50% Instant Depreciation
Deduction And How it
Applies to Charter Boats
For those serious about making a living from the sea, these 4 steps can help ensure smooth sailing.
By Brent Vaughan.
Have you dreamt of swapping florescent lights with sunshine, the water cooler for the calm blue sea and air-conditioning for a salt filled breeze? Has the same old work routine worn thin and running your own business combined with a coastal lifestyle has appeal? Then you need to read this guide and avoid the three common mistakes of wrong boat, wrong location, wrong marketing.
At this very moment in time, running your own successful charter boat business in Australia has never been more achievable thanks to a booming tourism sector in both our coastal cities and regional sea side towns.
There are several areas that need to be carefully considered to ensure success. These include:
1. Identifying the opportunity in the market
2. Be survey compliant and qualified
3. Profit and Loss Projections and ROI
4. Launching the business and connecting with travel agents
STEP 1: IDENTIFY OPPORTUNITIES
Understanding the tourism industry and the current cycle that it is going through is paramount to your success as a charter boat start up. Currently we are in an growth cycle and over the past 5 years, there has been a strong upward trend in Australian tourism as reflected in Australian arrivals as displayed below…
Source: ABS Overseas Arrivals and Departures, Australia June 2016
Thanks to the fall in the Australian dollar, international security concerns and a surge in Chinese tourism, the Australian tourism and charter boat industries are booming.
This is reflected in recent research by Tourism Research Australia who note:
“The latest International Visitor Survey results released today by Tourism Research Australia (TRA) show international visitors to Australia spent a record $37.9 billion in the year ending March 2016, 17 per cent or $5.4 billion more than the previous year.” TRA, 1 June 2016
Growth in Tourism Year Ending 2016, Tourism Research Australia
Investment into tourism infrastructure including hotel developments are at a record high which reflects the high occupancy rates that are touching 90% or more in locations including Sydney, Melbourne and Hamilton Island. This is just indicative of the tourism opportunities available while the charter boat industry is slow to respond.
Our top picks of charter boat opportunities include:
- Sydney Harbour
- Gold Coast
- Moreton Bay, Brisbane
- Port Phillip Bay, Melbourne
- Airlie Beach
Of course there are many more regional locations around Australia that offer good opportunities.
STEP 2: Be Survey Compliant and Qualified
Though many manufacturers and importers will happily sell you a charter boat, most will not guarantee its commercial certification and provide the complete package. Those who do, will most likely provide the boat as a bareboat built only to 4D (hire and drive in partially smooth waters) class survey which uses the European CE standards as a guide.
However if you want to take more than 12 passengers, which is critical for most successful skippered charter boats, you will need either 1E (more than 12 passengers in smooth waters) or 1D (more than 12 passengers in partially smooth waters) which uses the NSCV (National Standard for Commercial Vessels). As these vessels are essentially treated as passenger moving vessels, a much more sophisticated survey build is required. Be sure your manufacturer and importer guarantees compliance to these survey requirements. A common mistake is to buy a used boat built to CE, only to find that literally over $100,000 needs to be spent to convert the boat into the NSCV standards with sometimes years to achieve the result.
If you plan to skipper your own boat you will need to get qualified with the appropriate commercial skippers license. If your charter boat is under 12 metres then you simply need a Coxswains license (Grade 1NC) which is the simplest commercial license that can be obtained by attending a 5 week course. You also need to log a minimum of 30 days at sea on-board a commercial vessel. Many people will initially crew with a skipper on-board their own boat to get these hours logged.
Note: Multihull Central offer a wide selection of both sailing and power catamarans certified to the NSCV rules. The Seawind 1160 Resort is built to 1D survey for 43 passengers and 2 crew operating in partially smooth waters.
STEP 3: Predict a Profit and Loss and ROI
Depending on how hands on you want to get running the charter boat will determine your ultimate ROI. Below is an example of a profit and loss projection for Sydney Harbour onboard a Seawind 1160 Resort where the owner is the skipper and also cleans the boat after charters. Be sure to allow for Booking Agency fees as they will be crucial to launching your business quickly.
Note: If you plan to charter in the Whitsundays, there are limited commercial permits available that are all owned by the major charter companies, so you will need to partner with them.
The above Profit and Loss projection for a new Seawind 1160 Resort operating on Sydney Harbour predicts a ROI of around 20% based on industry sourced information.
STEP 4: Launch and Connecting to Agents
Once you boat arrives and is ready for action, plan to launch your boat into the charter industry with a launch party and invite local travel booking agents to inspect your boat, who in turn will promote to their extensive databases. This will ensure your new boat makes it to the market quickly, without you having to spend anything on marketing, other than booking commissions. There are about half a dozen prominent charter booking agencies on Sydney Harbour and others around the country.
For more information on how Multihull Central can help launch a new charter boat business for you, contact Brent Vaughan on 02-9810 5014 or email firstname.lastname@example.org
Above: Ozcat Luxury Catamaran Cruises launch Varuna with a cocktail party where charter booking agents were invited and inspected the boat.
Note: Multihull Central promotes new charter boats to an extensive database of customers, booking agents, the marine industry and broader press.