In Reply to: Can somebody explain the mechanics of what SC has done? posted by msblucow on June 27, 2007 at 16:57:51:

It is Sport Chalet's desire to maintain a twenty five percent profit margin on all charters booked. Additionally, Sport Chalet realizes over the past few years, operating expenses for the XXXX have increased due to rising fuel cost and boat upkeep. Therefore, Sport Chalet is proposing a seventy five, twenty five percent split on all seats sold for Charters booked by Sport Chalet. This proposal with will negate the flat charter rate previously in place and will give the XXXX the opportunity for increased (and severally decreased) revenue based on the number of seats sold.

I've enclosed a two-year charter history report for your review. Please note that the report is based on Sport Chalet's fiscal year, April 1 through March 31. Also enclosed is a profit calculation sheet based on the current Sport Chalet retail charter rate for charter bookings aboard the XXXX. The revenue in each column reflects the fee that would be paid to the XXXX at seventy five percent the retail charter rate. The green highlighted area indicates the maximum number of sellable spots and the yellow highlighted area indicates the current flat charter rate.

Booking Options:

Sport Chalet pre-charters the boat for specified dates/times. Sport Chalet owns those dates/times and is responsible for all sales. If at a minimum of 2 weeks prior to the charter departure date Sport Chalet determines that the minimums to conduct the charter may not be met, Sport Chalet has three options:

1. Sport Chalet may keep the boat closed and continue to sell seats independently, but will be required to pay for a minimum of XX seats at $yy.yy = XX×$yy.yy for the charter to run. If Sport Chalet sells seat above the minimum required to conduct the charter, Sport Chalet will pay the XXXX for the additional seats at 75 percent of the retail seat rate of $yy.yy per seat.

2. Sport Chalet may open the boat to the XXXX sales team. The XXXX will than waive the minimum seat requirement to conduct the charter for Sport Chalet. The XXXX will then have the right to sell seats at the rack rates, to be paid directly to the XXXX by the customer. Sport Chalet will only pay for seats it sells at 75 percent of the retail seat rate for the charter. Or, the XXXX may cancel the charter. If the XXXX cancels the charter, Sport Chalet will not be responsible to pay any cancellation fee to the XXXX.

3. Sport Chalet may cancel the charter, at a minimum of two weeks prior to the charter departure date without paying a cancellation fee.

Examples:
Option 1: (this one will never happen)

• Sport Chalet sells 10 seats and does not contact the XXXX to cancel or to open the boat 2 weeks prior to the charter departure date. Sport Chalet pays for XX seats @ $yy.yy each = XX×$yy.yy

Option 2

• Sport Chalet sells 10 seats, contacts the XXXX to open the boat 2 weeks prior to departure. The XXXX sells 5 seats. Sport Chalet pays for 10 seats @ $yy.yy each, The XXXX collect $yy.yy × 4/3 from directly from passengers for seats it sells.

• Sport Chalet sells 10 seats, contacts the XXXX to open the boat. The XXXX sells 1 seat. Trip is cancelled based on failure to meet minimums. Sport Chalet is responsible for issuing refunds for seats it sold. The XXXX is responsible for issuing refunds it sold.

Option 3:

• Sport Chalet contacts the XXXX 2 weeks prior to departure date to cancel. The XXXX updates charter date to OPEN boat status. No cancellation fee is paid by Sport Chalet.

Instructor Rates:

• Instructors and Certified Assistants (Divemaster, Assistant Instructor or Instructor) travel at no cost including air. The maximum number of free spots for Instructors and Certified Assistants per charter combined is six (6). Instructors and Certified Assistants do not count towards minimum charter requirements. If it is determined that the maximum number of Instructor and Certified Assistants sports are not needed due to class size, open spots may be sold at the standard agreed upon rate. Instructors and Certified Assistance are responsible for paying for their own food.
  • Instructors with 2 or less students pay ½ Sport Chalet Price
  • Instructors with 3 or more students go free
  • Instructors with 4 or more students may bring an assistant free (if space is available).

Divemasters:

• Sport Chalet will assign a maximum of two Divemasters per charter to provide customer service and to assist with overseeing in-water dive activities. Divemasters assigned to the charter do not count towards minimum charter requirements and travel at no cost including food and air.