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Yacht Charters

Discussion in 'General Yachting Discussion' started by Yachtjocky, Mar 16, 2011.

  1. Yachtjocky

    Yachtjocky Senior Member

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    I often wonder why a yacht charterer is prepared to pay thousands and in some cases hundreds of thousands in tips, food and fuel costs when they are being charged so much in the first place.

    I have seen it discussed on numeorus forums about why a crew should receive 15 to 25% as a tip but I have never agreed with that.

    The old Publix on 17th Street was the source for much of the food supplies on many of the charter boats so it can not be that expensive to feed a few guests, sure fuel costs have risen but I would like to see the profit margins charged by owners on that little number.

    Are taxes paid on the tips paid by charterers on a trip that starts and ends abroad. Surely when crew sign up they know the wages are not going to be that high but I have heard of some stories of crew holding out for the big tips.
  2. Pascal

    Pascal Senior Member

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    lots of questions in that post, some that i'm not sure what to make of it...

    first, there are charters and there are charters... are we talking cheap sandwich on a 45' sea ray day charter or week long charters on an 80, 100, 150' boat? my experience is at the small yacht level (60/80') typically run with just one crew.

    On the longer charters (multi day and weekly) charters are usually quoted without expenses. Fuel, dockage and provisioning is charged to the charter at cost based on what they ask for in their preference sheet so "Feeding a few guest" doesn't affect the bottom line and the cost will depend on what the charterers request. I've seen guests happy with $15 wines while others have specific $100+ a bottle preference...

    Provisioning is a little more complex than feeding a few guests. Sure, we may get basic stuff at the nearby publix, but in our case we get things like meats, fruits, veggies, etc... at better places like Whole Food, Fresh Market, etc... for best quality. Not gonna serve cheap Publix steaks... sorry.

    You seem to be implying that at the rates owners are charging, it should be all included... ever looked at what it costs to maintain a charter boat? the standards are little higher than on most personal boats with some significant expenses to upgrade things like linens, toys, etc... and did i mention the higher insurance premiums? and the 20% commission to the brokers?

    Every charter is different and so are the costs. on a day charter, you can usually forecast what the fuel usage will be as long as food and drinks and quote an all inclusive rate. on multi-day and weekly charters you can't have a one size fit all rate... some charterers want to cover a lot more ground than others and that cost a lot of fuel. I've seen charterers happy to spend 5 days around bimini and that's only 120NM or so worth of fuel. I've also seen charterers who in a week want to do Bimini, the Berrys, Nassau and back.. that's 4 times the fuel. Add to this their food and drinks preferences and expenses can vary by 3 to 5 folds. that's why they have to be charged separately...

    As to tips, personally i'm not a big fan of the system and would prefer a set up where crew wages were enough and included in the pricing to avoid tips... unfortunately, that's how the price structure of the charter industry is set up. bottom line is that chartering is hard work... typically the crew is on duty from 6/7am till late into the evening (midnight) with almost no time for breaks as it's non stop action from galley work to launching the toys and supervising activities. Lots of responsibility, especially when watersports are involved like snorkeling, jet skying, etc...

    Very very different from running a boat with just the owners on board, and a lot harder.
  3. Capt J

    Capt J Senior Member

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    It's really quite simple, the charter guests request a certain type of food......AND, they pay for it!

    The charter guests go to different area's and each charter is different, so they pay for their full......

    The guests are being served by the crew, much like a waitor or waittess does. They're working 16+ hours a day usually to please the guests who are trying to get every minute of daylight in. They earn those tips over a typical owner situation.
  4. bernd1972

    bernd1972 Senior Member

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    Are the charterers charged so much for the boat? Usually the charter rate for a week is about 1-3% of the ship´s replacement value (depending on the ship an if the price is rather on the high/low end) or from another approach it´s about 20-25% of the annual costs of keeping the vessel. Charter rates have to cover a good portion of both, the running expenses of the vessel and the loss of value. Just to give the owner a reaso to share his boat.
    Now that it´s obvious that chartering out is not really a money machine how should one expect that the expenses for food, fuel, drinks, hookers (no, not really) are included in that price as some kind of flatrate?
    And concerning the crew: They´re working their ass off, with no privacy for themselves, and they don´t have an 8hour/day job.
  5. Yachtjocky

    Yachtjocky Senior Member

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    So one of the very busiest charter boats over 100' here in the US does about 19 to 22 weeks per year, does that mean the crew are working their "ass off" for less than 50% of their time per year.

