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A “Must Read” by Kelly Sanford.

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An old yachtsman's adage defines a yacht as "a hole in the water into which one pours his money." Perhaps the sometimes painful truth of this aphorism is why many yacht owners find an irresistible allure in chartering their yacht. Though the costs of owning a megayacht can be significantly defrayed by charter income, a charter listing is not a philosopher's stone. The yacht that manages to "pay for itself" is the uncommon exception rather than the rule, and there is a great deal of dedication and sacrifice associated with a yacht that has any semblance of independent financial viability. This being said, there are clear fiscal advantages in offering your yacht for charter. When the yacht is chartered, in addition to the charter fee, the guests assume the cost of dockage, power, water and fuel. Income generated by chartering may enable an owner to purchase a larger or higher quality yacht and can facilitate hiring the appropriately qualified crew to manage and run the vessel. Gratuities from charter clients often attract superior crew, and a superior crew will not only improve your marketability as a charter yacht but will also improve the quality of your own on board experience. Charter income can justify an ambitious geographic itinerary, and can subsidize the costs of relocation. With such a cogent list of advantages, it is no surprise that a new trend in yacht design is building yachts that are designed to charter.

Set Your Goal

The first necessary distinction is whether the goal in chartering is supplemental income for specific expenses or the loftier goal of positive cash flow. The greater your income expectations, the more flexible you will need to be in the design process. If your goal is to be the alpha yacht of the charter market, then accept that only a very small part of this venture is going to be building your own personal dream yacht. The charter market is very competitive. To stand out in the fleet, a boat should be designed as a business investment with less attention on personal preference and more focus on marketability.

When the objective is to appeal to a wide array of charter clientele, an open mind is paramount in exploring the possibilities and opportunities associated with building a yacht for the charter market. Of course, if your goal is only three to four weeks of charter, you will have much more latitude in the design of your boat. An owner who is truly dedicated to building the "ultimate" charter yacht should understand all the factors that make one charter yacht more desirable than the others and use those elements in every phase of the build. This is a complex and sometimes convoluted undertaking. Distinguishing characteristics are often matters of perspective. In order to effectively weigh the merits of form and function, it is necessary to understand certain basic principals of yachts and the charter market.

Budget, of course, will have the ultimate impact on the size and caliber of yacht that will meet your goals. Should budget restrictions require a choice between the size of the yacht versus the pedigree of the build, then the choice will come down to individual priorities. A larger yacht from a lesser known shipyard that has more staterooms and deck space may generate greater demand in the charter market and command a larger charter fee than a higher quality, smaller yacht. However, in the long run, vessel maintenance and resale value revenues may even the playing field at the time of sale.

Determine Your Vessel's Pedigree

The yacht itself is a major investment, so let's address the principles of vessel pedigree and their impact on not only the yacht's ability to charter, but on its long term value .There are three major components of vessel pedigree; the shipyard/builder, whether the boat is built to class, and whether the boat has a safety certification .Much like the automotive industry, there are certain shipyards that are synonymous with high quality standard, who offer a long tradition of shipbuilding and superior craftsmanship.

Vessels from upper echelon yards tend to be more expensive but retain more of their initial value. The second component of pedigree is the vessel's class. There are at least a dozen classification societies, prominent examples include ABS (American Bureau of Shipping), LRS/Lloyd's (Lloyd's Register of Shipping), BV (Bureau Veritas) and DNV (Det Norske Veritas). These societies are independent

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