How Yacht Sharing Works
We explain how yacht sharing works, what costs are involved
How it works
Many of our syndicates adopt the Fractional Association’s standard operating procedure as the basis of their syndicate management structure which is outlined below. If you have any additional questions please get in touch with us and we’ll do our best to help and advise you.
One owner is appointed the Boat Manager and one owner is appointed the Finance Manager. Each yacht has between 4 and 10 equity shareowners who enjoy between 3 and 12 weeks on board per year.
The yacht’s ongoing running costs are then divided on a pro-rata basis to each owners percentage share. An algorithm ensures that each owner is treated fairly for the weekly use selection rota. Each yacht has its own website which is the yacht’s primary operational management tool which has five primary functions.
Yacht management tool benefits
- Live usage calendar and online weekly selection facility.
- Real-time maintenance account spreadsheet showing all transactions to date.
- Owners’ communication forum
- Yacht’s documentation library
- Photo & video gallery of the yacht (Useful for informing future guests of what to expect).
The Boat Manager is responsible for the detailed day-to-day management of the yacht. That includes all operational, maintenance and service issues as well as all owner liaison and the corresponding documentation.
The Finance Manager is responsible for the financial transactions related to the ongoing running costs of the yacht. This includes the detailed auditing and reporting of all the maintenance costs to all the respective owners.
Weekly Selection Process
Each person selects a week in rotation. Person 1 chooses one week, then it’s person 2, 3, 4, 5, 6, 7 and 8 – all choosing a week at a time in order. This cycle is repeated until all the weeks for the year are allocated. The following year it’s done in reverse order which gives the person who chose eighth the ability to choose first instead, and so on.
Each year, after the weeks are fully allocated, a bit of swapping may take place between owners to fine tune the forthcoming year’s calendar. This is to accommodate those owners who might prefer two weeks together for example. On the yacht’s dedicated owners’ website the communication forum has a special section for week swaps or for cancelled unused weeks which owners trade with one another.
Each syndicate tries to form with a good cross section of owners, who in turn have a real cross section of date preferences. Some prefer school holidays whereas those who are retired prefer to avoid school holidays. As a consequence every week has a relatively even level of desirability with July & August being slightly more popular in the Mediterranean.
The lower season 4 to 5 months are still lovely in the Mediterranean or Caribbean, often with sunny days, with conditions often still better than back home. Most owners tend to still enjoy their yacht out of season, maybe more as a floating hotel, perfectly located in a vibrant port with less frequent sea passages being undertaken.
Joining and leaving a syndicate
Ease of entry and exit are a key differentiator between shared and outright ownership of a yacht.
We are very keen to maintain the comparative ease to buy or sell a share in one of the syndicates. We have found that our shares generally change hands more rapidly, and with less complication than the sale of a whole yacht does. This is because:
A share in a yacht is a much smaller transaction
A £100k outlay on a 5 year old 60ft yacht is much less daunting than a £1m outlay on the same vessel. Buyers can draw comfort from their fellow shareholders in that yacht, who remain happy owners.
A share in a yacht is much less available on the market
There may be 10 or 20 sister ships of any particular model for sale in the western med at any one time, making it hard to sell one’s outright yacht in such a competitive marketplace. Whereas there is probably only ever one share for sale in one of those yachts, meaning the exclusivity generally translates to a quicker sale. (Some of our yachts even have waiting lists of potential new owners).
A share in a yacht is a less risky transaction
When buying a yacht outright one always wonders what’s wrong with it and why the seller truly wants out? With a share one can fairly safely assume that it’s not the yacht that is the issue, as the majority of other syndicate owners happily staying in the yacht and are not selling her.
A share in a yacht is a less complicated transaction
When buying a yacht outright one needs to undertake a full survey, make sure there are no liens and that the taxes paid and service history are all as they should be. With a share, the other owners have already vetted all the purchase pitfalls, and the syndicate agreement is the only document of significance. As that is also identical to the agreement of existing owners, it too will have already been scrutinised by the many past and present shareholding owners.
Each syndicate has a Finance Manager who is responsible for the maintenance accounting and its reporting to fellow owners. Using the Fractional Association’s accounts package with their spreadsheet templates helps create completely transparent visibility – in real time on the yacht’s website – for all owners to get an accurate handle on the ongoing running costs.
As most owners invariably get their capital outlay back, less some depreciation over time when selling their yacht (or their yacht share) the running costs actually form the greatest expenditure of yacht ownership over time. Only paying a small percentage of all the maintenance costs therefore becomes very refreshing in comparison!
All the benefits for a fraction of the cost
Because each owner only pays a fraction of the actually running costs there are many benefits that outright owners can’t avail themselves of.
For example, replacing the external upholstery on a yacht would cost circa €5,000 and needs to be done every three years or so. That becomes a bitter pill to swallow for an outright yacht owner, but for a 6 weeks a year fractional owner that same expense only comes to €625 instead of €5000!
The temptation is therefore to replace items sooner, meaning fractionally owned yachts often look in better condition than their adjacently moored privately owned yachts.
This same philosophy applies to the cleanliness of the vessel. By the very nature of the need for a weekly changeover valet throughout, fractionally owned yachts are serviced, cleaned and polished once a week.
Privately owned yachts sit unattended for many months at a time, rapidly deteriorating in a salt encrusted, burning sun environment, with the occasional clean only occurring before the outright owners’ next arrival.
Mooring costs far lower than when owning outright
Fractional Yachts are often berthed in the most desirable and therefore the most expensive mooring locations in the Mediterranean and Caribbean. Again, by only paying for the mooring when one is actually on board, as other owners pay while they are on board, it suddenly makes good economical sense.
To be specific, taking Puerto Portals in Mallorca as an example, a 60ft mooring is about €60k p.a., where an equivalent 20m mooring in a lesser marina in say Palma might cost about €30,000 per annum less. A significant saving if one only uses ones privately owned yacht for 6 weeks of the year, equating to €5000 per week’s use.
In contrast although the Puerto Portals mooring is €30,000 p.a. more expensive, a 6 week fractional owner is only actually paying €576 per week of use extra, to be moored in the best marina in the Med. The fuel savings alone for the saved hour or two a day in cruising, make it a better financial proposition to be based in vibrant Puerto Portals, aside from all the time saving, enjoyment, convenience and aesthetic benefits.
All in all, one of the most significant benefits of fractional ownership is that one only has to pay a fraction of the yacht’s ongoing running costs.
The Fractional Association
The Fractional Association can often be described as the backbone of many of our yacht syndicates.
The primary objective of those syndicates is to have a robust operational procedure in place to run the yacht by, coupled with a pre-defined and pre-agreed route to deal with any unexpected eventualities that may arise further down the line.
The Fractional Association not only provides the know how and tools to operate the syndicate professionally, it also provides an unbiased and fair remedial process in the unlikely event that it may be needed.
There are 4 membership tiers with varying degrees of member benefits and operational commitments. It is generally a testament of better well being when a syndicate has chosen to join the highest, Platinum Membership tier. The Yacht Share Network places those Platinum Member syndicates in their highest esteem.
The core of fractional ownership is the syndicate agreement that all the owners sign up to and abide by.
The Fractional Association’s shared yachts’ operational management programme has evolved over many years. Their syndicate agreement has been updated and amended over those years to remain relevant and always run in tandem with evolving operational experiences derived from the ever growing numbers of yacht syndicates and new fractional owners around the world.
The objective of the agreement is to outline the expectations and provide a robust but ‘plain English’ understanding for all parties. It should be read in conjunction with the Fractional Association’s Code of Conduct which underpins the Syndicate Agreement.