    I think you will find there are much better places to buy steaks than at Whole Foods etc but how many steaks can be eaten in a single week.

    Fuel is a variable as CaptJ points out but who works that out, do you start with a full tank and promise to bring it back full or else you get charged like they do in the car rental business.

    Do a crew on free board & lodgings, a good chance of medical coverage on a good boat plus paid vocation time think they deserve a tip which can add tens of thousands to a charterers fee.

    ...of should the whole business be shaken up so that the client feels good about their experience and are willing to come back again thus keeping the crew in work for the future.
  6. NYCAP123

    NYCAP123 Senior Member

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    When a yacht is crewed their salary is based on what it takes to run the boat. When guests are on board the workload is easily doubled. It's not fair for them to still make the same money with the extra work. No owner is going to pay them all year long what they're worth during those times and stay competitive, and it actually enables the owner to pay them less since (in theory) tips should supplement their salaries. Most everything is extra on a charter yacht, from liquor to food, to fuel and to the extra demands on crew. It's fair as long as the owner does in fact pass that money on to the crew.
  7. Ken Bracewell

    Ken Bracewell Senior Member

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    First, le me say that my clients always leave feeling good about the experience, and that many of them return repeatedly.

    Let's be real here- the owners are going to net the same one way or the other. If they were to start including tips, food, fuel, dockage, charter planes, wine, etc. the base price for the charter will just go up.
    Our charter rate is $95,000/week and the expenses generally run between $15,000-$25,000 dependent upon many factors (which, based on your earlier short-sighted comments, I don't think that you have even begun to comprehend), which is a huge variable! If we were to start charging a flat rate, I would have to assume that every charter wants the world at their fingers. This simply wouldn't be fair to a non-drinking client who simply wants to sit at anchor in one location and enjoy simple fare. The current system allows charterers to experience exactly what they want at the exact cost of providing those things to them. I can't imagine it being any simpler than that.

    Now, let's talk about tips: I, for one, get really worked up when I show up to a busy, tourist-type restaurant and receive really poor service only to find that a tip is already included in the price of the dinner. Tips are meant as incentive to provide excellent service and are given at the discretion of the tipper. The same holds true for charter yachts and the clients who charter them. Again, I can't imagine a more simple system.
  8. NYCAP123

    NYCAP123 Senior Member

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    Only wish my cable company gave me the option to only pay for what I use.:)
  9. zudnic

    zudnic Senior Member

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    A few years ago I was traveling a lot and often times with other "employee's". I tip the desk staff at check in and one employee thought I was crazy. The company was paying the tab, so me giving an extra few bucks always got me better service and rooms upgraded to suites. A few hotels we frequently stayed at and the desk staff knew my name. So did the bartenders in the lounges. I don't gamble, but in Vegas I'm treated like I've dropped a few bucks. Mandalay Bay front desk gave me a suite at The Hotel for $38 a night (regular room special) plus free drink tickets for their properties lounges. Cost me an extra $25!

    You want good service tip!!!!!!!
  10. Capt Bill11

    Capt Bill11 Senior Member

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    You don't, and apparently haven't, run a boat that charters I take it?

    "...of should the whole business be shaken up so that the client feels good about their experience and are willing to come back again thus keeping the crew in work for the future."

    I don't know why you think current clients don't feel good about the business. Mine seem to. And they do come back.

    In fact I have a charter starting this coming Saturday with people who were here just 3 weeks ago. This will be their 4th or 5th trip on the boat. The guests who went through the Panama canal with us were return guests as well. And left saying they would be back again.

    As to steaks and fuel, some people want steaks every night some don't. And fuel is simple, you start full or with a known amount, and they pay for what they use. So people use a lot, some don't.

