I received an interesting e-mail from a reader about yesterday's blog post. I reported that I had heard some interesting talk on the docks at last week's industry-only Antigua charter yacht show about discounts of more than 15 percent being a possible sign that something is wrong with a charter yacht or its owner's finances.
In this reader's opinion, that theory sounds wrong. He wrote:
"Maybe this is the economist in me, but I think the market dictates the price of a yacht charter. If your boat is not booked for a particular week, it is probably too expensive.
There is a price that someone will book the charter. If that price covers the costs of the charter, plus costs for maintaining the boat, and a profit margin worth the time/effort to set up the charter, the owner should consider chartering. How much money is an owner going to make with his/her boat sitting on a dock? Zero. Think about it: If two boats were identical, who would not pick the less expensive charter? I might even feel more comfortable on the discounted boat that is chartering more because at least I know they are making some money.
"I think similar to the housing market, yacht owners (and maybe brokers in this case) are trying to keep profit margins of years past. Unfortunately, it will probably take a few years to return to those levels. If you don't cut your price to levels that are selling today, your home and yacht will remain vacant. Maybe the owners of the discounted yachts are just savvy!
"I agree with you on the value of a broker but I am surprised there are not more charters being offered on eBay. To find the true value of something an auction is usually the best bet. If I was a boat owner, I would consider calculating the minimum cost I would accept for a charter, putting an unbooked week on eBay, and setting the minimum cost as the minimum bid. If no one bites, you sit and wait for better times."
My Personal Two Cents
I would be curious to hear how longtime, reputable charter brokers feel about this reader's opinion. Me personally? I would never, ever, ever book a crewed yacht charter through eBay or any other online auction service. My top three reasons:
1) I don't want to give my money directly to the guy who owns the yacht. I want a middleman with an escrow account and strong knowledge of maritime contracts, including those that cover itineraries crossing international boundaries (say, from France into Italy).
2) You can't smell an online listing. A lot of yachts look great in pictures, but when brokers actually go to inspect them, they stink. I trust a good broker who has been on the yacht far more than the guy who created the website full of pretty pictures.
3) Price is not my deciding factor in what makes a great charter yacht. My number one consideration is a yacht's crew. I would take an older yacht with a top-notch crew versus a new yacht with an unseasoned crew any day of the week. Again, crew is not something that can be accurately evaluated in an eBay listing. I want to know more than the crew's resumes. I want to know how the captain has dealt with previous charter clients. I want to know how the captain has acted when problems have arisen during past charters. I want to know how the chef's food actually tastes. No online listing can tell me those things in an unbiased way, since it is the yacht owner placing the listing. Only a broker who has been onboard and spoken with previous clients will have the real details, good and bad alike.
One more thing I'd add, regarding the idea of a yacht sitting idle because it is "overpriced": That's okay with some yacht owners. Private yachts are not hotels in Disney World. Owners don't want anybody and everybody getting onboard for a charter. Many yacht owners are as diligent in vetting potential charter clients as the clients themselves are in vetting the yacht. Many yacht owners don't need charter income. They offer their yacht to keep the crew busy and the yacht in good working order.
If I'm being honest, then I must admit that these points of mine sound awfully similar to what travel agents used to say about hotel and airfare bookings in the days before Expedia.com. And certainly, this reader's opinions will be shared by many people who enjoy the ease of booking their own vacations online. The Web is changing the way all of us think about doing everything, including selecting charter yachts for vacation.
Again, I would be curious to know what reputable charter brokers have to say. Drop me an e-mail if you'd like to remain anonymous, or post a comment if you are willing to be publicly mentioned by name.