Boat charters pick up after two-year lull

Boat charters pick up after two-year lull
Jeffrey and Christine Smith, owners of the boat chartering company Northwest Navigation, stand in front of their boat, the David B. After a rough couple years, the two said chartering activity is beginning to pick up, especially the shorter, less expensive trips.

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Filed on 02. May, 2011 in Contents

Photos by Josh Durias | www.joshdurias.com

In 2008, American consumer spending plummeted. Businesses began to cut back, too, laying off employees and cutting expenses. Surprisingly, though, one industry — one completely reliant on disposable income — remained strong. A lot of boat charter companies had a great year in 2008.

But, unfortunately for the industry, the reason was not recessionary immunity. The boat charting community is one of planners. At Northwest Navigation, customers booked trips for 2008 as early as 2006, when the economy was still strong, said Jeffrey Smith, who co-owns the business with his wife, Christine.

And after that oh-so-impressive 2008, charters plunged. The industry hit the doldrums in 2009.

“It was a fairly awful year,” Christine said.

In fact, in 2009, customers didn’t show enough interest in the company’s trip to Alaska to justify making the voyage, which Christine and Jeffrey had made each season beginning in 2006, when they started their business.

The Smith’s weren’t alone; other local chartering companies also had a rough time that year.

“Two years ago, as far as I’m concerned was, I don’t want to say dismal, but it was bleak,” said Herve Burnel, charter manager for Bellingham Yachts. “Two years ago was sort of the bottom of the barrel.”

In 2010, that downward trend began to level off and chartering picked up slightly. And as the opening of boating season approached this year, the numbers looked even better.

“It’s a big difference. A big, big, big difference,” Burnel said. “I’m close to being back to where we were four years ago. We can see a light at the end of the tunnel.”

So far, business at Bellingham Yachts this year is almost double what it was in 2010, Burnel said, and he expects those numbers to continue to grow.

“I do think that the trend is good for everyone,” he said. “It seems everyone is more active.”

Changing tides

In 2010, the first trips to rebound at Northwest Navigation were those with the smaller prices tags, such as weekend getaways in the San Juan Islands, which the company offers for about $700 per person. In 2011, the less expensive trips continue to be the most popular for the business.

Customers are often choosing weekend trips over midweek trips, when they would have to miss work, Jeffrey said.

Christine expects business to continue to improve — 2011 fall charter activity looks better than spring, she said. The number of Alaska charters is also up this year, but is still lower than it was in 2008, Christine said. Jeffrey said it’s off by about 70 percent, with the caveat that it’s hard for them to measure trends because their company is only six years old.

Christine and Jeffrey Smith sit the wheelhouse of their charter boat, the David B.

Companies with different chartering options are seeing similar trends. Northwest Navigation has one boat, the David B, a refurbished cannery tender that was built in Maine in 1929 and is adorned with glossy wood planking and a classic wood interior. The boat is captained by Jeffrey, and Christine is the on-board chef and naturalist.

Bellingham Yachts has a larger fleet of between eight and 10 high-end yachts, most of which are also built in Maine, that customers tend to captain themselves. Like the Smiths, Burnel has noticed a reduction in the distances customers are travelling.

He has observed other differences in customers’ chartering preferences and activity, too.

While the number of charters for 2011 is almost on par with 2008, the larger yachts aren’t renting as well as the smaller ones.

“I’m catching up, basically, from the bottom up,” Burnel said.

Another change Burnel has noticed is the composition of groups that charter.

“Before, we would see a lot of families renting boats, and now you see more friends who can share the cost of renting a boat,” he said.

And Jeffrey has noticed a reduction in the number of retirees chartering boats — that could be a result of overall financial uncertainty, he said.

Smooth sailing

Roger Van Dyken, owner of San Juan Sailing, also saw a reduction in charter activity in 2009, but mostly for power boats — the company charters both power boats and sailboats. The recession was hard on a lot of boat companies, he said, some of which he watched file for bankruptcy.

“But through all that, surprisingly, sailboat charters remained remarkably strong,” Van Dyken said.

Last year, San Juan Sailing experienced a record year for sailboat charters and 2011 looks even better, Van Dyken said. Sailing numbers may have remained high because sailors tend to be more dedicated to their sport, he said, and they also aren’t concerned with the ebb and flow of fuel prices.

Last year, power boat charters also started to bounce back. This year isn’t as impressive, though: 2011 numbers for the company are 17 percent lower than they were in April 2010.

In addition to chartering, San Juan Sailing sells boats, and Van Dyken has also seen the effects of high fuel prices on sales. He’s optimistic about sailboat sales, he said, but feels uncertainty regarding power boat sales. Some power boats are selling better than others, though.

“There is a trend from faster, less fuel-efficient motor yachts to slower, more fuel-efficient trawlers,” he said.

Burnel noticed a similar trend at Bellingham Yachts. As of late, every client asks how much fuel an engine burns per hour, he said.

“The more a power boat was fuel hungry, the more it took a beating,” Burnel said.

Recovery ho!

Despite fuel prices, power boats are getting a lot of attention from Canadian boaters, Van Dyken said.

“Both sail and power boats are getting very good responses out of Canada, which is building because of the Canadian dollar,” he said.

The company is also seeing more people from Europe, Van Dyken said.

Bellingham Yachts has started actively trying to attract new customers from the other side of the United States. Burnel has attended boat shows on the East Coast and the company is considering participating in a few big European shows, he said.

“We’re still talking about where to find new clients or more clients,” Burnel said.

Attracting new customers to the area could provide the break the local chartering industry needs.

Most companies Jeffrey and Christine know of have weathered the storm, but they have had to make concessions to survive. Some have shortened their seasons and most have begun offering discounts, which Jeffrey is afraid could hurt the industry in the long run, as customers come to expect low prices.

Unlike most companies he knows, Burnel said Bellingham Yachts decided not to offer discounts, but that doesn’t mean it was business as usual. The company hasn’t raised its rates in three years, Burnel said.

Companies are continuing to offer discounted rates this year, Burnel said, but he has noticed improvements in customer expectations. Last year, a lot of customers tried to negotiate prices with him, but this year fewer people are.

Another sign of increased interest in boating is in boat construction, Jeffrey said. The large cruise ship companies are beginning to build a lot more boats, he said, and that is a good indication business may begin rebounding to pre-recessionary levels.

So with another boating season underway, it looks like charter companies have wind and tide on their side.

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IFRoZSBKb3VybmFsPC9saT48L3VsPg==