    I don't think the system is broken. So I guess no one is looking for a fix.
  11. NYCAP123

    NYCAP123 Senior Member

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    Many people in this business work 3 to 6 months a year. It's tips that enable them to live, and they show their appreciation.
  12. 84far

    84far Senior Member

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    I can see fuel, food, drinks etc can very... but tips...? As you say better you tip, better the service, I think that shouldn't be the case... at all?

    Lets say ones parent shout there son and daughter in-law a trip on one of these expensive charters for say a honeymoon, the newlyweds do tip on what they can afford, but can't dish out money like some oil tycoon, but now there going to get a half good service, and treated less even though they will probably show more respect to the deckies, then some oil tycoon would show...? Just a thought. Cheers

    Far
  13. bernd1972

    bernd1972 Senior Member

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    No, quality of service does not depend on a tip. Every guest should be considered a premium guest, there is no such thing a guests 2nd class aboard a yacht. Tips are not mandatory, they are a gratification for good service. So if the guests want to leave a tip for the crew avter the charter it is welcome and certainly deserved.
    And concerning other expenses: You get what you pay for. That means You pay a deposit for provisionings before boarding and your captain will give you a documentation of the money spent on foods, docking fees, fuel,... as deteiled as possible. What´s left will be returned to the guest.
    And yachtjockey, if you believe charterboat-crews are supposed to kiss the decks you´re alking on as a charter guest just because you generously give them the possibility to work for their money, well, I don´t have to comment on that attitude.
  14. Capt Bill11

    Capt Bill11 Senior Member

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    Unless they are return guests you don't know going in how they will tip. So you treat everybody very well.

    And even if you know they don't tip well, you still treat them right because the friends they may refer to you, could be great tippers. :)

    Besides the good people in this business, aren't in it for the tips.
  15. Capt J

    Capt J Senior Member

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    You are tipped at the END of the charter. Everyone usually recieves the same service on every charter, and you work your hardest to provide the best service and hope they tip accordingly. On one boat I ran that did very infrequent charters, the guests were on board down to Key West and back over 5 days. We were in Key West during the coldest day in 130 years. The boat didn't have red wine glasses on board and they had a case of $200 bottles of red wine they brought on board. The mate went running around Key West in the freezing pouring rain at 7pm and found them red wine glasses. I then barbequed dinner for them for an hour, in the pouring freezing rain on the flybridge because they changed their mind at the last minute about eating off the boat which they had earlier decided. Other then that the charter was pretty easy going, they chose to eat off the boat at least 1 meal a day, and did no water activities. They tipped us 30% of the charter amount and in cash.

    We also did a charter with the owner's sons school teacher and 6 of her guests (her husband, dad, and the rest school teachers). It was her 73 year old fathers birthday and his dream was always to buy a yacht if he won the lottery. It was 7 very long and hard days through the Bahamas from Fort Lauderdale. We anchored every night, they snorkeled and fished every single day, ate every meal on board, we worked 7am-11pm every single day. It was just a mate and I, doing everything. We didn't have sleeping quarters for another crew member. The owner let them use the boat for a week, if they just covered the expenses (no charter fee). They tipped us $300, but it was just as rewarding as the other charter where we were tipped extremely well. We understood they weren't wealthy, but were a great group of people, and it was the trip of their life.

    The thing is, on this particular yacht, I was not full time and charged the owner exactly the same if we delivered the boat to a destination for him (no cooking, no guests, no interior cleaning, no babysitting), or had a boat load of people on board and the added responsibility to go with it. Delivering the yacht was an 8, maybe 10hr day. Charters usually are 14-16hr days, so should the tip make up for it, definately.

    As for the busy charter boat at 22 weeks a year. Well if you consider you have 2 days of clean up after each charter, 2 days of getting the boat ready before the next charter, thats 44 days /7= 6 weeks. Thats 28 weeks a year of non-stop work (no days off), not to mention fixing things, moving to a different destination etc. The crew should definately make more money. Only 5% of the time does a private yacht get used that much (no charters). Typical usage is about 8 weeks a year on a private crewed yacht. Also most owners are fairly knowledgable of what it takes for each thing they ask you for and are considerate and give you fair notice of when they will want the tender in the water, when they'll want dinner, and when they'll want to move. You might be out trolling 4 miles offshore, and a charter guest will simply say, can we go snorkeling right now, we're done with fishing.

