Free Spirit LLC (provisional name)is a captained single-yacht chartering operating from various ports-of-call in the global equatorial tropical belt.
The following is a call for a $15,000 secured investment with an interesting dividend.
Purpose. The purpose of Free Spirit LLC is to provide income to its owner, Thomas Harris, more than sufficient to maintain the yacht known as L’Esprit Libre II in completely seaworthy condition until 2017 (when he will be 70) so as to provide him with a modest retirement fund thereafter.
Service. Free Spirit LLC will provide charter parties of up to three individuals at a time with a high quality chartering experience, “high quality’ defined as a top quality boat, good quality provisions such as linens, and finest quality food and drink, as well as ancillary items such as scuba diving, snorkeling, fishing.
Individual charters will principally be for week-long blocks. Shorter (day and sunset cruises) will be available.
Location. The charters will take place wherever L’Esprit Libre II is located, which will be announced at least three months in advance. For the foreseeable future, the locations will be around the Caribbean basin within an hour drive of an international airport.
Personnel. The owner, Thomas Harris, is also the captain and chef. He possesses a valid USCG 50T Masters License (with 200 mile limit, auxiliary sail, and assisted towing endorsements); an STCW; a PADI divemaster candidacy; he is also a trained (provençale) French chef; he has crossed the Atlantic on a 21’ sailboat and has taught sailing and celestial navigation on three of the world’s oceans; he has been designated “commodore” by the Seven Seas Cruising Association.
No other personnel are envisioned.
Competition. There is considerable competition in all ports-of-call, starting with the size of L’Esprit Libre II up to megayachts.
Two years ago one would have said that the market was saturated. Today, this is much less the case as many of the charter yachts were owner-operated, with large mortgages; as the market collapsed, many have been forced out of business.
Reports are that the market is experiencing a come-back, especially in the lower end. It continues to be undeniably soft.
Distinguishing Characteristics. L’Esprit Libre II is a “salty” yacht: she looks and feels like an ocean-going vessel intended for long ocean voyages, which she is. At the same time “salty” does not get in the way of the brightwork being recently varnished and the decks kept pristine, or with creature comforts. She does not resemble a modern production boat in any way, inside or out.
L’Esprit Libre II is rigged to be easily sailed by one person. Charter guests are invited to participate in all activities, to the extent of their abilities and experience.
Having only one crew onboard means the guests can have more intimacy.
Finally, Harris intends to take the yacht around the world (via the canals), and invites guests to consider return visits, essentially accompanying the yacht on its circumnavigation. This should appeal to the latent desires of many landlubbers as well to couples who become attached to a particular captain and craft but want to see someplace different each charter.
Markets. Geographically, the markets are North America (Canada and the US) and Europe.
Socio-economically, the markets are upper middle class, well educated. Most will be middle age and older, with a demonstrated interest in things marine. Previous clients of the large chartering companies, such as Moorings and Sunsail, will be targeted. And readers of sailing magazines will be targeted.
Marketing. There are five aspects to marketing of Free Spirit charters.
First, the internet. The site www.lespritlibre.org has been up since early 2009 and now efforts are being devoted to populating that site throughout the web, using devices such as AdWords.
Second, Harris’ various networks. Regular email mailings will be sent to Harris’ various rolodexes. Friends will be given incentives for attracting their friends (e.g., one free week for each three secured).
Third, Harris is authoring a series of articles on cruising for sailing magazines. The first article, on the Iles d’Hyères, will be published shortly by Latitudes and Longitudes.
Fourth, Harris will be associated with the Virgin Island Charterboat League (www.vicl.org) and its associate, Flagship (www.flagshipvi.com). In particular, Flagship handles relationships between individual charter boats and charter brokers, advising both parties. (Harris has been advised by Flagship that the concept of circumnavigation may be very attractive and build a repetitive client.)
Fifth, limited advertising in monthly publications such as Cruising World, will be restarted.
Pricing. The base price is $3,000 per week, adding on $250 per person for food and drink. Marina fees if any will be charged directly to the client. Fuel is included.
No more than twenty weeks a year will be accepted, in order to provide repair and recuperation time, as well as time to move the boat to the next port-of-call.
Charters will also be accepted for moving the boat to another port-of-call, for which another pricing formula will be offered, as guests will be required to participate in navigation.
Income Projections. The objective is five charters in 2010, for income of $15,000; ten in 2011, for an income of $30,000; and twenty each year thereafter. Ten percent should be deducted from each income figure to provide for brokers fees (20%), estimated to be applicable to half the charters. (Income figures exclude the food and drink adjustment.)
Insurance. Standard charter insurance is carried on the boat for loss and liability, including for water sports including diving.
Operating Costs. Using a boat and dinghy heavily inevitably incurs unforeseen costs, some quite high. An annual budget of $20,000 in maintenance and replacement will be used for the full program of 20 charters per annum. A minimum of $10,000, regardless the number of charters, has to be programmed.
Personnel costs will be nil as Harris will be receiving French and American social security.
Capital Costs. L’Esprit Libre II is fully paid for and there are no liens on her. There remain no equipment or structural items to be bought.
Initial Costs. There remain start-up costs in the order of $15,000
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Notes:
- Incorporation and registrations are deemed necessary so as to protect the vessel from unwarranted claims; these fees also include template charter agreements.
- A survey is required prior to issuance of charter insurance, and this requires the boat to be hauled out; while this is done, new bottom paint will be applied (cost of materials only).
- Inspection of the four-person liferaft is due every three years and is now due.
- The Iridium satellite telephone requires pre-paid minutes; these will be later be charged to the relevant clients
- Marketing includes costs of association with Flagship and monthly ads in Cruising World
- The additional scuba tanks will bring the total to ten, necessary as it is impractical to have a compressor onboard
Proposal. The $15,000 invested by a third party in this project will be guaranteed by a lien on the value of the boat. (The last survey, in 2006 before many of the major improvements were made, put the value at $43,500 and the replacement value in excess of $150,000; the new survey will no doubt put a value in between these two figures.)
While it is Harris’ intention to repay the investment as quickly as possible, as long as it is on the books the investor will have the right to a charter of two weeks for two people of his/her choice each year. The fair-market value of this “dividend” is $6,000 a year, or 40%.
Provision for Default. Two possibilities can be envisaged.
- Harris becomes disabled or dies. In this case, the executor of his estate, his elder daughter, Anna Harris Ghen, will be charged to dispose of the L’Esprit Libre II in such a way as to repay the investment.
- The number of charters does not meet the projections. In this case, the value of the investment is not jeopardized as it is secured against the value of the boat which has not changed and the annual “dividend” is still possible on the same terms as before
For inquiries, please contact me via the email address.
January 2010