I had to consult my records and carefully count fingers to realize that I have kept a boat in charter for five years.  There have been many ups and downs, and several near-misses, but The Usual Suspects has remained afloat, despite the world’s best efforts to bankrupt, trash, sink, beach, and scuttle her.  The boat remains a gleaming example of how to properly maintain a charter boat.  

It was a little better year in the travel industry, but not quite enough to make me order up another round of Rummers.  How a disheveled old goat with a scraggly beard, hiding in a spider hole in some remote village in Iraq successfully kept people hiding in their basements, I’ll never know.

I did enjoy one glorious trip on the boat last February, and that experience made me forget about everything else.

Financials

Given the financial disaster of the previous year, I sat down with Seth at Barefoot and put a plan in place to bring the numbers back in line.  I had a large negative balance on my account that had to be fixed, or this show was over.  We decided to charter the hell out of her, using every means possible.  I only used the boat once (albeit in the height of high season), and financial incentives were used to convince any interested party to go ahead and book.

Gross revenues from bookings of The Usual Suspects last year were 78.3% of target, which made it only an average year, despite the bookings blitz.  While the number of guests who chartered the boat was impressive, widespread discounting in a very competitive market helped contribute to a revenue shortfall.  Had I not used the boat in February and booked a full-price charter instead, revenues still would have only come in at 84% of target.  So, revenues continue to be the Achilles heel of the charter industry.

Operating expenses have historically been kept down around 70% of target, due to some excellent cost controls at Barefoot.  This year, they jumped to 91.8%, a number quite in line with a charter boat turning nine years old, and a company keeping on top of maintenance.  I review every monthly statement in detail and am satisfied that prudent cost controls continue to be implemented.  I remain extremely pleased with the excellent condition of the boat and the care and attention she receives from Barefoot’s maintenance team.

Insurance costs took large hike last year, and given the damage claims associated with the string of Hurricanes in 2004, it will get worse.  While this is not the fault of the charter company, it places increasing pressure on the boat ownership business as a viable entity.

Unfortunately, the key figure in this whole business, total operating profit, remains a disappointment.   In past years, the operating profit number has been propped up by keeping expenses down.  Not this year.  With expenses up and revenues only average, operating profit (before depreciation and taxes) was a measly 37.1% of target.  Interestingly enough, one more high-season charter (in lieu of my trip) would have pushed that number to 59.5%, so you really need those last few charters to overcome the fixed overhead.  We were really that close to a good year.

Still, Barefoot met the goal of bringing a large negative account balance back from the dead.  I still really need another excellent year.  The financial plan for this program is that once purchased, it should be financially self-sustaining.  For two years in row, I have had to cover shortfalls out-of-pocket.  If at the end of this year, the picture does not change, I will have to reconsider this program.

Wear and Tear

The boat remains in excellent condition as a result of an excellent maintenance program. Despite being nine years old, she still shines brightly and is a joy to sail.  She was hauled out and refurbished last fall, on schedule.  A fair number of little things were replaced, as expected.  Nothing major.

The genoa and bimini are finally ready to be replaced in the coming year.  Barefoot has elected to change to new colors, so the replacement of these items will include the new colors.

The refrigerator continues to leak water into the floorboards, causing some of them to rot.  A few more boards will be replaced, however this does not cost much and the finished product breathes new life into the interior.  The interior varnish job completed a few years go continues to look great.

No major mechanical problems have surfaced.  One charter guest reported total electrical failure recently.  That problem was corrected last year, and did not show up when I used the boat last winter, so I am not certain what that was all about.

"Attention Shoppers, Deep Discounts in Aisle Twelve"

Despite the fine condition of the boat, Barefoot made the decision this year to move her from the Premier Line to the Value Line, with an associated mark-down in price.  This was done not so much in response to the age and condition of the boat, but more with the fact that Barefoot had almost NO boats left in their Value Line.  When they looked at their fleet, which has a number of relatively new boats, they drew the line and Suspects ended up on the lower half.

Incidents and Other Perils

There were no major incidents to report last year.  Tropical Depression #3 (later became Hurricane Claudette) passed through the region without incident in 2003.  No other storms threatened the Windward Islands during the entire hurricane season.

2004, is another matter.  Ivan the Terrible came close to ending the life of The Usual Suspects, however the protective cone of ignorance saved her one more time.  No doubt she will face many more wild storms in her lifetime.

www.usual-suspects-sailing.com

Readership continues to grow.  The website experiences 500 - 600 hits per day.  I receive dozens of e-mails each month from people planning charters in the region, as well as reports from those who had a wonderful time.  The Grenadines and Boat Vendor materials were updated again.  I contributed an article to SAIL magazine, describing the ongoing saga of the management of the Tobago Cays.

I no longer have the time to dedicate to monthly updates, so they are now made on a quarterly basis.  Even then, it is difficult to meet deadlines.  An average update requires about 20 hours of time to complete.

Despite the readership and the e-mails, there has not been one single occurrence of a paid charter of The Usual Suspects that has resulted from website publicity.  While the purpose of the website was never commercial, I would have expected over a four year period that at least one reader would have been motivated to charter THAT boat.  Not so.

Two Out of Three

To conclude, I can summarize my five-year experience owning a charter boat as winning on two out of three basic measurements:

First, there is no question that Barefoot has done an outstanding job looking after the boat.  She has remained in excellent condition for the five years they have managed her, and I NEVER worry bout her.  EVER.  For someone wanting to keep a boat in the Caribbean, there is no question that their investment is safe in the hands of this organization.

Second, I have been mostly pleased with Barefoot’s management of costs over the past five years.  In fact, careful cost management has resulted in operating profits in years that showed revenue shortfalls.

Which leads to the final item - revenues.  The financial model for charter boat ownership is based on the equivalent of 20 weeks of charter income at full rates.  This has never happened in any of the five years I have been around, so I cannot even agree that it might be an average over several years.  I would be more inclined to agree that 16 weeks is a more realistic number, at least for a 5-to-9-year-old 40-foot monohull in The Grenadines.  The forecast might differ for a 50-footer, or for a catamaran.

Given the reality of more moderate revenue expectations and the expectation of increasing costs, I can advise anybody looking to get into this business that profit should NOT be the governing factor.  You really need to rationalize this using some other means. 

I have.

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The End