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The Quest for Profitability in Charter


The Quest for Profitability in Charter
Marko Gnjidić

18 February, 2021 | 5 min read

Professional charter companies are in constant search of profitability. With the rising competition, more and more new boats in the market, this task seems to be getting harder every year.

Fleets are attempting to innovate to overcome these challenges. In general, ideas are in marketing activities, insurance options and offering different inclusive pricing options. While these attempts are nice, in most cases, they are just cosmetic repackaging of the same product and not the real expansion of choice or experience for the client.

Cute marketing tricks will, of course, work on clients for a short time. However, they are very easy to imitate by competition. They will still keep guests treating the charter product as a commodity instead of the unique experience it is supposed to be.

So what more can be done? Listening to real client needs and making them feel more satisfied and special, of course!

One of the most glaring areas where mainstream yacht charter marketplace is neglecting the clients is being flexible with availabilities in what is considered a “non-standard booking”.

Everyone knows the check-in is on Saturday. Why is it so? Most clients are checking out by 9 am and new batch checking back in by 5 pm. Two sets of clients interchange all on the same day. Even smaller fleets with less than 20 boats have an overload of clients on the pier nervously waiting in queues for hours for their moment to board their sailboat. At the end of that experience, no one feels treated special, and there is no way to charge a premium for such a service.

By the way, did we mention that all of this happens on the same day of the week? Always Saturday. If you are a client trying to get the boat on any other day, you will be met with varying versions of resistance and rejection from the charter providers. Even only getting the information about such availabilities in any given area is an investigative job that often involves a lot of negotiation and convincing.

Why is that? Why can’t a client decide to travel to his sailing holidays on Monday to avoid the summer weekend traffic jams on the Autobahn? Why are there no boats or even working staff in marinas on Mondays?

Humans are creatures of habit, so when something becomes one, we rarely question ourselves, and we go with the flow because “This is the Way”. It is so very true of check-in Saturdays and seven days bookings.

How Flexibility Helps Clients and Staff

The usual argument for standard check-in days is that it makes it easier to execute operations. We pack most client activities to this one day in the week and keep chaos to the minimum. In theory, it is also easier to reach the maximum occupancy when we have uniform blocks of 7 days for each boat. We just fill the predefined slots, right?

However, this perceived efficiency is a mirage. There is no need for staff to organise the work or answer specific booking requests manually. In the last few decades, all organisational issues have been resolved by advanced online booking and back-office tools such as Booking Manager.

Operational arguments, such as “then every day for me would be as crazy as Saturday” are also false. If we assume that the added flexibility in choosing any day would result in shorter trips, even doubling the number of check-ins would mean that the average operational day would be about three times less intensive than Saturday. Less work, less staff needed on the spot to take care of clients, inspect the boats and do regular cleaning operation. In short, running everything with fewer people and less operational stress.

What is more important, the advantages for guests are even more convincing. First of all, they are not treated like cattle on Saturday, with fewer boats going out the check-in experience is immediately more personal and less hectic. Even if we get 30% fewer people on Saturday, the difference is felt strongly.

Also, the same guest can comfortably take that road trip on Monday and return on Friday, or if they arrive from another part of the world, they can easily fly in on Wednesday, or combine part of their two-week holiday with a hotel stay.

Be Flexible and Save The Industry

Why does it all matter? First, after a short period of adjustment by the staff, everybody is happier, and work conditions and routines become easier to manage. In general, costs go down (or regular staff salaries go up?), because the payroll staff has less unused time during the week and less part-time people are needed on Saturdays.

More importantly, it makes the guests more satisfied, and it opens the doors to reach entirely new customers. A tourist already visiting your destination can automatically book online on the spur of the moment, or non-experienced person wanting to try out sailing for a couple of days (with the obligatory skipper of course) but not committing to entire week can enjoy a new experience.

New experiences could be a lot of things. However, they are never a commodity, and there are no pricing wars to the bottom with new experiences. They simply bring more revenue and profit as a result.

The great thing is that professional charter companies don’t have to take our word for it. Many organisations in other industries are successfully flexible to their customers. While often non-experienced observers wrongly equate the yacht charter industry to hotels and accommodation, in this case, it is valid to compare. If hotels are as flexible with the product that in many cases, costs more per person than an average charter booking, there is no reason why the charter product cannot do the same. Another comparable example - car rentals make a great success in leveraging individual clients’ high flow by selling extra services.

In fact, there are living examples in sectors of the boat renting industry itself. River and Canal charters such as Nicols have been continuously successful in offering availability on more weekdays.

In Booking Manager, we believe that profit comes from offering additional value to your customers. If we provide something better, that clients really need, they will happily pay more and be satisfied. In this stage, it is more of a chicken and egg problem where the new demand will inevitably grow due to offered availability. However, those brave companies that start first will be the ones with the greatest reward in the end.