Learning to Share
For avid sailors with flexible schedules, timeshare sailing can offer a cheaper alternative to sailing clubs or chartering.
Sailtime’s base in Austin, Texas hopes to attract sailors looking for regular access to local waters, without the hassles of ownership
Sailtime’s base in Austin, Texas hopes to attract sailors looking for regular access tolocal waters, without the hassles ofownership.
Hurricane Wilma splintered your hull. The condo crush absorbed your marina. Maintenance chores are putting blisters on your blisters. Whatever the reason, suppose you find yourself in the market for regular or semi-regular access to a keel boat in your local area with overnight cruising amenities—one that can be had without the full financial commitment of ownership What are your alternatives?
To answer this question, Practical Sailor compared the economics of chartering, chartering through membership in a sailing school or for-profit club, community access sailing clubs, and timesharing. For this comparison, we put ourselves in the shoes of a sailor in the San Francisco Bay Area who is seeking to take out guests on a 30- to 35-foot keelboat for trips of at least an overnight duration. Here are the options, and our outlook:
In a timeshare arrangement, a group of people share the use of a boat by dividing among themselves the right to use that property for specific time periods. This arrangement gives an individual access to a boat for a limited period at a cost much less than that of sole ownership.
SailTime is an Austin, Texas-based company that has been expanding over the past year its operations around North America, selling memberships that pertain to the use of its Hunter sailboats. Two other companies that arrived not long ago on the timeshare scene are Pinnacle Yachts and Windpath Sailing. As of this writing, Pinnacle had nine bases offering the use of its Jeanneau sailboats and Windpath had four bases with Catalina 350s available.
There are two kinds of timeshare arrangements: those that share title and those that do not. The former has given rise to the term “fractional ownership,” because title is indeed divided into eighths, or some other fraction thereof. In the latter, the title remains with a sole property owner, while other participants merely have a right to use the property. SailTime bills its services as “fractional sailing,” which is a convenient use of this phrase, because the structure of a SailTime agreement essentially means that only one in eight participants will have title to the boat.
SailTime’s business model depends on one person purchasing a new Hunter 33 or 36, and turning it over to SailTime to manage. SailTime, which currently has bases in 16 U.S. cities and Toronto, pays the vessel owner approximately $1,100 per month, which its representatives say is enough to cover any bank financing. (Actual payments may vary from franchise to franchise.) SailTime is also responsible for insurance, slip rental, fuel, cleaning and maintenance costs—at least for the first three years.
For each boat purchased, SailTime sells memberships to seven other individuals, who collectively share the use of that vessel with the owner. Each non-owning member in the vessel pays $425 monthly, on top of a one-time initiation fee of $1,000. (Again, actual payments may vary depending upon the franchise.) The non-owning member also puts up a $2,000 security deposit, which is refundable minus a $500 “remarketing fee” if the individual leaves the program prematurely. Non-owning members must commit to a full season. Some SailTime bases have an eight-month sailing season, while others are year-round. In either case, the non-owning member must pay 12 monthly installments.
Under the SailTime plan, the day is divided into two time slots: from 10:30 a.m. to 6:00 p.m., and from 6:00 p.m. to 10:30 a.m. the next day. Each member gets seven time slots per month, with a maximum of two of the seven periods usable on weekends. The owner gets the same amount of time as the seven members. And members can borrow time from an adjacent month, meaning that it’s possible to sign out the vessel for a full week, every other month.
However, enjoying the vessel for a full weekend appears to be ruled out. There is unlimited use of any time slot not reserved and confirmed prior to 24 hours in advance. All scheduling is conducted online, through a password-protected website. Like some resort timeshare companies, SailTime offers its members access to other locations in the company’s network. For a $100 fee, one can book a vessel at another SailTime location, but only when that vessel is not otherwise reserved, and not on weekends.
Members check in and out of a vessel through a personal digital assistant (PDA) carried on board the boat. The PDA communicates wirelessly with the SailTime boat manager, relaying the member’s check-in and check-out times, as well as fuel levels, and any cleaning or maintenance issues that might require attention. While SailTime touts this high-tech system as way to instill more “pride in ownership,” the $2,000 damage deposit and the electronic log tracking who used the vessel last, will likely provide the most incentive for keeping the boat in good condition.
The first-year investment by a non-owning member amounts to $8,100 (including the $2,000 refundable security deposit). For this outlay, the non-owning member is allocated 84 hours per month. Based on those figures, the total cost works out to $12 per hour of access to the vessel for an eight-month sailing season, and $8 per hour for year-round sailing.
We don’t think it’s realistic that members will utilize all 84 hours each month. Perhaps 40 hours of actual time spent on board each month is a more reasonable figure. Say on average you use the boat for five weeknight cruises of three hours duration each, one weekend daysail for six hours, a weekend overnight of 14 hours, and an opportunistic five hours per month at times when the vessel is left unreserved; that level of usage still leaves the hourly cost at under $20/hour for the first year. Although this article pertains to options for those who don’t want to own a vessel, PS also examined the economics of SailTime from the point of view of the owning member. The price of a new Hunter 33 is approximately $155,000. To secure bank financing requires a 20% down payment, or $31,000. A loan of $124,000 at 6% interest amortized over 15 years produces a monthly payment of $1,046.
