Revisiting boat rentals
Renting boats has been viewed by industry marketers as a way to expand public interest in the boating lifestyle. It fits the tried and true, “try before you buy” principle and gives people a way to go boating at a fraction of the cost of ownership. Today, another good reason for promoting rentals or “fractional yachting” is moving new boats out of inventory, or owned and idled craft into service. Doing so could create a revenue stream for dealers and builders and gain payments for lenders on delinquent loans. For owners in financial irons and desperate enough to abandon or scuttle their boats, a move to rental might keep them from becoming a nuisance or safety problem on waterways.
The struggling economy is driving many consumers to become thrifty, pay down (or not expand) debt, and find ways to enjoy previous pastimes at lower cost. The boating cost barrier may be greater today than ever, complicated by reduced affordability due to tighter credit conditions and the loss of home equity to finance desires. And new barriers may also be things such as the aversion to appear financially arrogant or a distaste for those pursuing luxury, discretionary diversions.
A number of firms are highlighting the idea of sharing time as a way to enjoy boating while avoiding the hassles of ownership and indirectly confronting changing consumer habits. A good example is the routine established by SailTime, which deals primarily in sailboats. It provides access to fleets in a number of U.S. recreational ports (and some foreign ones), where the boats are owned by investors who use the boats and share excess time. For non-owners, there is a typical charge of $2,500 for a first-year initiation, then a monthly (12-month commitment) charge based on the type and size of the boat (a 35-foot Hunter averages $500 per month). Members can schedule two weekend and five weekday outings per month and need to leave the boat clean, but other maintenance, docking and service details and costs are handled by the club.
At WindPath, where Catalina sail and Back Cove power program boats are offered, a similar time-share routine illustrates the benefits of owning and sharing. Buying and owning a Catalina 309 for five years is calculated to cost $102,000. A time-sharing member will pay $33,500 for the same length of time. Owning and sharing it costs $29,000, since it returns a monthly income stream and assumes this pays for the borrowing costs. In this example, the owner has an arrangement similar to a charter.
The reduced ownership costs are compelling, and if properly promoted should appeal to “investors” willing to purchase the boats then turn them into rentals or fractional time shares. From the lending and legal perspective, a single owner makes structuring contracts much simpler, so the pure rental or owner/fractional share arrangement is best. With multiple owners on a single boat contract, costs and lending risks rise, lowering profit potential for those involved. That single owner could be an individual, a dealership, a manufacturer or pure investor or lender.
Sailboats have had more widespread acceptance with time sharing, probably due to a combination of having water access, more manageable operating costs and limited liability issues. But powerboat programs are available in a number of markets. At Port Harbor Marine in South Portland, Maine, an upscale boat club program has joined the traditional rental routine. One option is a Family Membership at an annual rate of $3,495, allowing family groups and one designated captain access to boats for the season, from May 1 to Oct. 1. In these types of power programs, fuel and charges for typical maintenance are added costs.
Industry studies of boat buyers and prospects have always pointed to barriers to ownership as cost, not having enough time to enjoy, and knowledge or perception of the difficulty of keeping or maintaining boats. The idea of renting, leasing or sharing boats has been of limited interest over time. Instead, people have said they desire the freedom, or luxury, of being able to go out on their own craft whenever they wish.
A harsh economy has likely changed that. Given the robust inventory of new and idle boats at dealerships and yards across the country, this may be the ideal time to revisit rentals. Plus, the idea of renting or sharing time on a boat can be promoted as just plain financially smart in addition to being politically correct.