If you are looking to charter a yacht understanding the costs involved can seem daunting and confusing. The two important things to understand are your base price and what you will be expected to pay on top of it.
The best analogy for determining the cost of your charter is with buying a car. It’s never quite as easy as just walking into a showroom and saying, “I’ll take the blue one.” Immediately the salesman whips out his order pad and starts asking questions. “Do you want a radio?” “How about the fancy wheels?” “Did you want the two-tone paint?”
Your broker will be able to provide you with an accurate estimation of all the costs involved in advance but here is a breakdown of what to expect.
What factors influence the base price?
High season vs. low season
In general, you’ll find two basic rates: high season and low season, usually with specific dates set for each. In addition, you’ll find special events that are more expensive: New Year’s Eve, Monaco during the Grand Prix, Cannes during the Film Festival, the Olympics or the America’s Cup.
The key is to choose your times carefully. A difference of one week (from high season into low season) can make a vast difference in cost, while still providing the same weather as the more expensive period.
The yacht itself
The yacht itself is a major factor in determining the charter cost, but it’s not just about size. A recently launched charter yacht from a famed builder with an experienced and popular charter crew is going to command top prices for its size range. Yachts with a legendary name, such as a history of celebrity ownership, can also ask higher rates just for the “fame” value. And yachts with special features, such as alfresco movie theaters or exceptional water toys (a submarine, for example) are also pricier.
Three different 30-metre charter yachts may vary in cost by as much as 75,000 Euros. Ask your broker to explain the differences. One yacht may have a larger and more experienced crew or a big-name chef, another yacht may be a little tired, another may not be in a prime location. It’s important to understand why the prices are higher or lower.
Bear in mind that every charter yacht, because they are privately owned and the owner sets the rules, is slightly different
How does the contract influence price?
Knowing the base price of your charter is just the starting point, however, depending on the location, which often governs the terms of the contract, more or less may be included in the base price of your charter. Bear in mind that every charter yacht, because they are privately owned and the owner sets the rules, is slightly different. One yacht may include a “standard” selection of wines with every meal and charge only to upgrade the vintages, while on another yacht the wines are a la carte.
Mediterranean Yacht Brokers Association
Under Mediterranean Yacht Brokers Association (MYBA) charter contracts, which are arguably the most common, the charterer is charged for food and beverage (for the charter guests only), fuel, dockage and harbor fees, and miscellaneous expenses. As a round number, which depends on how much fuel the yacht uses and how fancy the meals and drinks, you can expect to add 25% to 50% of your charter cost.
Caribbean Terms Inclusive
The Caribbean Terms Inclusive (CTI), which is sometimes called Standard Caribbean Terms (SCT), is more inclusive. Three meals per day and fuel for four hours of cruising a day are included. Some yachts under CTI terms include basic beverages (not vintage wines or champagnes), but this is mainly in the Virgin Islands.
What is an Advance Provisioning Allowance?
Whatever the terms of your charter contract, you should understand the Advance Provisioning Allowance. This is an amount of about 20-25 per cent of the charter fee for a “plus all expenses” charter and about five per cent for an “all inclusive” charter. It is sent to the yacht before the charter to provision the yacht according to your preferences.
During the charter, the captain will provide a running account of the usage of the funds and, at the end of the charter, the captain will present a detailed accounting along with any unused funds in cash.
If the APA balance runs low during the charter, the client is expected to provide the captain a sufficient amount in cash to cover the needs for the remainder of the charter. Since many charterers prefer not to carry quantities of cash, the charter broker can hold an amount and release it to the captain as needed.
What other additional costs might there be?
Food and drink
Before you book a charter, your charter broker can provide you with a good estimate of the additional costs that will be incurred. Food is one of the largest and it is directly proportional to how exuberantly you plan to dine. If you expect several bottles of Cristal champagne with every meal, then you can assume that your costs will be higher.
Fuel can be another cost and, again, it depends on how much the yacht cruises and how fast, too. Time spent at anchor will include the fuel for the generators, while shore-side electricity when at a dock is also an extra. Don’t forget that fuel is also charged for the tenders and water toys, so you’ll pay for the fuel used while zipping around on the jetskis.
Harbor fees and dockage
Harbor fees and dockage are a variable that can range from exorbitant (a front-row dock at the Monaco Grand Prix) to little or nothing in some areas.
Communications are another cost and, with the options for satellite communications and Internet, an important one for most charterers.
A delivery fee is usually charged if a charterer requests to board (or depart) a yacht at a distance from where the yacht is normally based.
All the yacht laundry, including towels, sheets and table linens, is included in the charter fee, but some yachts charge to launder personal items of the charterer. Most, however, will do small quantities of personal laundry as a service but they usually won’t be responsible for delicate items.
While it may seem at first glance that the extras on many charters are just a way to pad your bill, they are actually a benefit to the charterer
What about VAT and insurance?
One cost not directly related to the operation of the charter yacht is insurance for the charterer. Cancellation and curtailment insurance is the charter version of travel insurance on airlines and cruise ships: It covers the charterer for the costs if unforeseen circumstances force a cancellation or shortening of the charter. Your charter broker can provide this insurance, which is a wise investment.
Charterers may be charged VAT, or “value added tax”, on the charter fees. Many European countries and a few Caribbean islands add VAT, but it is a complex issue that depends on where you board and debark the yacht, so rely on your charter broker for advice.
Made to measure
While it may seem at first glance that the extras on many charters are just a way to pad your bill, they are actually a benefit to the charterer. Food and drink, for example, is custom-ordered to meet the client’s requests, so the level of expense is entirely up to the charterer. Fuel is only charged if it is used and other fees are also at the discretion of the charterer. So you do have a way to control your costs and still savor a luxurious charter.