    As for the provisioning expense. I have seen ALL sorts of expensive foods on the list that had to be flown in from who knows where. Caviar, truffle butter, certain wines/years, etc etc etc. Also, many things they request are very expensive to get and cannot be found typically on the island you happen to be on, so they have to be flown in from somewhere. They pay for what they request just as if you send your son to the grocery store with a list.
  16. NYCAP123

    NYCAP123 Senior Member

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    The 'gratuity' charged on the front side of a charter should be considered the salary for the extra work involved during the charter. Sometimes it doesn't even make it to the crew, but that's what it should be considered. At the end of the cruise a seperate tip should be left for individual crewmembers, or the whole crew, who gave you that 'extra effort' such as the crew member mentioned earlier with the wine glasses. However there are cheap SOBs who don't let go of a dime that's not pried from their hands (usually the ones who make you work the hardest). The crew has to be (financially) protected against them. It's the same reasoning you'll find in restaurants where you see "a gratuity of ___% is added to the bill for parties of 6 or more", and in some states it's common for it to be added to all bills. Some people just get a kick out of sticking it to a person who can't do anything about it. I take an elderly lady out to lunch often. Although we'll alternate picking up the tab (respect), I always leave the tip. She's likely to leave $1 thinking it's a good amount.
  17. Ken Bracewell

    Ken Bracewell Senior Member

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    Ed. I don't know how they do things where you are, but nobody in the mainstream charter industry charges a gratuity "on the front side". I have, on occasion, had charter guests ask if they can wire the gratuity into an escrow account beforehand so they don't have to carry $20,000 extra in cash, but this is kept confidential and is still given at their discretion at the end of the charter.

    As for not getting gratuities to the crew? I have heard of captains who take theirs off the top before doling out the rest, but this is certainly not the norm and those guys should be ashamed of themselves. Everyone works equally hard; some charters are harder on the interior staff and some on the exterior staff; some charters are a nightmare for the engineer and others are difficult for the chef. The point is that successful charters are created through a team effort and that should show in the way that the gratuities are shared.

    Let me leave you with something that Billy Smith of Trinity Yachts once told me: "With a good crew, you're boating. But with a great crew, you're Yachting!"
  18. NYCAP123

    NYCAP123 Senior Member

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    Things must have changed. Back in the days when I considered getting into that business (but realized that it was more a write off business than a profit one) and was working the party charter business, everybody was adding 10% up front plus a fuel deposit. Since the owner is making his money he's not likely to refuse a charter, even if they stiffed the crew, and no self respecting crew could bring themselves to deliver less than stellar service even if it is deserved. Under today's situation as you describe it, how do you handle 'cheap' clients? As for the captains who take it off the top, I've met several, and yes, shame on them.
  19. Ken Bracewell

    Ken Bracewell Senior Member

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    A Simple Answer

    Since your experience seems to be in Florida, this is the way it works in the US: unless the chartered vessel is a commercially operated vessel the charter contract will be that of a bare-boat or demise nature. The definition of such is as follows: http://www.google.com/search?hl=en&defl=en&q=define:bareboat&sa=X&ei=dVeDTbWdI8G20QGfu-nSCA&ved=0CBcQkAE

    There will usually be a separate Crew Services agreement which will cover the expenditure/accounting of the Advanced Provisioning Allowance (APA) with regard to covering all of the costs that you mention in your original post. Again, the gratuity is an entirely separate item which can (or cannot) be given at the charterers discretion.
    Last edited: Mar 18, 2011
  20. NYCAP123

    NYCAP123 Senior Member

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    Thank you for the info Ken. Back then 'Bare-boat' charter contracts were coming under attack and owners were trying to find ways of getting their boats chartered with their own captains still at the helm. It was also the times of the luxury tax so things were getting worked out. I always thought the included gratuity was a fair approach. In my current business I've had customers double and even tripple my rate, but I've also had those who don't even say thank you. As the 'boss' (questionable at times:eek: ) I refuse future jobs from cheap clients, but that's not possible when you're not the owner. I'm guessing that you haven't run into the client who cheaps your crew, but have you given any thought on how to handle it if they come back?

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