Can chartering out your yacht cover its running costs?

At a glance

What the sources say

The answer depends on one number more than any other: how many weeks a year the yacht is really booked.

The four numbers that decide it

1. Running costs. Brokers put a year's running costs at 10–15% of the yacht's value (Fraser) or 10–20% (Ocean Independence). That covers crew, berth, insurance, maintenance and fuel for the owner's own use. It does not include depreciation, financing or a major refit.
2. The weekly charter rate. What the yacht's own listing achieves after discounts, not the brochure rate.
3. Commission. The owner pays the brokers out of the charter fee. Allied Yachting, a broker, gives 15–20% of the gross rate; YachtBuyer says about 20% typically goes to the central agent, who shares it with the client's broker.
4. Weeks booked. Use a range, here 6 to 12 weeks, as a planning assumption, not the number you hope for.

Illustration: how far charter income goes

So the same yacht can cover 40% or 120% of her running costs depending on the bookings and the cost base. To find the weeks needed to cover the running costs, divide the yearly costs by what each week brings in after commission and the extra costs of chartering. Before those extra costs, that is $800,000 ÷ $80,000 = 10 weeks, or $1,200,000 ÷ $80,000 = 15 weeks.

Depreciation comes on top. Ocean Independence puts it at about 10% in the first year and 6–8% a year after. Depreciation is not included in this calculation.

What chartering adds to your costs

• Commercial certification. Paid charter normally needs a yacht registered and certified for commercial use. On the British registers the Red Ensign Group Yacht Code, Part A, covers yachts of 24 m load-line length and over carrying no more than 12 passengers. Some flags allow limited charter on a private registration, under their own conditions; the Marshall Islands' Private Yacht Limited Charter programme is one. See our flag guide.
• More wear. Weeks of guests mean more wear on interiors, tenders and toys, and more maintenance between charters.
• Crew. Charter guests expect a full, experienced crew all season, which may cost more than private use alone.
• Tax. Tax on charter income and on the charter fee depends on how the yacht is owned and operated. Take advice from a tax adviser before you plan on any income.

What the charterer pays on top of the fee, mainly the APA for fuel, food and port costs, is spent on their week. It is not income for the owner. Our APA guide explains how it works.

What helps the numbers

• The right yacht for the market. Guests choose on layout, condition and cruising area. Ask a charter broker how similar yachts actually booked.
• Two seasons. Yachts that move between the Mediterranean in summer and the Caribbean in winter have two seasons to fill, though the deliveries cost fuel and crew time.
• Owner flexibility. The peak Mediterranean weeks, July and August, are also the weeks most owners want. Giving them up earns more.
• A good central agent and manager. They set the rate, keep the yacht visible to other brokers and handle the charter paperwork.

What to ask your broker

1. How many weeks did this yacht, or yachts like her, book in each of the last three seasons?
2. What were the real weekly rates after discounts?
3. What will commercial certification cost, and does she already meet the code?
4. What does the charter manager or central agent charge, and what is included?
5. Which costs rise because of charter: crew, insurance, maintenance?

When this is not the right choice

• You want the yacht for most of July and August. Those are the weeks charter guests pay most for.
• The yacht will struggle to book. A small, old or unusual yacht may not reach six weeks.
• You need charter income to afford her at all. The sources above treat charter as a way to reduce the cost of owning, not to pay for it.

If you want to test a particular yacht's charter record, our ownership cost calculator sets running costs against a range of charter weeks, and one of our partner yacht sales brokers can help.

Questions people ask