The purpose of this article is to provide guidance on starting a yacht charter service in Dubai.
Dubai is a major destination for leisure and today boasts some of the world’s leading offerings in hotels, shopping malls, entertainment facilities, and yacht cruises. Tourism is a significant part of Dubai’s economy. Dubai makes up 66% of the UAE tourism industry’s contribution to the country’s overall GDP. The growth in tourism over the next decade will be record-breaking.
Dubai Maritime City Authority (DMCA) aims to foster modern infrastructure for the yacht sector in Dubai. The Authority specially created the Sea Dubai initiative to promote Dubai’s luxury yacht sector and attract many private companies providing services in the industry. Nakheel is expanding its existing marina offering on Palm Jumeirah by adding more facilities to bring the total number of berths on the island to 600.
Dubai is working with the cruise company Carnival to become a global cruise tourism hub, with Dubai Cruise Terminal (DCT) set to become Carnival’s primary center in the region. New investments in expanding air and rail capacity and major regional events such as the Expo and the World Cup are likely to spur further growth in the tourism sector. These tourists are the perfect target for a new yacht rental business.
Understand the Local Market
Yacht buying and chartering are more accessible than ever, with such range and variety in small to midsized boats meaning there is such a broad scope, whatever the budget. It is estimated that by 2025, there will be approximately 20,000 boat owners in the UAE. This also means that competition in the sector is as fierce as ever.
Yachts can be money pits, and expenses are not limited to the up-front cost. In addition to the initial purchase, you must factor in costs for routine maintenance, insurance, berthing fees, licensing, transit logs, harbor master formalities, crew salaries, etc. You will need a significant emergency fund because all these need to be paid, whether you have bookings or not.
Most of the popular sites with high tourist footfall have been cornered by established companies. Dubai yacht rental companies are segmented into three categories; small budget yacht rentals that depend on volume, large high-end yacht charters that cater to wealthy tourists, and companies with exclusive contracts with tour operators.
Luxury Yacht Rental Services
Where you position your business will have a significant impact on your margins. While everyone would like the high margins that the luxury yacht rental services provider, a more substantial initial investment is required. Many companies in this segment also depend on word-of-mouth marketing which can be challenging for a newcomer.
The easier route to enter the market is to team up with an existing tour operator. They will be able to give you the passenger volume to make your business sustainable. However, you will have to provide a referral fee to the tour company for every passenger that they send across. These companies can also be aggressive in getting a substantial cut for their referrals.
Launching Your Yacht Charter Business
You will need a local business license via the Dubai Department of Economic Development (DED) to operate a yacht rental business. There are additional approvals related to the operation of a maritime vessel and safety clearance certificates. The procedures are not as straightforward as typical business formation; therefore, we recommend that you use the services of a consultant.
Our trusted team can help your yacht business become a reality. All it takes is a free consultation with one of our business consultants to get started.