Charter vs Ownership: Which is right for you?

One of the most common questions I am asked by clients is whether they should charter or buy a yacht.

It might surprise you, but I spend more time telling clients not to buy a yacht than to actually buy one. Either because they have fallen in love with the wrong yacht (which I know won’t fit their requirements or is just a “bad buy”), because I simply don’t think they are ready to buy, or charter would actually suit them better at that point in time.

For many first-time clients, with little or no experience of yachting, my advice is to charter first.

Not because ownership is a bad idea, quite the opposite, but because chartering is often the best way to understand what you really want from yachting before making such a significant commitment.

After more than two decades in the industry, I have learned that one of the most important conversations we have with prospective clients happens very early in the process. In fact, within the first thirty minutes of a conversation, I can tell with about 99% certainty whether somebody is more likely to be suited to ownership or chartering.

And interestingly, it usually has very little to do with their net worth.

The Conversation We Have Very Early

One of the first things I listen for is how people think about money.

If the very first questions they pose are:

• What will the detailed operational budget be?
• How much charter income can I earn?

… then I usually know we need to have a very frank discussion.

These are not bad questions. In fact, they are sensible questions. The problem is that they often reveal a mindset that is fundamentally incompatible with yacht ownership.

Clients that I know will be suited to buying will ask for an indicative number on running costs and when I reply “1 million, 5 million, 15 million” or whatever number I know is approximately right for the size and operation of the boat in question, they don’t blink and the conversation moves on to other matters. These people often have friends who run yachts so they know the kinds of numbers involved or have already bought into the idea that this is a fun decision, not a business decision. 

Many successful entrepreneurs, investors and business owners have spent their entire lives making decisions purely based on financial return. Every investment is expected to generate a yield or create a measurable return on capital and they psychologically are unable to switch that mindset off. 

A superyacht is different. A superyacht is a luxury, not an investment asset.

A Yacht Is Not a Normal Investment 

One of the biggest misconceptions I encounter is the belief that a yacht should perform like any other investment.

Of course, there are exceptions. I have personally sold yachts for clients for more than they cost them to build or originally purchase and have seen owners benefit from favourable market conditions. However, I would never advise somebody to buy a yacht expecting it to give them a return either from charter revenue or capital appreciation. To be clear, yachts, no matter how well you buy them, tend to depreciate in value and the running costs are not inconsiderable.

They require crew, maintenance, insurance, berthing, fuel and ongoing capital investment.

Can charter income help offset some of those costs? Absolutely.

Many owners place their yachts into charter programmes and generate meaningful charter revenue and the yachts that we manage for charter are very popular and offset a considerable amount of their running costs, while the owners still enjoy using them themselves a good number of weeks per year.

However, very few yachts generate a genuine profit once acquisition costs, operating expenses and depreciation are properly considered.

The owners who enjoy yachting the most are rarely focused on financial return.

They focus on return on enjoyment. They value privacy. They value freedom. They value time with family and friends. They value experiences that simply cannot be replicated elsewhere. 

They understand that they are buying into a rare luxury that they are fortunate to be able afford. Properly advised clients that can get into that mindset will enjoy owning a yacht. 

I would never judge someone that can’t switch off that innate need for every penny of their money invested to yield a return. We have many very happy Forbes listed billionaires who charter once or twice a year with us as it works very well for them.

Sometimes the Best Advice Is Not to Buy

There have been many occasions throughout my career where I have advised clients not to buy a yacht.

Instead, I have encouraged them to charter.

That advice is not always what they expect to hear, but it is often the right advice.

If someone wants to spend two weeks in the Mediterranean each summer and perhaps another two weeks in the Caribbean during the winter, chartering can provide an extraordinary yachting lifestyle.

They enjoy all of the benefits. The yachts. The crew. The destinations. The experiences… but without the responsibilities that come with ownership.

Many of these clients have remained loyal charter clients for years. Some could easily own several yachts if they wanted to. However, they understand that chartering suits their lifestyle and mindset better than ownership.

