The concept of fractional yacht ownership is not new. In the 1990s, a few companies attempted to create shared ownership programs for yachts. Hatteras’ well-promoted program, Yachtscape (“Shared Ownership, May 1998), drew inspiration from the success of fractional jet ownership programs. Yachtscape and its fellow large-yacht operations, though, never saw the success the jet programs did. The shared yacht programs ultimately failed.
Less than a decade later, a resurrected fractional yacht ownership scene is taking shape, and three players appear to be worth watching: SeaChange and Yachting Solutions, both based in Monaco, and Monocle Management, based in Ft. Lauderdale. All three have the same goal, to provide the lifestyle of yachting for a fraction of the cost of sole yacht ownership and, often, for less than the price of regular charter.
This is not unlike the aim of the original fractional ownership programs that failed, and none of these programs is fully functional yet. But all three are united in believing they have learned from the mistakes of the past.
Will any succeed? It’s tough to say, since each is taking a different path. More important, should you buy a share? Perhaps.
“We offer complete ownership of the yacht”, said Yachting Solutions Associate Robert Peel. Yachting Solutions allows six owners to divide 100 percent of the ownership of a 144-foot Izar motoryacht. In other words, after the agreement among the six individuals is made, Yachting Solutions holds no equity in the Spanish-built yacht.
Each share costs about $3.3 million (the price varies with the exchange rate, since Yachting Solutions figures all costs in euros) and guarantees each owner six weeks aboard for six years. The price covers maintenance, management of the yacht and Yachting Solutions’ concierge service once in a given destination.
Peel said that when comparing the cost of fractional ownership with the cost of chartering for six weeks per year, fractional ownership makes more sense, especially since Yachting Solutions guarantees it will buy back clients’ shares at 50 percent of the original purchase price. A disadvantage, he said, is that “charter offers some control in the itinerary”. With Yachting Solutions, once the itinerary is set among the six owners, it is somewhat rigid.
Monocle Management Sales Director David Allenby also acknowledged the more rigid schedules involved with fractional ownership. From his perspective, they are a key reason fractional ownership plans can’t be based solely on fractional jet ownership schemes.
“A fleet of jets is much more maneuverable than a boat”, Allenby said. “A prospective buyer needs to be much more open. This is pleasure-oriented, not business-oriented like jets”.
Monocle’s Preferred Partnership Program seeks manufacturers that are willing to retain 50 percent ownership of the vessel. Monocle then seeks 10 buyers to split the remaining 50 percent of the equity. Each owner will have access to the yacht 33 days per year. The price varies according to each yacht’s LOA, manufacturer, crew, etc. Monocle’s current project, a 115-foot Trinity, is priced at $60,000 per year per owner. The share price includes all management, maintenance and running costs. It is based on a six-year term, and Monocle makes no guarantees on a return in investment.
In the case of SeaChange, a wholly owned subsidiary of Liveras Yachts (Superyacht Report, March), the yachts more closely resemble small ocean liners. They are 280 feet LOA and can accommodate up to 36 guests. SeaChange claims to be the first company to offer a fractional-ownership service for yachts of this size. It has teamed with Nigel Burgess Ltd., Fraser Yachts Worldwide and Peter Insull’s Yacht Marketing to seek clients.
SeaChange has space for 10 owners per yacht in its program, which is expected to be up and running late this year, at best. Vice Chairman Kyri Kyriacou said a $7 million lump sum gives owners access to the yacht for four weeks per year: two weeks during peak season in the Caribbean or the Med, then two weeks off-peak, for as long as the life of the yacht. Maintenance for the first three years is $385,000 annually. Following years’ maintenance will be determined after the initial three years.
Liveras retains 53.1 percent of the vessel, and each owner’s share works out to 9.38 percent, which is guaranteed in perpetuity.
At the end of the day, deciding whether to buy a share in a program or to continue chartering seems to be a matter of taking a gamble on a return in investment. If you only charter once or twice per year in vastly different locations on short notice, these programs probably aren’t for you. If you charter four weeks a year at $40,000 per week, plus expenses, your yearly layout will be about $215,000-less than any of these fractional ownership programs, but with no equity return. If chartering is a way of life, you don’t want to buy your own boat but you do want to consider an investment in yachting, then fractional ownership might be worth looking into.
One thing is for sure: With such different approaches and no clear, predetermined path toward success, there’s still an element of risk to any fractional ownership option.