At the end of five years, the owner will have paid $33,034 in interest, and $29,749 in principal, for a balance owing at the end of 60 months of $94,251. The monthly payments that SailTime makes to the owner would leave that person with a slightly positive cash flow. However, since the owner shares maintenance costs after the third year, that could put him slightly in red at the latter end of his five-year agreement. Standard depreciation calculations for sailing yachts (10 percent the first year, 6 percent the second and 4 percent for the last three years) would put the book value of the vessel after five years at approximately $116,000. With $94,000 owing on the loan after that period, it looks like the owner could be substantially ahead. However, the actual market value of a five-year old vessel, sailed by 8 people, 56 times per month might be quite a bit lower than the blue-book figure. Buyers typically expect a 10-15 percent discount for boats coming out of charter fleets. We recommend that owners accept the shortfall as the price for having a vessel maintained by a management company. If they come out ahead in the end, it will be a pleasant surprise.
Around the U.S., it’s not uncommon for sailing schools to offer chartering opportunities as a means of gaining more revenue from their fleets. Some offer discounted charter rates to people who pay so-called ‘membership’ fees to join a sailing ‘club’ operating within the auspices of the school. Membership packages may include sailing lessons, but typically users must meet the school’s certification standards before they can take out a vessel on their own. In many cases you can either take a full course of instruction or challenge the school’s exam. PS found that, for members, discounts on charter rates can be in the range of 30 to 40 percent. Here are the details on three such sailing-school-cum-charter-companies that operate in the San Francisco Bay area: Club Nautique, OCSC Sailing, and Spinnaker-Sailing.
Club Nautique charges experienced sailors an initiation fee of $595 and monthly fees of $70, for an annual fixed cost of $1,435. The closest comparable vessel in the Club Nautique fleet to SailTime’s Hunter 33 is a Hunter 320. The half-day charter rate for members who wish to use this boat on a weekday is $205, which amounts to roughly a 1/3 discount on the non-member rate of $305. A weekend, full-day charter of the same vessel is $320 for members and $483 for non-members.
Membership fees and charter rates at OCSC Sailing (Olympic Circle Sailing Club) are: a $595 initiation fee and a $59 monthly fee, giving you access to a Catalina 320, among other vessels. For $205, members can have the boat on a weekday (half-day) and $325 secures the boat for a full weekend day (9:00 a.m. to 8:00 a.m.).
And Spinnaker-Sailing requires a $475 initiation fee and $40 monthly dues, which gives you access to, among others, a Hunter 310 for $202 for a half-day during the week, or $316 for a full weekend day. The monthly $40 fee can be applied to a charter fee, but only for that month.
While the San Francisco Bay Area seems to have a high concentration of such businesses (the Modern Sailing Academy and Tradewinds Sailing are two others in the area), similar businesses can be found elsewhere in the U.S. Boston Harbor Sailing, for instance, follows the same business model, in which annual membership fees buy the right to discounted charter rates on keelboats with overnight amenities.
Another alternative to boat ownership is joining a nonprofit community sailing center. Our imaginary sailor in San Francisco could join the Cal Sailing Club of Berkeley, where for membership fees of $200 annually, he would have essentially unlimited access to sailboats from 14 to 26 feet in length. However, the daysailing keelboats at the Cal Sailing Club don’t meet the parameters of our comparison. Similar community sailing centers exist around the U.S. Two others we’re aware of are the Community Sailing Center in Burlington, VT, and the Downtown Sailing Center in Baltimore, MD; the latter has cruising keelboats up to 30 feet in its fleet.
Instead of opting for the long-term financial commitment of a timeshare or the relatively shorter one for charter club, sailors can simply charter a vessel from a conventional chartering business and sail when and as often as they please (or their budgets will allow). The sailing school-charter clubs also offer boats to the general public, at different rates. And, we found other conventional chartering companies in the bay area with similar sized boats that are chartered for similar rates ($350 to $450 for a weekday or weekend day aboard a keelboat in the mid 30-foot range).
Of course there are a plethora of charter companies doing business in alluring destinations in the Caribbean, the Mediterranean, and elsewhere, but these don’t meet our need for a local boat.
The cost of becoming a member of a chartering club has an inherent break-even point, at which time the money you have saved off regular charter rates equals the costs of joining the chartering club.
Just where the break-even point lies is impossible to pinpoint, since the actual dollars saved on each charter will vary according to the length and timing of the charter—either half- or full day, weekday or weekend. In rough terms, though, joining a charter club should pay back after approximately nine to 10 half-day charters during the week, or after six full weekend charters. However, since chartering clubs operate on a pay-as-you-go basis, the costs will begin to go up steadily after you pass the break-even point. To get the same number of hours, in the same weekday and weekend proportions, through a chartering club as one would paying a flat rate at SailTime requires nearly double the investment. And buying the same amount of time on the open chartering market will cost nearly triple.
On the other hand, adhering to the SailTime sailing schedule may be difficult for some. So, those sailors might opt to join a chartering club and use the boat for one full weekend each month—an option that is not available under the SailTime rules. At the end of an eight-month season, those sailors would spend about the same amount as a SailTime member ($6,100), albeit for fewer hours on the water, but they’d be establishing a sailing schedule that might better fit their lifestyle.
Certainly SailTime and similar timeshare arrangements like Pinnacle Yachts and Windpath Sailing offer individuals a viable alternative to outright ownership. And the actual owner of the vessel can get others to help with the bank payments, in exchange for sharing use of the property with up to seven strangers. But the owner has full title to a depreciating asset, and so may be faced with owing more money at the end of the loan’s term than the boat can fetch. However, for the non-owning participants, a timeshare is without a doubt a lower cost way to get time on the water under sail. The non-owning participants in a system such as SailTime’s pay a flat rate, so the actual value depends on how much they take advantage of their allotted time per month. For others with fewer hours to devote to sailing, it may make more sense economically to join a chartering club and pay-to-sail on a schedule of ones own devising.