They love yachting. They simply do not want or need to own.

Why Chartering Is Often the Best First Step

For someone new to yachting, I would 100% recommend chartering as the best form of education available.

Every yacht is different. Every shipyard is different in terms of quality. Every layout creates a different guest experience.

By chartering several yachts over a number of seasons, clients quickly learn what features matters most to them.

Some discover they want a beach club. Others realise they value large exterior spaces. Some fall in love with explorer yachts.

Others discover that speed, shallow draft or family-friendly layouts are more important.

Many clients eventually buy a yacht that is completely different from the one they initially thought they wanted.

Chartering allows them to learn these lessons before making a substantial investment while we can advise them throughout the process.

The Limitations of Chartering

While I often recommend chartering as the first step into yachting, it is important to recognise that chartering and ownership are not identical experiences.

The best yachts in the charter market are often booked well in advance, particularly during peak periods such as the Mediterranean summer season, Christmas and New Year in the Caribbean.

Availability can become a challenge, especially with larger yachts over 75 metres, where the number of options available for charter is very limited. Many of the owners of these much larger yachts simply don’t want to charter as they can well afford the operational costs and value privacy.

Chartering also requires clients to work within the availability and cruising schedules of the existing fleet.

If your plans change at short notice, or if you wish to spend extended periods cruising, the options can become more limited.

This becomes particularly relevant for those wishing to explore remote destinations.

The Mediterranean and Caribbean offer a decent amount of charter choice, but as you move further afield, charter options naturally decrease.

Clients wishing to spend significant time in remote parts of the world often find that ownership provides a level of flexibility and freedom that chartering simply cannot match.

The yacht is where you want it, when you want it, for as long as you want it and you don’t have to pin down your exact dates months in advance. For busy business owners this kind of flexibility is required and is one of the greatest luxuries of all.

When Ownership Starts to Make Sense

Ownership becomes attractive when a yacht evolves from being a holiday platform into part of your lifestyle.

We usually say that if a client is spending more than around 6 weeks a year chartering then ownership starts to make financial sense.

Many owners love the consistency. The same crew. The same chef. The same familiar surroundings. Your wardrobe stays on board. Your children know every corner of the yacht. The crew know your preferences. The yacht is positioned exactly where you want it.

The yacht is designed, equipped and presented to your exact taste and requirements.

There is a level of convenience, personalisation and flexibility that chartering cannot completely replicate.

For those who spend significant time on board, ownership can become incredibly rewarding.

Success Is Matching the Person to the Solution

One of the reasons we place so much importance on these early conversations is because expectations matter enormously.

We would much rather advise somebody to continue chartering than see them buy a yacht for the wrong reasons, have a disappointing experience and leave yachting altogether.

Nothing is more damaging than mismanaged expectations.

The vast majority of our business comes from repeat clients and referrals.

Some of our clients have bought and sold multiple yachts through us over many years. Others have chartered with us season after season. Both are equally successful outcomes.

What all our clients have in common is that they love yachting.

The objective is not to convince somebody to buy a yacht. The objective is to help them enjoy the lifestyle in the way that suits them best.

Some people are better suited to ownership. Some people are better suited to chartering. Neither answer is right for everyone.

The skill lies in understanding the individual, their expectations and their motivations and helping them choose the path that will make them happiest.

Conclusion

One of the biggest misconceptions in yachting is that ownership is somehow the ultimate goal.

It is not.

The ultimate goal is enjoying life on the water.

For some people that means owning a yacht.

For others it means chartering different yachts in different destinations every year.

Both approaches can be enormously rewarding.

The key is understanding which one suits your lifestyle, your ambitions and your expectations.

If you are new to yachting, my advice is simple. Charter first. Experience different yachts. Experience different destinations. Learn what matters to you.

The knowledge gained through chartering often leads to better ownership decisions later.

And if, after all of that, you decide ownership is right for you, you will enter it with realistic expectations and a much greater chance of becoming one of those owners who enjoys yachting for decades to come.