you won't do that with a boat.

The only way that I could see it making financial sense is if there was some hugely lucrative tax dodge to offset the high depreciation.

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On 8/5/2021 at 12:59 PM, Omer said:

Is charter boat owner ship a good idea? Is it a good investment?  

How does one proceed? I know there are companies who can take care of your investment by looking after your boat and chartering it.

Anybody has any experience in eastern Med? Turkey and Greece. 

Any reputable companies who deal with that? What to watch for? What are the biggest pitfalls?

What is the norm for payback period, return on equity etc, etc?

 

The eastern med is salty , wind blasted and sun scorched 

boats age rapidly 

some charter companies do a decent job at managing the boats

in the end you must decide if the finances ,  ownership costs and depreciation  are correct for you 

DAE64175-94F4-46E4-9CBE-33C71E8A9688.png

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14 minutes ago, slug zitski said:

in the end you must decide if the finances ,  ownership costs and depreciation  are correct for you 

Here's the key question for me: If the finance houses don't reckon it provides a good return on their cheap capital, why would it be a good return on your capital?

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It kind of reminds me of the chicken and hog farm business model. In this case, the individual boat owners are the farmers, and the charter company is the processor.

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55 minutes ago, Bull City said:

It kind of reminds me of the chicken and hog farm business model. In this case, the individual boat owners are the farmers, and the charter company is the processor.

Excellent analogy. 

"Hey little guy, please take on all the risk in our business".

"Thank you!  Here's my life savings, plus all the cash I could borrow".

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On 8/5/2021 at 12:59 PM, Omer said:

Is charter boat owner ship a good idea? Is it a good investment?  

How does one proceed? I know there are companies who can take care of your investment by looking after your boat and chartering it.

Anybody has any experience in eastern Med? Turkey and Greece. 

Any reputable companies who deal with that? What to watch for? What are the biggest pitfalls?

What is the norm for payback period, return on equity etc, etc?

 

When I looked into it I concluded it was a at best a neutral investment if:

1.       You had high tax rate on income you could shelter by using depreciation on your charter boat allowing you to make the acquisition with pre-tax $. (AND you must be sure that tax situation would not change adversely over five years).

2.       You would use 100% of the “owner weeks” – i.e. you were sure you would use ~12 weeks a year in your own boat (depending on the programme) or a similar boat at the same base or from the same charter outfit. You would use these weeks every year for five years. You would be using them because you really wanted to not because you felt obliged to justify your decision.

3.       You got significant psychological benefit from describing yourself as a yacht owner.

That’s before getting into issues of volatility in values at the end of contract, revenue stream and quality of care/upkeep.

 

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I remember the last evening of a charter we were sat on the boat having a drink. The family next door didn't seem to be having a great time and the wife was visibly upset. Her husband explained to me later that they had just completed a week on 'their' new boat. They couldn't believe the mess it was already in and how many things were fucked. His wife never wanted to see it again.

I actually thought that company kept things in a pretty good state for charter boats, but that is good for charter boats.

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19 hours ago, European Bloke said:

I remember the last evening of a charter we were sat on the boat having a drink. The family next door didn't seem to be having a great time and the wife was visibly upset. Her husband explained to me later that they had just completed a week on 'their' new boat. They couldn't believe the mess it was already in and how many things were fucked. His wife never wanted to see it again.

I actually thought that company kept things in a pretty good state for charter boats, but that is good for charter boats.

We had a similar experience.  Ran into a sistership (one year newer than ours) in the Caribbean.  Their boat was just coming out of charter that season and ours has never been in charter.  They invited us aboard their boat for a drink.....their boat was a train wreck.  Just sad to see....

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Wow, we chartered a 10 year old boat with absolutely nothing wrong with it, all systems worked, woodwork was good, cabinetry all tight fit.  It did point 10degrees higher on starboard tack, i saw it sold later quickly for ~300k Aud - Leopard 40

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