- March 1st, 2007
- in Yachting
FRACTIONAL YACHT OWNERSHIP – How many times do we hear about the Baby Boomer generation turning sixty? Far too often, in my mind, especially if one is about to turn sixty. Well, I am not quite there yet and I am really not ready to retire. I’m constantly being reminded that I’ve worked hard for long enough, and I’ve really earned some ‘leisure time’. I’ve done my bit to prop up the economy and the Country, so I should get something back from it…
I am in marketing, with a career covering a diverse range of industry sectors, from casinos through aviation to yachts. During my time in the aircraft industry I acquired some invaluable experience selling expensive equipment in and out of fractional ownership programmes. Fractional ownership is a fairly complex business, and to be successful, one really has to understand the needs of the individual, as well as be on top of the market’s requirements.
Fractional ownership programmes have been around since the mid eighties, but until recently were more or less exclusive to the aviation industry. Derived to combat the effects of ever increasing costs of aircraft ownership (even big companies were finding it hard to justify the expense of corporate travel during the 80s economic boom and bust), the concept involves several individuals buying in to the same aircraft, allowing them to hold title to their fraction and giving them enjoyment the plane as if they were the sole owner.
Marine Fractional Ownership
There are differences between aviation and marine fractionals, although the overall effects on the concept are minimal. The aviation market is based upon the needs and time constraints for travelling executives, with aircraft available with as little as 8 hours notice. With yachts, there is no real need for immediate use. With both, though, there is a need to achieve one’s travel and leisure decisions with minimum hassle.
For the yachting industry, most fractional ownerships are divided into 8 shares, and as a buyer you can buy just one or as many as seven shares. The share ownership is geared around how much time you expect to spend on the yacht. Generally, the yacht is available for 40 weeks a year (12 weeks are set aside for maintenance, crew leave and repositioning of the yacht), so each share represents 5 weeks of usage per annum.
Each yacht comes with a full time crew (captain and first mate), who have complete responsibility for the yacht and its owners. They are available 24/7 for you, your guests and the safety of all. An owner can skipper his own yacht, but the crew remains aboard to assure safety and protection of the other owners’ interests.
Each owner has an undivided interest in the yacht and a Limited Liability Company is set up for the yacht for assurance purposes. The protection afforded by the LLC is such that if another owner becomes insolvent, no financial institution, government agency or another individual can attach to the asset in any way. The LLC also protects each individual from law suits that may be filed against the yacht due to negligence or fraud by another owner.
Each owner also subscribes to the designated management company that handles all aspects of the yacht, including purchase, paperwork, insurance, dockage, crew, repositioning, chartering, maintenance, etc. This allows the owner to arrive at the dock and be ready to go, as and when they please.
The real value of fractional programmes is the freedom they offer – there’s no need to get embroiled in the day to day running of your vessel, and your asset is proactively managed and maintained 365 days a year. A good fractional programme will also offer an individual relationship with captain and crew, and will also offer the owner chartering opportunities or use of other similar type boats in foreign ports.
The advantages of having the yacht maintained by experienced crew and management are obvious and many, not least when it comes to resale. All those regular checks will stand in good stead when it comes to survey time, and a much greater price is achievable than if the boat did nothing for most of the year.
As good stewards of the economy, we also need to be aware of our environment. Have you ever noticed just how many yachts sit in our marinas unused? They take up space, pollutants pour into the water from the bilge pumps, and engine oil and fuel leak into our sensitive estuaries. Believe it or not, fractional yacht ownership is an environmentally friendly way to enjoy a boat.
Fractional yacht ownership actually takes yachts off the water. Based on the described model, for every fraction sold, there are potentially 7 fewer yachts in the water. And, as fractional yachts tend to be larger, well maintained and self contained, the environment gets a break. Of course, less equipment in the market place also increases demand, helping to boost the value of the asset.
Winning on all counts
Without a doubt, fractional ownership goes a long way in showing our dedicated stewardship to the economy, environment and, most of all, our freedom and enjoyment of that leisure time we are all reminded that we have earned. Its a well managed package that benefits landlubbers as well as old salts.